[Federal Register Volume 60, Number 81 (Thursday, April 27, 1995)]
[Rules and Regulations]
[Pages 20628-20642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10226]



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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 146

[T.D. 95-35]
RIN 1515-AB20


Petroleum Refineries in Foreign Trade Subzones

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document amends the Customs Regulations by adding special 
procedures and requirements governing the operations of crude petroleum 
refineries approved as foreign trade subzones, in implementation of 
section 9002 of the Technical and Miscellaneous Revenue Act of 1988, 
which amended the Foreign Trade Zones Act to make specific provision 
for petroleum refinery subzones.

EFFECTIVE DATE: These regulations are effective October 24, 1995.

FOR FURTHER INFORMATION CONTACT: For Legal aspects: Bill Rosoff, Chief, 
Entry Rulings Branch (202)482-7040. For Operational aspects: Louis 
Hryniw, Regulatory Audit (202)927-1100.

SUPPLEMENTARY INFORMATION:

Background

    On August 10, 1992 (57 FR 35530), Customs published a document in 
the Federal Register proposing to amend the Customs Regulations to add 
special procedures and requirements governing the operations of crude 
petroleum refineries approved as foreign trade subzones, in 
implementation of section 9002 of the Technical and Miscellaneous 
Revenue Act of 1988 which amended the Foreign Trade Zones Act, 19 
U.S.C. 81c(d), to make specific provision for petroleum refinery 
subzones.
    Briefly, as stated in the August 10, 1992, notice of proposed 
rulemaking, the statutory amendment obviates the need to determine 
exactly when and where in the manufacturing process crude and other 
feedstocks become other products. In so doing, it permits refiners as 
well as Customs to assess the relative value of such multiple products 
at the end of the manufacturing period during which such products were 
produced, when the actual quantities of these products resulting from 
the refining process can be measured with certainty. Also, the 
amendment permits the products refined in a subzone during a 
manufacturing period to be attributed to a given crude or other 
feedstocks introduced into production during the period, to the extent 
that such products were producible (could have been produced) therefrom 
in the quantities removed from the subzone.
    As a result of extensive and varied input received from the oil 
refinery and foreign trade zone communities, as well as from other 
interested parties, in response to the initial notice of proposed 
rulemaking, Customs published a significantly revised notice on March 
4, 1994 (59 FR 10342) and solicited additional public comment on the 
revised proposed rule.
    The following discussion includes a summary of the various comments 
received in response to the March 4, 1994, notice of proposed 
rulemaking, together with an explanation and analysis regarding the 
sections to be added, eliminated or further revised. The final rule as 
revised is thereafter set forth.

