Sec. 1. 36 MRSA §1752, sub-§9-B, as amended by PL 1997, c. 557, Pt. D, §1, as affected by §4 and as affected by Pt. G, §1, is further amended to read:

9-B. Production. "Production" means an operation or integrated series of operations engaged in as a business or segment of a business that transforms or converts personal property by physical, chemical or other means into a different form, composition or character from that in which it originally existed.

"Production" includes manufacturing, processing, assembling and fabricating operations that meet the definitional requisites, including biological processes that are part of an integrated process of manufacturing organisms or microorganic materials through the application of biotechnology. "Production" also includes cooking or preparing drinks, meals, food or food products by a person in the food service industry.

"Production" does not include biological processes except as otherwise provided by this subsection, wood harvesting operations, or the severance of sand, gravel, oil, gas or other natural resources produced or severed from the soil or water, or activities such as cooking or preparing drinks, meals, food or food products by a retailer for retail sale. The foregoing are examples of activities that are not included within the term "production."

Sec. 2. 36 MRSA §1760, sub-§31, as amended by PL 1989, c. 501, Pt. V, §§4 and 5, is further amended to read:

31. Machinery and equipment. Sales of machinery and equipment for use by the purchaser directly and primarily in either the production of tangible personal property, which property is intended to be sold or leased ultimately for final use or consumption, or; the production of tangible personal property pursuant to a contract with the United States Government or any agency thereof of the United Sates Government; or for use by the purchaser in the lodging industry.

Sec. 3. 36 MRSA §1760, sub-§74, as enacted by PL 1989, c. 871, §15, is amended to read:

74. Property used in production. Sales of tangible personal property, other than fuel or electricity, that becomes an ingredient or component part of, or that is consumed or destroyed or loses its identity directly and primarily in either the production of tangible personal property for later sale or