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$1,368 to petitioner for the use of "Area B", and on paragraph 4
of the Agreement, which stated that petitioner was to furnish
"such systems and utilities" as required to accommodate the safe
and efficient use of the WTC Equipment.
Petitioner made a similar argument in United States v.
Norstam Veneers, Inc., 95-1 USTC (CCH) par. 50,034,
75 AFTR2d 95-591 (S.D. Ind. 1994). In that case, petitioner
litigated its entitlement to section 29 credits for its 1987 and
1988 tax years (i.e., tax years preceding its Agreement with WTC)
and contended that, because biomass was an integral part of the
process by which veneer was produced, the biomass had become part
of the product and was thereby "sold" to an unrelated person.
The District Court rejected Norstam's argument. The court
noted that section 29 required a sale of a qualified fuel--not
merely of products produced through the use of a qualified fuel.
The court stated that Norstam's position confused process with
product. "Using Norstam's logic," the court wrote, "we could
similarly argue that Indiana corn, if eaten by Norstam workers,
powered the muscles which helped produce the veneer, and thus is
also part of Norstam's product." Id.
Petitioner's argument in the present case is equally
unpersuasive. Petitioner's position is undermined by the express
terms of the Agreement. The Agreement contains no indication
that part of WTC's "fixed payment" to petitioner was intended to
pay for the purchase of biomass. Indeed, the Agreement provided
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