Discussion of Comments

    Comment: Two commenters suggested deletion of proposed 
Sec. 146.92(a)(1), (2) and (3) because it is already covered in 
proposed Sec. 146.93.
    Customs Response: Customs agrees and, therefore, these three 
subsections have been deleted.
    Comment: Three commenters suggested that the definition in proposed 
Sec. 146.92(b) be expanded to include products from natural gas 
production and blendstocks and, additionally, that the definition state 
that Customs may add other merchandise to this definition by way of a 
ruling.
    Two commenters suggested the inclusion of ``other hydrocarbon 
feedstocks, light olefins, and other aromatics and their derivatives'' 
in this definition.
    Customs Response: Regarding the suggestion that this definition may 
be modified by a ruling, Customs regulations may not be modified or 
changed by way of a ruling. Any changes to the regulations would have 
to follow regulatory procedures. It is not clear to Customs how natural 
gas production and blendstocks apply to producibility. Any change to 
T.D. 66-16 to include feedstocks or products not listed must include 
supporting records and a technical explanation of the change. 
Therefore, this suggestion has not been adopted.
    Comment: One commenter suggested that the word ``means'' in 
proposed Sec. 146.92(c) be changed to ``is based on''. Another 
commenter suggested deletion of ``utilizing T.D. 66-16 (see 
Sec. 146.92(h)), and'' and insertion of ``volumetric'' between ``any'' 
and ``loss''.
    Customs Response: The suggested change has been adopted with 
respect to addition of the word ``volumetric'' and Sec. 146.92(c) has 
been reworded. Customs disagrees that the phrase ``utilizing T.D. 66-
16'' should be deleted. The word ``means'' should be retained since 
this section defines terms for use in this subpart.
    Comment: The suggestion was made that proposed Sec. 146.92(d) be 
re-worded to read as follows:
    Final product means any product that is produced in a petroleum 
refinery subzone from feedstock processed therein, and thereafter 
removed therefrom or consumed within the zone.
    Two commenters suggested that the phrase ``and or hydrocarbon 
product'' be inserted after ``product'' and before ``that''. Another 
commenter suggested that the phrase ``lost or destroyed in the subzone 
as provided in Sec. 146.53(c)(1)(iv)'' be inserted after ``therefrom''.
    Customs Response: The first suggestion regarding the rewording of 
Sec. 146.92(d) has been adopted. The use of attribution by records 
requires that the amounts removed or consumed actually be measured; 
such method is not acceptable to account for unmeasured losses. This 
suggestion has not been adopted. It is Customs position that 19 U.S.C. 
81c(d) applies only to crude petroleum products and not to hydrocarbons 
in general. Therefore, this suggestion was not adopted.
    Comment: Two commenters suggested that the words ``or 
manufacturer'' be inserted after ``refiner'' and that the words 
``production facility'' be inserted after ``refinery'' in proposed 
Sec. 146.92(e). One commenter suggested deletion of the phrase ``for 
which * * * subzone'' because attribution is addressed 
[[Page 20629]] elsewhere in the regulations. Another commenter 
recommended that the word ``for'' after ``month'' be deleted and 
replaced with ``within''.
    Customs Response: Regarding the first suggestion, the purpose of 
these regulations is to implement 19 U.S.C. 81c(d). That statutory 
provision only applies to crude petroleum refineries in foreign trade 
zones. Therefore, there is no basis to extend these regulations to 
``production facilities.'' The suggestion to remove the reference to 
final products consumed or removed from the subzone has not been 
adopted since the statute provides an attribution formula to be used at 
specific subzones. The word ``for'' is shorter than ``within'' and 
there is no change in substance.
    Comment: One commenter proposed addition of a definition of 
``Petroleum'' to read as follows:
    Petroleum means a feedstock listed on the top line of the tables 
set forth in T.D. 66-16 and includes any hydrocarbon feedstock produced 
from natural gas liquids or comprised of natural gas liquids.
    Customs Response: Customs disagrees that such a definition is 
necessary and, therefore, has not included this definition in the final 
rule.
    Comment: Two commenters recommended that the phrase ``listed on the 
top line of the tables set forth in T.D. 66-16'' be replaced with ``as 
defined herein into final products as defined herein''. One commenter 
suggested that the following phrase be added at the end of proposed 
Sec. 146.92(f):
    * * * and includes any facility that processes a hydrocarbon 
feedstock utilizing one or more of the units in the definition of a 
refinery operating unit.
    Two other commenters advocated re-naming this definition 
``Petroleum refinery or production facility'' and then adding the 
following:
    Production facility means a facility that primarily converts 
hydrocarbon feedstocks, light olefins, aromatics and their derivatives 
into primarily light olefin products such as ethylene or propylene or 
other products such as toluene, benzene, or derivatives of olefins and 
aromatic products such as cyclohexane, acrylates, alcohols, 
caprolactam, or other petrochemical products.
    Customs Response: As previously stated, there is no authority to 
extend the application of 19 U.S.C. 81c(d) beyond a crude petroleum 
refinery.
    Comment: Two commenters proposed deletion of ``market'' and ``each 
month'' from the definition in proposed Sec. 146.92(g).
    Customs Response: Customs disagrees with this suggestion. A refiner 
has the option to use the market value of each product or a published 
standard value such as Platts.
    Comment: Two commenters suggested addition of the phrase ``is an 
inventory control'' before the word ``method'' in proposed 
Sec. 146.92(h) and replacement of the phrase ``set forth in T.D. 66-
16'' with ``as verified and adopted by the Secretary of the Treasury''.
    Customs Response: The suggested changes have not been adopted. 
Producibility is not an inventory control because it does not reflect 
actual feedstocks in inventory at any given time. It is a statutory 
method to account for import duties owed on privileged foreign 
feedstocks. The Industry Standards of Potential Production are set 
forth in T.D. 66-16 and, even if that Treasury Decision is modified in 
the future, the reference will always be to ``T.D. 66-16 as modified by 
T.D.----''.
    Comment: Four commenters suggested replacement of the definition in 
proposed Sec. 146.92(i) with the following language:
    Relative value means a factor assigned to each final product 
attributed to the separation from a privileged foreign feedstock equal 
to the ratio of its ``price of product'' to the average ``price of 
product'' for all final products at the time of separation.
    Customs Response: Customs disagrees with this suggestion because 
``relative value'' is a dollar value assigned to products and not a 
factor. Therefore, the definition remains as proposed.
    Comment: Two commenters suggested addition of ``or production 
operating unit'' to the title of Sec. 146.92 and insertion of the 
following language in the definition:
    Production operating unit means a unit in a production facility in 
which feedstock is processed such as a thermal cracking furnace or 
distillation tower.
    Four commenters suggested deletion of proposed Sec. 146.92(j) 
(definition of ``Refinery operating unit'') in its entirety. 
Alternatively, one commenter suggested the definition should read as 
``a facility within a refinery wherein feedstocks lose their unique 
physical identity or may undergo changes in physical characteristics''. 
Another commenter agreed with the proposed definition but also 
suggested adding the words, ``including, but not limited to, API 
gravity, distillation traits, chemical characteristics, etc.'' Yet 
another commenter proposed deletion of any reference to ``operating 
unit'' in this section and in proposed Secs. 146.93(a) (1) and (4), 
146.93(b), 146.94(a), and 146.96(a)(1).
    Customs Response: Customs agrees with the position asserted by the 
