By McCall                                             H.B. No. 2301
       74R6730 DAK-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the application of the manufacturing equipment sales
    1-3  tax exemption to fabrication in a cleanroom environment of
    1-4  semiconductor products.
    1-5        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-6        SECTION 1.  Section 151.318, Tax Code, is amended by amending
    1-7  Subsection (a) and adding Subsection (q) to read as follows:
    1-8        (a)  The following items are exempted from the taxes imposed
    1-9  by this chapter:
   1-10              (1)  tangible personal property that will become an
   1-11  ingredient or component part of tangible personal property
   1-12  manufactured, processed, or fabricated for ultimate sale;
   1-13              (2)  tangible personal property used or consumed in or
   1-14  during the actual manufacturing, processing, or fabrication of
   1-15  tangible personal property for ultimate sale if the use or
   1-16  consumption of the property is necessary or essential to the
   1-17  manufacturing, processing, or fabrication operation; <and>
   1-18              (3)  services performed directly on the product being
   1-19  manufactured prior to its distribution for sale and for the purpose
   1-20  of making the product more marketable; and
   1-21              (4)  tangible personal property utilized in connection
   1-22  with the manufacturing, processing, or fabrication in a cleanroom
   1-23  environment of semiconductor products.
   1-24        (q)  Notwithstanding Subsection (c)(2), the exemption
    2-1  described by Subsection (a)(4) applies to tangible personal
    2-2  property, without regard to whether the property is affixed or
    2-3  incorporated into realty or contained in a cleanroom environment,
    2-4  used in connection with the manufacturing, processing, or
    2-5  fabrication of semiconductor products in a cleanroom environment,
    2-6  including:
    2-7              (1)  integrated systems, fixtures, and piping;
    2-8              (2)  tangible personal property necessary or adapted
    2-9  for the establishment and maintenance of the cleanroom environment,
   2-10  including the reduction of contamination or the control of air
   2-11  flow, temperature, humidity, vibration, chemical purity, and other
   2-12  manufacturing tolerances in the cleanroom environment; and
   2-13              (3)  production equipment and machinery.
   2-14        SECTION 2.  This Act clarifies existing law and is not
   2-15  intended to enact a substantive change in existing law.
   2-16        SECTION 3.  The importance of this legislation and the
   2-17  crowded condition of the calendars in both houses create an
   2-18  emergency and an imperative public necessity that the
   2-19  constitutional rule requiring bills to be read on three several
   2-20  days in each house be suspended, and this rule is hereby suspended,
   2-21  and that this Act take effect and be in force from and after its
   2-22  passage, and it is so enacted.