[Federal Register Volume 59, Number 59 (Monday, March 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7152]


[Federal Register: March 28, 1994]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service


Tax on Certain Imported Substances; Determination

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

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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 benzoic acid and 
benzaldehyde.

EFFECTIVE DATE: This modification is effective July 1, 1993.

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 16, 1994, the Secretary determined that benzoic acid and 
benzaldehyde should be added to the list of taxable substances in 
section 4672(a)(3) of the Internal Revenue Code, effective July 1, 
1993.
    The rate of tax prescribed for benzoic acid, under section 
4671(b)(3), is $3.67 per ton. This is based upon a conversion factor 
for toluene of 0.7545.
    The rate of tax prescribed for benzaldehyde, under section 
4671(b)(3), is $4.22 per ton. This is based upon a conversion factor 
for toluene of 0.8682.
    The petitioner is Kalama Chemical 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.

Benzoic Acid

HTS number: 2916.31.10.05
CAS number: 65-85-0

    Benzoic acid is derived from the taxable chemical toluene. Benzoic 
acid is a solid produced predominantly by the continuous liquid-phase 
oxidation of toluene, using air as the oxygen source, in the presence 
of a cobalt containing catalyst.
    The stoichiometric material consumption formula for benzoic acid 
is:

C7H8 (toluene) + 1.5 O2 (oxygen)----> 
C7H6O2 (benzoic acid) + H2O (water)

    Benzoic acid 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 65.7 percent by weight of the materials used in its 
production.

Benzaldehyde

HTS number: 2912.21.00.00
CAS number: 100-52-7

    Benzaldehyde is derived from the taxable chemical toluene. 
Benzaldehyde is a liquid produced predominantly by as a co- product of 
benzoic acid by the continuous liquid-phase oxidation of toluene, using 
air as the oxygen source, in the presence of a cobalt containing 
catalyst.
    The stoichiometric material consumption formula for benzaldehyde 
is:

C7H8 (toluene) + O2 (oxygen) ----> C7H6O 
(benzaldehyde) + H2O (water)
    Benzaldehyde 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 74.1 percent by weight of the materials used in its 
production.
Dale D. Goode,
Federal Register Liaison Officer, Assistant Chief Counsel (Corporate).
[FR Doc. 94-7152 Filed 3-25-94; 8:45 am]
BILLING CODE 4830-01-U