commenters that the manufacture and manipulation of feedstocks begins 
on admission to a refinery subzone because a refiner deliberately mixes 
various feedstocks on admission to achieve optimum characteristics for 
processing. For that reason, proposed Sec. 146.92(j) is unnecessary and 
has been deleted. Based on the assertion by refiners that the mixing 
occurs on admission, the admission of feedstock in nonprivileged status 
will be binding and a post-admission request for privileged status will 
be denied unless the refiner establishes that the feedstock was not 
manipulated or manufactured to effect a change in tariff 
classification. A new Sec. 146.93(e) has been added to reflect this 
position.
    Comment: Two commenters suggested revising proposed Sec. 146.92(k) 
to read as follows:
    Time of separation in the case of privileged foreign feedstock 
means the manufacturing period in which such feedstock is deemed to 
have been separated into two or more final feedstocks.
    Customs Response: Customs disagrees with this suggestion since it 
merely adds words without changing the substance of the definition.
    Comment: Three commenters proposed inclusion of the following 
language in proposed Sec. 146.93(a) immediately following 
``Attribution'' and before ``(1) Producibility'':
    (a) Attribution. All final products removed from or consumed within 
a petroleum refinery zone must be attributed to feedstock processed 
within said petroleum refinery zone in the current or prior 
manufacturing period. Attribution must be based on records maintained 
by the operator. Attribution may be made by applying one of the 
authorized inventory control methods set forth in this section. Records 
may be maintained on a weight or volume basis.
    Two commenters suggested that the phrase ``have been introduced 
into a refinery operating unit'' in proposed Sec. 146.93(a)(1) be 
replaced with ``are eligible for attribution, as set forth in paragraph 
(b), of this section * * *''. Another commenter proposed replacement of 
the same phrase with ``are eligible for attribution, as set forth in 
paragraph (a)(4) of this section * * *''. A third commenter recommended 
replacement of the same phrase with the words ``are eligible for 
attribution * * *''.
    Two other commenters suggested the inclusion of the phrase ``or 
production operating unit'' after ``refinery operating unit''.
    Customs Response: Because Customs accepts the assertions of 
refiners that [[Page 20630]] they begin to manipulate all feedstocks on 
admission to achieve an optimum set of characteristics for processing, 
Customs has modified Sec. 146.93(a)(1) accordingly.
    Comment: Two commenters recommended that ``[i]n addition, an 
operator may use such other inventory control method(s) as approved by 
the Secretary of the Treasury that protects the revenue'' be added at 
the end of proposed Sec. 146.93(a)(3).
    Customs Response: Customs disagrees. The provision for additional 
methods is covered by Sec. 146.96.
    Comment: Two commenters suggested re-designating proposed 
Sec. 146.93(a)(4) as (b). The commenters propose the section should 
read as follows:
    (b) Feedstock eligible for attribution. Feedstock admitted into the 
refinery zone or subzone is eligible for attribution to any final 
product in accordance with the operator's inventory control method.
    One commenter suggested the entire proposed section be deleted and 
replaced with:
    (4) Feedstock eligible for attribution. Feedstock admitted into the 
refinery zone or subzone is eligible for attribution to the extent that 
such feedstock is not remaining in tank inventory at the end of the 
manufacturing period as determined in accordance with the operator's 
zone procedure. For a given manufacturing period, the quantity of 
feedstock eligible for attribution may be computed as beginning 
inventory, plus receipts less shipments of feedstock out of the zone, 
minus ending inventory.
    Customs Response: Customs has incorporated some of the suggested 
language and, therefore, Sec. 146.93(a)(4) (redesignated as 
Sec. 146.93(b)) has been reworded.
    Comment: Four commenters suggested redesignating proposed 
Sec. 146.93(b) as (c) and replacing the phrase ``introduced into a 
refinery operating unit'' with ``eligible for attribution under 
Sec. 146.93(b) * * *''.
    Customs Response: Customs agrees and has so modified the wording of 
this section (redesignated as Sec. 146.93(d)).
    Comment: Four commenters suggested redesignating proposed 
Sec. 146.93(c) as (d), and deletion of the sentence ``(a)d valorem * * 
* relative value calculation'' because duties are not relevant to the 
relative value calculation.
    Customs Response: Customs disagrees and this language has been 
retained.
    Comment: One commenter recommended deletion of proposed 
Sec. 146.94(a) in its entirety. Another commenter suggested that a 
refiner should only be required to maintain appropriate inventory 
records to substantiate feedstocks processed and remaining in ending 
inventory. Two other commenters suggested that the section should read 
as follows:
    (a) Feedstock processed. The operator must maintain appropriate 
inventory records during the manufacturing period to substantiate the 
feedstock eligible for attribution under Sec. 146.93(a)(4) and in 
accordance with the operator's selected inventory control method.
    Another variation was offered by a commenter who suggested the 
section should read as follows:
    (a) Feedstock processed. The operator shall maintain appropriate 
inventory records to establish the quantity of feedstock eligible for 
attribution under Sec. 146.93(a)(4) during each manufacturing period.
    Customs Response: Customs disagrees that this subsection should be 
deleted in its entirety. However, Customs does agree with the suggested 
changes and Sec. 146.94(a) has been reworded to reflect the refiners' 
assertion that feedstocks are manipulated or manufactured on admission.
    Comment: Two commenters proposed replacement of the language in 
proposed Sec. 146.94(b) with the following:
    The operator shall maintain records to establish the quantity of 
products consumed in or removed from the zone or subzone during the 
entry period.
    Another commenter suggested replacing this proposed section with:
    (b) Final product removed, consumed, lost or destroyed. The 
operator shall maintain appropriate inventory records to establish the 
quantity of final products removed from, consumed in, lost, or 
destroyed in the subzone during the manufacturing period.
    Customs Response: Customs disagrees with the suggested changes for 
the reasons noted in the Customs Response with respect to 
Sec. 146.92(d).
    Comment: Three commenters suggested deletion of any references to 
``week'' in proposed Sec. 146.94(c) and insertion of ``approved entry 
period'' instead.
    Customs Response: As was explained in the March 4, 1994, Federal 
Register notice, while a manufacturing or accounting period may be 
greater than a week, there is no authority to permit a consumption 
entry covering products removed from a zone to exceed one week. Thus, 
the language of Sec. 146.94(c) remains in substance as originally 
proposed.
    Comment: Two commenters suggested deletion of the phrase ``* * * is 
dutiable if entered for consumption unless otherwise exempt from duty'' 
in proposed Sec. 146.94(d) and that it be replaced with ``shall be 
treated as foreign merchandise when entered for consumption''.
    Customs Response: The relevancy of this suggested change is not 
understood and, therefore, the suggestion has not been adopted. All 
merchandise, except for domestic status merchandise, when entered for 
consumption is foreign merchandise.
    Comment: One commenter suggested that the title to proposed 
Sec. 146.94(e) should read ``Attributing gain or loss; acceptable 
methods'' instead of the proposed title. Another commenter remarked 
that the regulations should specify that determination of gain or loss 
may be done either at time of separation (production) or at time of 
removal from or consumption in the zone.
    Customs Response: Neither of these suggested changes have been 
adopted since they merely add words without changing the substance.
