[Federal Register Volume 59, Number 116 (Friday, June 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14702]


[[Page Unknown]]

[Federal Register: June 17, 1994]


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DEPARTMENT OF THE TREASURY
 

Tax on Certain Imported Substances (Glycerine, et al.); Notice of 
Determinations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

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SUMMARY: This notice announces determinations, under Notice 89-61, that 
the list of taxable substances in section 4672(a)(3) will be modified 
to include glycerine and phenol.

EFFECTIVE DATE: This modification is effective January 1, 1991.

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), 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 June 10, 1994, the Secretary determined that glycerine and 
phenol should be added to the list of taxable substances in section 
4672(a)(3), effective January 1, 1991.
    The rate of tax prescribed for glycerine, under section 4671(b)(3), 
is $9.52 per ton. This is based upon a conversion factor for propylene 
of 0.67, a conversion factor for chlorine of 2.16, and a conversion 
factor for sodium hydroxide of 1.54.
    The rate of tax prescribed for phenol, under section 4671(b)(3), is 
$6.33 per ton. This is based upon a conversion factor for benzene of 
0.9 and a conversion factor for propylene of 0.4.
    The petitioner is Dow 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.

Glycerine

HTS number: 1520.90.00.00
CAS number: 56-81-5

    Glycerine is derived from the taxable chemicals propylene, 
chlorine, and sodium hydroxide. Glycerine is a liquid produced 
predominantly by the reaction of epichlorohydrin with an aqueous 
caustic carbonate solution, followed by the removal of water, sodium 
chloride, and other impurities by mechanical means, chemical 
extraction, and distillation.
    The stoichiometric material consumption formula for glycerine 
substance is:

C3H6 (propylene) + 2 Cl2 (chlorine) + 2 NaOH (sodium 
hydroxide) + H2O (water)  C3H8O3 
(glycerine) + 2 NaCl (sodium chloride) + 2 HCl (hydrogen chloride)

    Glycerine 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 93.5 percent by weight of the materials used in its 
production.

Phenol

HTS number: 2907.11.00.00
CAS number: 108-95-2

    Phenol is derived from the taxable chemicals benzene and propylene. 
Phenol is a solid produced predominantly based on cumene peroxidation.
    The stoichiometric material consumption formula for phenol is:

C6H6 (benzene) + C3H6 (propylene) + O2 
(oxygen)  C6H6O (phenol) + C36 (acetone)

    Phenol 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 78.9 percent by weight of the materials used in its 
production.
Dale D. Goode,
 Federal Register Liaison Officer, Assistant Chief Counsel (Corporate).
[FR Doc. 94-14702 Filed 6-16-94; 8:45 am]
BILLING CODE 4830-01-U