[Federal Register Volume 59, Number 53 (Friday, March 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6377]


[[Page Unknown]]

[Federal Register: March 18, 1994]


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DEPARTMENT OF THE TREASURY
 

Tax on Certain Imported Substances; Notice of Determination

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

SUMMARY: This notice announces a determination, under Notice 89-61, 
that the list of taxable substances in section 4672(a)(3) of the 
Internal Revenue Code will be modified to include poly (69/31 ethylene/
cyclohexylenedimethylene terephthalate), poly (96.5/3.5 ethylene/
cyclohexylenedimethylene terephthalate), and poly (98.5/1.5 ethylene/
cyclohexylenedimethylene terephthalate).

EFFECTIVE DATE: This modification is effective October 1, 1990.

FOR FURTHER INFORMATION CONTACT: Tyrone J. Montague, Office of 
Assistant Chief Counsel (Passthroughs and Special Industries), (202) 
622-3130 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    Under section 4672(a) of the Internal Revenue Code, an importer or 
exporter of any substance may request that the Secretary determine 
whether such substance should be listed as a taxable substance. The 
Secretary shall add such substance to the list of taxable substances in 
section 4672(a)(3) if the Secretary determines that taxable chemicals 
constitute more than 50 percent of the weight, or more than 50 percent 
of the value, of the materials used to produce such substance. This 
determination is to be made on the basis of the predominant method of 
production. Notice 89-61, 1989-1 C.B. 717, sets forth the rules 
relating to the determination process.

Determination

    On March 10, 1994, the Secretary determined that poly (69/31 
ethylene/cyclohexylenedimethylene terephthalate), poly (96.5/3.5 
ethylene/cyclohexylenedimethylene terephthalate), and poly (98.5/1.5 
ethylene/cyclohexylenedimethylene terephthalate) should be added to the 
list of taxable substances in section 4672(a)(3) of the Internal 
Revenue Code, effective October 1, 1990.
    The rate of tax prescribed for poly (69/31 ethylene/
cyclohexylenedimethylene terephthalate), under section 4671(b)(3), is 
$6.89 per ton before January 1, 1992, and $3.54 per ton for imported 
poly (69/31 ethylene/cyclohexylenedimethylene terephthalate) first sold 
or used after December 31, 1991. This is based upon a conversion factor 
for xylene of 0.6372 and a conversion factor for ethylene of 0.0900.
    The rate of tax prescribed for poly (96.5/3.5 ethylene/
cyclohexylenedimethylene terephthalate), under section 4671(b)(3), is 
$6.36 per ton before January 1, 1992, and $3.41 per ton for imported 
poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate) first 
sold or used after December 31, 1991. This is based upon a conversion 
factor for xylene of 0.5616 and a conversion factor for ethylene of 
0.1398.
    The rate of tax prescribed for poly (98.5/1.5 ethylene/
cyclohexylenedimethylene terephthalate), under section 4671(b)(3), is 
$6.32 per ton before January 1, 1992, and $3.40 per ton for imported 
poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate) first 
sold or used after December 31, 1991. This is based upon a conversion 
factor for xylene of 0.5554 and a conversion factor for ethylene of 
0.1439.
    The petitioner is Eastman Chemicals Division, Eastman Kodak 
Company, a manufacturer and exporter of these substances. No material 
comments were received on these petitions. The following information is 
the basis for the determinations.

Poly (69/31 ethylene/cyclohexylenedimethylene terephthalate)

HTS number: 3907.60.00.90
CAS number: 26100-86-7

    Poly (69/31 ethylene/cyclohexylenedimethylene terephthalate) is 
derived from the taxable chemicals ethylene and xylene. Poly (69/31 
ethylene/cyclohexylenedimethylene terephthalate), a solid, is produced 
predominantly by reacting dimethyl terephthalate with ethylene glycol 
and cyclohexanedimethanol. Dimethyl terephthalate is produced by the 
air oxidation of p-xylene to yield terephthalic acid, and the acid is 
subsequently esterified to the dimethyl ester with methanol. Ethylene 
glycol is produced via reaction of ethylene with oxygen and water, and 
cyclohexanedimethanol is produced via the hydrogenation of dimethyl 
terephthalate.
    The stoichiometric material consumption formula for Poly (69/31 
ethylene/cyclohexylenedimethylene terephthalate) is:
    131 C8H10 (xylene) + 70 C2H4 (ethylene) + 
428 O2 (oxygen) + 70 H2O (water) + 217 H2 
(hydrogen)----
>C2H6O2(C10H8O4)69(C16H1
8O4)31 (poly (69/31 ethylene/cyclohexylenedimethylene 
terephthalate)) + 524 H2O (water)