    Comment: One commenter suggested that the word ``account'' in 
proposed Sec. 146.94(e)(1) be replaced with ``attribute''.
    Customs Response: Customs disagrees. Attribution refers to matching 
actual measured amounts of privileged foreign feedstock consumed in, or 
removed from, the subzone refinery in the form of final products 
against the limits imposed by T.D. 66-16 or other approved method.
    Comment: One commenter proposed insertion of the phrase ``or loss'' 
after ``volume gain'' in proposed Sec. 146.94(e)(2) and insertion of 
the following at the end of the section:
    The operator may determine the feedstock factor using values 
associated with the total removals from and consumption in the zone or 
subzone for the period in lieu of using such values for production 
during the period.
    Customs Response: Customs agrees with respect to the first 
suggestion. Regarding the second suggestion, it is not clear which 
``period'' the commenter is referring to. Customs has agreed with prior 
comments that the manufacturing period will be up to a calendar month. 
Therefore, this change was not adopted.
    Comment: One commenter suggested insertion of the following 
language at the end of proposed Sec. 146.94(e)(3):
    * * * at either:
    (A) The time of separation, or
    (B) The time of removal from or consumption in the zone or subzone.
    Customs Response: Customs disagrees. As noted above, prior 
commentors had requested that the [[Page 20631]] manufacturing period 
not exceed a calendar month and Customs revised the regulations 
accordingly.
    Comment: A commenter suggested that deviations from T.D. 66-16 be 
provided for.
    Customs Response: Customs agrees and has amended Sec. 146.95(a)(3) 
to permit deviations from T.D. 66-16 with approval from Customs. It 
requires that any such deviation not be inconsistent with any related 
claim for drawback under 19 U.S.C. 1313.
    Comment: Two commenters advocated incorporation of the entire 
proposed Sec. 146.95 into proposed Sec. 146.96.
    Customs Response: Customs agrees. Therefore, proposed Sec. 146.96 
is now redesignated as Sec. 146.95.
    Comment: Three commenters suggested that any references to ``listed 
in'' in proposed Sec. 146.95(b) should be replaced with ``provided 
for''.
    Customs Response: Customs agrees with this suggestion and has so 
changed Sec. 146.95(b) (redesignated as Sec. 146.95(a)(2)).
    Comment: One commenter suggested the following: replacement of the 
words ``using the * * * in T.D. 66-16'' in proposed Sec. 146.96(a)(1) 
with the provisions of Sec. 146.95--to be denominated as new 
subparagraphs (2) and (3); replacement of the words ``not listed'' with 
the words ``not provided for''; and replacement of the reference to 
``T.D. 66-16'' with the words ``industry standards of potential 
production on a practical operating basis''.
    One commenter noted that proposed Sec. 146.96(a)(1) should not be 
limited to feedstocks introduced into the refinery operating unit. 
Another commenter suggested replacing the phrase ``introduced into a 
refinery operating unit'' with ``eligible for attribution''.
    A commenter proposed deletion of the sentence ``The operator is * * 
* prior period.'' and the phrase ``* * * using the * * * T.D. 66-16''.
    Customs Response: Customs does not agree that references to T.D. 
66-16 should be deleted from these regulations. Attribution uses the 
industry standards of potential production on a practical operating 
basis as set forth in T.D. 66-16. End products which are admitted into 
the zone and subsequently entered for consumption without any further 
processing are eligible for attribution, and the text has been modified 
to reflect this. The definition of a refinery in Sec. 146.92(f) refers 
to feedstocks and products listed in T.D. 66-16. Thus, to avoid 
confusion the same terminology is used here.
    Comment: Two commenters suggested deletion of proposed 
Sec. 146.96(a)(2) in its entirety. Other commenters suggested moving 
the example in this proposed section to the Appendix.
    Customs Response: Customs disagrees that Sec. 146.96(a)(2) 
(redesignated at Sec. 146.95(b)) should be deleted. However, the 
example has been moved to the appendix.
    Comment: All of the comments received suggested that the appendix 
include some introductory language to the effect that where there is 
any inconsistency between an example and the regulation, the regulation 
prevails.
    Customs Response: Customs agrees and has incorporated this change.
    Comment: Four of the comments received suggested that any 
references to ``actual production records'' and ``recordation'' in 
proposed Sec. 146.96(b) be changed to ``refinery accounting records'' 
and ``accounting principles'', respectively. The suggestion was also 
made that the example be included in the appendix.
    Customs Response: Customs disagrees regarding the rewording of 
Sec. 146.96(b) (redesignated as Sec. 146.95(c)). Accounting records 
could mean records that summarize net activity over a period. Customs 
needs to verify actual amounts admitted into, removed from, or consumed 
in a refinery subzone. Customs also needs to know if any adjustment was 
made to those amounts recorded rather than a period-end summary which 
nets the amount without disclosing the existence of any adjustment. The 
example is more appropriately placed within the section because it 
illustrates the precise principle applied.
    Comment: One commenter proposed including introductory language in 
proposed Sec. 146.97(a) as follows:
    An operator may use the FIFO method of inventory accounting. The 
use of this method is illustrated in the appendix to this subpart.
    Customs Response: Customs disagrees because Sec. 146.93(a)(3) 
already provides that FIFO may be used as an inventory method.
    Comment: Most commenters suggested addition of a new Sec. 146.97(d) 
to provide as follows:
    (d) Appeal to the Commissioner. In the event that the Director, 
Office of Regulatory Audit fails to approve a request under paragraph 
(c) of this section, an operator may file an appeal with the 
Commissioner of Customs for further review. Denial by the Commissioner 
of Customs may be appealed to the Court of International Trade under 28 
U.S.C. 1581(i).
    Customs Response: Customs disagrees with this suggestion. The 
proposal would change the statutory scope of jurisdiction of the Court 
which is beyond this rulemaking.
    Comment: One commenter noted that the proposed regulations do not 
address zone-to-zone transfers and accounting for non-privileged 
foreign goods.
    Customs Response: It is Customs position that these regulations are 
not the appropriate vehicle for addressing the issue of accounting for 
non-privileged status merchandise. Additionally, these regulations do 
not authorize the use of zone-to-zone transfers where the start of a 
manufacturing period in one zone refinery would be carried over to 
another zone refinery. Customs would consider promulgating regulations 
to handle such transfers but only if interested parties submitted 
detailed mathematical examples, with dates, showing how such transfers 
would be recorded by both the first and subsequent refineries, together 
with how the end products that are removed from the last zone would be 
entered for consumption, consumed in the zone, or withdrawn for 
exportation as defined in Secs. 146.92 (e), (g), (i), and (j). Such a 
proposal must discuss the responsibilities of each refiner in the 
transfer chain with respect to recordkeeping and duty liability if 
there was a failure to maintain these records by one or more of the 
transferors.
    Comment: A commenter noted that privileged foreign merchandise 
``liquidations'' are not liquidations within the meaning of 19 U.S.C. 
1500. Customs has the right to correct the classification and 
appraisement until the bulletin notice of liquidation is posted and the 
protest period begins. Prior to such final notice, the importer has the 
right and obligation to change classification when conditions warrant. 
Such change of classification does not affect zone status.
    Customs Response: Customs basically agrees and has made modified 
Sec. 146.65 to clarify this point.

