create a new offspring with “particularized desired characteristics”); cf. Mechanics Laundry & Supply, Inc. v. Ind. Dep’t of State Revenue, 650 N.E.2d 1223, 1228-29, 1231 (Ind. Tax Ct. 1995) (finding no production occurred because taxpayer’s act of cleaning a textile did not create a new marketable good but merely returned the textile to its original state). Production can occur through manufacturing, processing, or any other activity listed in the exemption. Mid-America Energy, 681 N.E.2d at 262 (citing Cave Stone, 457 N.E.2d at 524). However, when a good is not produced and a service is provided, it is proper to deny the exemption. Mid-America Energy, 681 N.E.2d at 263.
In Mid-America Energy Resources, this Court found that Mid-America was entitled to the consumption exemption on chemicals and steam service it purchased because its operation of chilling and treating water for the purpose of conditioning air in its customers’ buildings constituted production of other tangible personal property. Id. at 264-65. Mid-America used compressors, a refrigerant condenser, expansion valves, and an evaporator to remove heat, a form of energy, from water to chill it to 40°. Id. at 260, 263. The chilled water was then pumped through a close loop system, where it was chemically treated, and used by Mid-America’s customers to cool the air in their buildings. Id. When the water reached a temperature of 52°, it was returned to Mid-America through the same closed loop system. Id. at 260. Mid-America then re-chilled the water and sent it back out to its customers’ buildings. Id. This Court found that the process of chilling the water created a significant change in the properties of the water and made it capable of cooling air in buildings. Id. at 263-64. The Court also found that Mid-America’s “operation create[d] a new and marketable good, or in the language of the statute, produce[d] ‘other tangible personal property.’” Id. at 263. Thus, because