    Poly (69/31 ethylene/cyclohexylenedimethylene terephthalate) has 
been determined to be a taxable substance because a review of its 
stoichiometric material consumption formula shows that, based on the 
predominant method of production, taxable chemicals constitute 50.7 
percent by weight of the materials used in its production.

Poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate)

HTS number: 3907.60.00.90
CAS number: 26100-86-7

    Poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate) is 
derived from the taxable chemicals ethylene and xylene. Poly (96.5/3.5 
ethylene/cyclohexylenedimethylene terephthalate), a solid, is produced 
predominantly by reacting dimethyl terephthalate with ethylene glycol 
and cyclohexanedimethanol. Dimethyl terephthalate is produced by the 
air oxidation of p-xylene to yield terephthalic acid, and the acid is 
subsequently esterified to the dimethyl ester with methanol. Ethylene 
glycol is produced via reaction of ethylene with oxygen and water, and 
cyclohexanedimethanol is produced via the hydrogenation of dimethyl 
terephthalate.
    The stoichiometric material consumption formula for Poly (96.5/3.5 
ethylene/cyclohexylenedimethylene terephthalate) is:

    103.5 C8H10 (xylene) + 97.5 C2H4 (ethylene) 
+ 359.25 O2 (oxygen) + 97.5 H2O (water) + 24.5 H2 
(hydrogen) ----> 
C2H6O2(C10H8O4)96.5(C16H18O4
)3.5 (poly (96.5/3.5 ethylene/cyclohexylenedimethylene 
terephthalate)) + 414 H2O (water)

    Poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate) has 
been determined to be a taxable substance because a review of its 
stoichiometric material consumption formula shows that, based on the 
predominant method of production, taxable chemicals constitute 50.7 
percent by weight of the materials used in its production.

Poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate)

HTS number: 3907.60.00.90
CAS number: 26100-86-7
    Poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate) is 
derived from the taxable chemicals ethylene and xylene. Poly (98.5/1.5 
ethylene/cyclohexylenedimethylene terephthalate), a solid, is produced 
predominantly by reacting dimethyl terephthalate with ethylene glycol 
and cyclohexanedimethanol. Dimethyl terephthalate is produced by the 
air oxidation of p-xylene to yield terephthalic acid, and the acid is 
subsequently esterified to the dimethyl ester with methanol. Ethylene 
glycol is produced via reaction of ethylene with oxygen and water, and 
cyclohexanedimethanol is produced via the hydrogenation of dimethyl 
terephthalate.
    The stoichiometric material consumption formula for Poly (98.5/1.5 
ethylene/cyclohexylenedimethylene terephthalate) is:

    101.5 C8H10 (xylene) + 99.5 C2H4 (ethylene) 
+ 354.25 O2 (oxygen) + 99.5 H2O (water) + 10.5 H2 
(hydrogen) ----
>C2H6O2(C10H8O4)98.5(C16H18O4
)1.5 (poly (98.5/1.5 ethylene/cyclohexylenedimethylene 
terephthalate)) + 406 H2O (water)

    Poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate) has 
been determined to be a taxable substance because a review of its 
stoichiometric material consumption formula shows that, based on the 
predominant method of production, taxable chemicals constitute 50.7 
percent by weight of the materials used in its production.
Dale D. Goode,
Federal Register Liaison Officer, Assistant Chief Counsel (Corporate).
[FR Doc. 94-6377 Filed 3-17-94; 8:45 am]
BILLING CODE 4830-01-U