Conclusion

    Based on the above, Customs believes that the proposed regulatory 
amendments should be adopted as a final rule with the following 
changes: Sec. 146.65 is revised to reflect Customs authority under 19 
U.S.C. 1500 to fix the final classification of merchandise classified 
as privileged merchandise; Sec. 146.91 is revised to eliminate 
unnecessary references to eligible feedstock (the second sentence) and 
to include a new third sentence to clarify that these regulations do 
not address [[Page 20632]] zone-to-zone transfers; in Sec. 146.92, one 
definition is deleted (Sec. 146.92(j)) and one definition is added 
(Sec. 146.92(k)); Sec. 146.93 is expanded to include privileged status 
after admission (paragraph (e)) and new paragraph (b) is added to 
clarify feedstock eligible for attribution; in Sec. 146.94, paragraph 
(a) is revised to clarify recordkeeping requirements applicable to 
feedstocks admitted into the subzone; and in Sec. 146.95, language is 
added to subparagraphs (a)(3) (i) and (ii) regarding attribution to 
product or feedstock not listed in T.D. 66-16, and to subparagraphs (b) 
regarding Customs use of refinery operating records. Other changes to 
the proposed regulations involve the renumbering of two provisions 
caused by the incorporation of proposed Sec. 146.95 into the text of 
proposed Sec. 146.96, which is redesignated as Sec. 146.95; a 
corresponding renumbering changes occur in proposed Sec. 146.97, which 
is now redesignated as Sec. 146.96. Also, the example contained in 
proposed Sec. 146.96(a)(2) is moved to the appendix, which contains 
expanded examples.

