[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: 94-14703]


[[Page Unknown]]

[Federal Register: June 17, 1994]


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DEPARTMENT OF THE TREASURY
 

Tax on Certain Imported Substances (Tetrahydrofuran, 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 tetrahydrofuran and 1,4 butanediol.

EFFECTIVE DATE: This modification is effective October 1, 1994.

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 tetrahydrofuran and 
1,4 butanediol should be added to the list of taxable substances in 
section 4672(a)(3), effective October 1, 1994. However, if these 
substances are produced from acetylene derived from coal they are not 
taxable substances.
    The rate of tax prescribed for tetrahydrofuran, under section 
4671(b)(3), is $5.28 per ton unless it is produced from acetylene 
derived from coal. This is based upon a conversion factor for acetylene 
of 0.40 and a conversion factor for methane of 0.97.
    The rate of tax prescribed for 1,4 butanediol, under section 
4671(b)(3), is $4.20 per ton unless it is produced from acetylene 
derived from coal. This is based upon a conversion factor for methane 
of 0.77 and a conversion factor for acetylene of 0.32.
    The petitioner is E. I. DuPont de Nemours and 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.

Tetrahyrofuran

HTS number: 2932.11.00.00
CAS number: 109-99-9

    Tetrahyrofuran is derived from the taxable chemicals methane and 
acetylene. Tetrahyrofuran is a liquid produced predominantly by the 
reaction of acetylene (derived from methane in natural gas) with 
formaldehyde made by air oxidation and dehydrogenation of methanol 
(derived from methane in natural gas) producing the intermediate 
butynediol which is in turn reacted with hydrogen (derived from methane 
in natural gas) to produce 1,4 butanediol. The 1,4 butanediol is ring 
closed using an acid catalyst to produce tetrahydrofuran.
    The stoichiometric material consumption formula for tetrahyrofuran 
is:

C2H2 (acetylene) + 3 CH4 (methane) + 0.5 O2 
(oxygen) + 2 H2O (water)  C4H8O 
(tetrahydrofuran) + 5 H2 (hydrogen) + CO2 (carbon dioxide)

    Tetrahyrofuran 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 58.7 percent by weight of the materials used in 
its production.

1,4 butanediol

HTS number: 2905.39.10.00
CAS number: 110-63-4

    1,4 butanediol is derived from the taxable chemicals methane and 
acetylene. 1,4 butanediol is a liquid produced predominantly by the 
reaction of acetylene (derived from methane in natural gas) with 
formaldehyde made by air oxidation and dehydrogenation of methanol 
(derived from methane in natural gas) producing the intermediate 
butynediol which is in turn reacted with hydrogen (derived from methane 
in natural gas) to produce 1,4 butanediol.
    The stoichiometric material consumption formula for 1,4 butanediol 
is:

3 CH4 (methane) + C2H2 (acetylene) + 3 H2O 
(water) + 0.5 O2 (oxygen)  C4H10O2 (1,4 
butanediol) + 5 H2 (hydrogen) + CO2 (carbon dioxide)

    1,4 butanediol 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 51.3 percent by weight of the materials used in 
its production.
Dale D. Goode,
Federal Register Liaison Officer, Assistant Chief Counsel (Corporate).
[FR Doc. 94-14703 Filed 6-16-94; 8:45 am]
BILLING CODE 4830-01-U