Sale for resale includes the sale of goods which will be resold in
their original form, in an altered form, or as a part or ingredient of
another article. A sale of goods which the seller knows, or has
reasonable cause to believe, will be resold after processing or
manufacture is a sale for resale. Thus, sales of parts with the
expectation that they will be incorporated in aircraft and that the
aircraft will be sold clearly are sales for resale. (Arnold v. Ben
Kanowsky, Inc., 361 U.S. 388.) Similarly, the sale of lumber to
furniture or box factories, or the sale of textiles to clothing
manufacturers, is a sale for resale even though the goods are resold in
the form of furniture or clothing.
The principle is also illustrated in cases where the article sold
becomes a part or an ingredient of another, such as scrap metal in
steel, dyes in fabrics, flour in bread and pastries, and salt in food or
ice in beverages. (Mitchell v. Douglas Auto Parts Co., 11 WH Cases 807,
25 L.C. Par. 68, 119 (N.D. Ill., 1954).) The fact that goods sold will
be resold as a part of a service in which they are used or as a part of
a building into which they are incorporated does not negate the
character of the sale as one ``for resale.'' (Mitchell v. Furman Beauty
Supply, 300 F. 2d 16 (CA-3); Mayol v. Mitchell, 280 F. 2d 477 (CA-1),
cert. denied 364 U.S. 902; Goldberg v. Kleban Eng. Corp., 303 F. 2d 855
(CA-5).)