The Regulatory Flexibility Act and Executive Order 12866

    Based on the supplementary information set forth above, pursuant to 
the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., 
it is certified that the regulations will not have a significant 
economic impact on a substantial number of small entities. Accordingly, 
the regulations are not subject to the regulatory analysis or other 
requirements of 5 U.S.C. 603 and 604. This document does not meet the 
criteria for a ``significant regulatory action'' as specified in E.O. 
12866.

Paperwork Reduction Act

    The collection of information requirements contained in these final 
regulations have been reviewed and approved by the Office of Management 
and Budget (OMB) in accordance with Paperwork Reduction Act of 1980 (44 
U.S.C. 3507) under control number 1515-0189. The estimated average 
annual burden associated with this collection is 18,824 hours, or 2,353 
hours per respondent or recordkeeper. Comments concerning the accuracy 
of this burden estimate and suggestions for reducing this burden should 
be directed to the U.S. Customs Service, Paperwork Management Branch, 
Room 6316, 1301 Constitution Avenue, NW., Washington, DC 20229, or the 
Office of Management and Budget, Attention: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503.

Drafting Information

    The principal author of this document was Russell Berger, 
Regulations Branch, U.S. Customs Service. However, personnel from other 
offices participated in its development.

List of Subjects in 19 CFR Part 146

    Customs duties and inspection, Entry, Exports, Foreign-trade zones, 
Imports, Penalties, Petroleum, Reporting and recordkeeping 
requirements.

Amendments to the Regulations

    For the reasons stated above, the proposed amendments to part 146 
of the Customs Regulations (19 CFR part 146), which were published at 
59 FR 10342 on March 1, 1994, are adopted as a final rule as set forth 
below.

PART 146--FOREIGN-TRADE ZONES

    1. The general authority citation for part 146 is revised to read 
as follows:

    Authority: 19 U.S.C. 66, 81a-81u, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States (HTSUS)), 1623, 
1624.
* * * * *
    2. In Sec. 146.65, paragraph (a)(1) is amended by adding a sentence 
at the end to read as follows:


Sec. 146.65  Classification, valuation, and liquidation.

    (a) Classification.--(1) * * * Notwithstanding the grant of 
privileged status, Customs may correct any misclassification of any 
such entered merchandise when it posts the bulletin notice of 
liquidation under Sec. 159.9 of this chapter.
* * * * *
    3. Part 146 is amended by adding a new subpart H and appendix to 
read as follows:
Subpart H--Petroleum Refineries in Foreign-Trade Subzones
Sec.
146.91  Applicability.
146.92  Definitions.
146.93  Inventory control and recordkeeping system.
146.94  Records concerning establishment of manufacturing period.
146.95  Methods of attribution.
146.96  Approval of other recordkeeping systems.

Appendix to Part 146--Guidelines for Determining Producibility and 
Relative Values for Oil Refinery Zones

Subpart H--Petroleum Refineries in Foreign-Trade Subzones


Sec. 146.91  Applicability.

    This subpart applies only to a petroleum refinery (as defined 
herein) engaged in refining petroleum in a foreign-trade zone or 
subzone. Further, the provisions relating to zones generally, which are 
set forth elsewhere in this part, including documentation and document 
retention requirements, and entry procedures, such as weekly entry, 
shall apply as well to a refinery subzone, insofar as applicable to and 
not inconsistent with the specific provisions of this subpart. It does 
not cover zone-to-zone transfers in which the fact of removal from one 
zone is ignored.


Sec. 146.92  Definitions.

    (a) Attribution. ``Attribution'' means the association of a final 
product with its source material.
    (b) Feedstocks. ``Feedstocks'' means crude petroleum or 
intermediate product that is used in a petroleum refinery to make a 
final product.
    (c) Feedstock factor. ``Feedstock factor'' means the relative value 
of final products utilizing T.D. 66-16 (see Sec. 146.92(h)), and which 
takes into account any volumetric loss or gain.
    (d) Final product. ``Final product'' means any petroleum product 
that is produced in a refinery subzone and thereafter removed therefrom 
or consumed within the zone.
    (e) Manufacturing period. ``Manufacturing period'' means a period 
selected by the refiner which must be no more than a calendar month 
basis, for which attribution to a source feedstock must be made for 
every final product made, consumed in, or removed from the refinery 
subzone.
    (f) Petroleum refinery. ``Petroleum refinery'' means a facility 
that refines a feedstock listed on the top line of the tables set forth 
in T.D. 66-16 into a product listed in the left column of the tables 
set forth in T.D. 66-16.
    (g) Price of product. ``Price of product'' means the average per 
unit market value of each final product for a given manufacturing 
period or the published standard product value if updated each month.
    (h) Producibility. ``Producibility'' is a method of attributing 
products to feedstocks for petroleum manufacturing in accordance with 
the Industry Standards of Potential Production set forth in T.D. 66-16.
    (i) Relative value. ``Relative value'' means a value assigned to 
each final product attributed to the separation from a privileged 
foreign feedstock based on the ratio of the final product's value 
compared to the privileged foreign feedstock's duty.
    (j) Time of Separation. ``Time of separation'' means the 
manufacturing period in which a privileged foreign status feedstock is 
deemed to have been [[Page 20633]] separated into two or more final 
products.
    (k) Weighted Average. ``Weighted average'' means the relative value 
of merchandise, which is determined by dividing the total value of 
shipments in a given period by the total quantity shipped in the same 
given period. See example in section VI of the appendix to this part.


