- 73 -
yet time-constrained, process in which petitioner possessed all
the necessary tools and equipment utilized in its logging opera-
tions, when combined, constitute a process substantial in na-
ture." Id. at 144. We further found that the taxpayer's opera-
tions were generally considered to constitute production. We
based that finding by considering, inter alia, "how harvesting or
logging is generally perceived in the forest products industry".
Id. at 148. In that regard, we found, inter alia, that:
(1) Loggers consider themselves to be producers;
(2) standing timber is not particularly useful to
manufacturers; (3) substantial activities are required
before such materials are useful to manufacturers; and
(4) the items considered to be raw materials and who is
perceived to be a producer, varies depending upon one's
position in the manufacturing and/or production pro-
cess. [Id.]
We again considered the meaning of and applied section
1.993-3(c)(2)(iii), Income Tax Regs., in Garnac Grain Co. v.
Commissioner, supra. There, the taxpayer purchased grain that it
stored in its grain elevators, processed that grain in a series
of operations including drying, cleaning, aerating, blending, and
fumigating, and sold it for export purposes. We found that the
taxpayers' operations were substantial in nature because they
required "trained and experienced personnel employing both skill
and judgment in the performance of their duties." Id. at 28.
However, relying primarily on the fact that the grain industry
considered the taxpayers' operations to constitute grain handling
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