[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: 94-14704]


[[Page Unknown]]

[Federal Register: June 17, 1994]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

 

Tax on Certain Imported Substances (Dimethyl Terephthalate); 
Notice of 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) will be 
modified to include dimethyl terephthalate.

EFFECTIVE DATE: This modification is effective April 1, 1992.

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 dimethyl 
terephthalate should be added to the list of taxable substances in 
section 4672(a)(3), effective April 1, 1992.
    The rate of tax prescribed for dimethyl terephthalate, under 
section 4671(b)(3), is $3.23 per ton. This is based upon a conversion 
factor for xylene of 0.547 and a conversion factor for methane of 
0.165.
    The petitioner is Cape Industries, a manufacturer and exporter of 
this substance. No material comments were received on this petition. 
The following information is the basis for the determination.

HTS number: 2917.37.00.00
CAS number: 120-61-6
    Dimethyl terephthalate is derived from the taxable chemicals xylene 
and methane. Dimethyl terephthalate is a solid produced predominantly 
by oxidation of xylene followed by esterification with methanol.
    The stoichiometric material consumption formula for dimethyl 
terephthalate is:

C8H10 (xylene)+2 CH4 (methane)+4 O2 (oxygen) 

C10H10O4 (dimethyl terephthalate)+4 H2O (water)

    Dimethyl 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 51.8 percent by weight of the materials 
used in its production.
Dale D. Goode,
Federal Register Liaison Officer Assistant Chief Counsel (Corporate).
[FR Doc. 94-14704 Filed 6-16-94; 8:45 am]
BILLING CODE 4830-01-U