Sec. 146.93  Inventory control and recordkeeping system.

    (a) Attribution. All final products removed from or consumed within 
a petroleum refinery subzone must be attributed to feedstock admitted 
into said petroleum refinery subzone in the current or prior 
manufacturing period. Attribution must be based on records maintained 
by the operator. Attribution may be made by applying one of the 
authorized methods set forth in this section. Records must be 
maintained on a weight or volume basis.
    (1) Producibility. The producibility method of attribution requires 
that records be kept to attribute final products to feedstocks which 
are eligible for attribution as set forth in this section during the 
current or prior manufacturing period.
    (2) Actual production records. An operator may use its actual 
production records as provided for under Sec. 146.95(b) of this 
subpart.
    (3) Other inventory method. An operator may use the FIFO (first-in, 
first-out) method of accounting (see Sec. 191.22(c) of this chapter). 
The use of this method is illustrated in the appendix to this part.
    (b) Feedstock eligible for attribution. Only a feedstock that has 
been admitted into the refinery subzone is eligible for attribution. 
For a given manufacturing period, the quantity of feedstock eligible 
for attribution may be computed as beginning inventory, plus receipts 
less shipments of feedstock out of the subzone, and less ending 
inventory.
    (c) Consumption or removal of final product. Each final product 
that is consumed in or removed from a refinery subzone must be 
attributed to a feedstock eligible for attribution during the current 
or a prior manufacturing period. Each final product attributed as being 
produced from the separation of a privileged foreign status feedstock 
must be assigned the proper relative value as set forth in paragraph 
(d) of this section.
    (d) Relative value. A relative value calculation is required when 
two or more final products are produced as the result of the separation 
of privileged foreign status feedstock. Ad valorem and compound rates 
of duty must be converted to specific rates of duty in order to make a 
relative value calculation.
    (e) Privileged status after admission. Nonprivileged status 
feedstock is eligible for privileged status only if the request shows 
to the satisfaction of the Customs Service that there was no 
manipulation or manufacture of the feedstock to change its tariff 
classification before the request is granted. The absence of such 
manipulation or manufacture can be shown by demonstrating that the 
feedstock was placed in an empty tank, in a tank that contained only 
feedstock with the same nominal specifications or providing a sample 
which shows there was no change in tariff status. The existence of 
negligible amounts of other feedstocks may be disregarded only in 
accordance with Sec. 146.95(b). A request for after-admission 
privileged foreign status shall be denied unless the feedstock's tank 
records from admission to the time that the request is made accompany 
the request. A refiner who makes such a request shall not put any other 
feedstock having different nominal specifications into the tank until 
the request for privileged status is granted. The Customs Service will 
deny or revoke a post-admission request if a refiner fails to retain 
the integrity of the feedstock in the tank.
    (f) Consistent use required. The operator must use the selected 
method, measurement (weight or volume), and the price of product 
consistently (see Sec. 146.92(g) of this subpart and paragraph (a) of 
this section).


Sec. 146.94  Records concerning establishment of manufacturing period.

    (a) Feedstock admitted into the refinery subzone. The operator must 
maintain appropriate inventory records during the manufacturing period 
to substantiate the feedstock(s) eligible for attribution under 
Sec. 146.93(b) and in accordance with the operator's selected 
attribution method.
    (b) Final product consumed in or removed from subzone. The operator 
must record the date and amount of each final product consumed in, or 
removed from the subzone.
    (c) Consumption or removal. The consumption or removal of a final 
product during a week may be considered to have occurred on the last 
day of that week for purposes of attribution and relative value 
calculation instead of the actual day on which the removal or 
consumption occurred, unless the refiner elects to attribute using the 
FIFO method (see section II of the appendix to this part).
    (d) Gain or loss. A gain or loss that occurs during a manufacturing 
period must be taken into account in determining the attribution of a 
final product to a feedstock and the relative value calculation of 
privileged foreign feedstocks. Any gain in a final product attributed 
to a non-privileged foreign status feedstock is dutiable if entered for 
consumption unless otherwise exempt from duty.
    (e) Determining gain or loss; acceptable methods.--(1) Converting 
volume to weight. Volume measurements may be converted to weight 
measurements using American Petroleum Institute conversion factors to 
account for gain or loss.
    (2) Calculating feedstock factor to account for volume gain or 
loss. A feedstock factor may be calculated by dividing the value per 
barrel of production per product category by the quotient of the total 
value of production divided by all feedstock consumed. This factor 
would be applied to a finished product that has been attributed to a 
feedstock to account for volume gain.
    (3) Calculating volume difference. Volume difference may be 
determined by comparing the amount of feedstocks introduced for a given 
period with the amount of final products produced during the period, 
and then assigning the volume change to each final product 
proportionately.


Sec. 146.95  Methods of attribution.

    (a) Producibility.--(1) General. A subzone operator must attribute 
the source of each final product. The operator is limited in this 
regard to feedstocks which were eligible for attribution during the 
current or prior manufacturing period. Attribution of final products is 
allowable to the extent that the quantity of such products could have 
been produced from such feedstocks, using the industry standards of 
potential production on a practical operating basis, as published in 
T.D. 66-16. Once attribution is made for a particular product, that 
attribution is binding. Subsequent attributions of feedstock to product 
must take prior attributions into account. Each refiner shall keep 
records showing each attribution.
    (2) Industry standards of potential production. The industry 
standards of potential production on a practical operating basis 
necessary for the producibility attribution method are contained in 
tables published in T.D. 66-16. With these tables, a subzone operator 
may attribute final products consumed in, or removed from, the subzone 
to feedstocks during the current or a prior manufacturing period.
    (3) Attribution to product or feedstock not listed in T.D. 66-16. 
(i) For purposes [[Page 20634]] of attribution, where a final product 
or a feedstock is not listed in T.D. 66-16, the operator must submit a 
proposed attribution schedule, supported by a technical memorandum, to 
the appropriate district director. The district director shall refer 
the request to the Director, Office of Regulatory Audit (``ORA''), who 
will verify the refiner's records and will coordinate with the 
Director, Office of Laboratories and Scientific Services (``OLSS''). 
The Director, ORA, shall either approve or deny the request. If the 
request is approved, the Director, ORA, shall publish a modification of 
T.D. 66-16. If an operator elects to show attribution on a 
producibility basis, but fails to keep records on that basis, the 
operator shall use its actual operating records to determine 
attribution and any necessary relative value calculation upon the 
Customs Service demand and subject to verification.
    (ii) An operator may attribute a final product to a feedstock in 
excess of the amount allowed under T.D. 66-16, when authorized by 
Customs, without losing the ability to attribute under T.D. 66-16 for 
all other feedstock-final product combinations. The operator must use 
its actual production records for the requested feedstock-final product 
combination. The operator must agree in writing that it will not, and 
it will not enable any other person, to file a drawback claim under 19 
U.S.C. 1313 inconsistent with those actual production records for that 
feedstock-final product combination. The operator shall file its 
request in accordance with paragraph (a)(3) of this section. The 
Director, ORA, and the Director, OLSS, must determine whether T.D. 66-
16 needs to be modified and shall publish in the Customs Bulletin each 
approval granted under this paragraph and request public comments with 
each such approval.
    (4) Attribution to privileged foreign feedstock; relative value. If 
a final product is attributed to the separation of a privileged foreign 
feedstock a relative value must be assigned (see section IV of the 
appendix to this part).
    (b) Refinery operating records. An operator may use the actual 
refinery operating records to attribute the feedstocks used to the 
removed or consumed products. Customs shall accept the operator's 
operating conventions to the extent that the operator demonstrates that 
it actually uses these conventions in its refinery operations. Whatever 
conventions are elected by the operator, they must be used consistently 
in order to be acceptable to Customs. Additionally, Customs may use 
these records to test the validity of admissions into the subzone, 
consumption within and removals from the subzone.

    Example. If the operator mixes three equal quantities of 
material in a day tank and treats that product as a three-part 
mixture in its production unit, Customs will accept the resulting 
product as composed of the three materials. If, in the alternative, 
the operator assumes that the three products do not mix and treats 
the first product as being composed of the first material put into 
the day tank, the second product as composed of the second material 
put into the day tank, and the third product as being composed of 
the third material put into the day tank, Customs will accept that 
convention also.


Sec. 146.96  Approval of other recordkeeping systems.

    (a) Approval procedure. An operator must seek prior approval of 
another recordkeeping procedure by submitting the following to the 
Director, Office of Regulatory Audit:
    (1) An explanation of the method describing how attribution will be 
made when a finished product is removed from or consumed in the 
subzone, and how and when the feedstocks will be decremented;
    (2) A mathematical example covering at least two months which shows 
the amounts attributed, all necessary relative value calculations, the 
dates of consumption and removal, and the amounts and dates that the 
transactions are reported to Customs.
    (b) Failure to comply. Requests received that fail to comply with 
paragraph (a) of this section will be returned to the requester with 
the defects noted by the Director, Office of Regulatory Audit.
    (c) Determination by Director. When the Director, Office of 
Regulatory Audit, determines that the recordkeeping procedures provide 
an acceptable basis for verifying the admissions and removals from or 
consumption in a refinery subzone, the Director will issue a written 
approval to the applicant.

Appendix to Part 146--Guidelines for Determining Producibility and 
Relative Values for Oil Refinery Zones

    Where an example is set out in this appendix, the example is for 
purposes of illustrating the application of a provision, and where 
there is any inconsistency between the example and the provision, 
the provision prevails to the extent of the inconsistency. 
Alternative formats are also acceptable so long as they are 
consistent with the provisions of this part.

I. Attribution Using Producibility Showing Manufacturing Periods From 
Admission to Removal Within a Calender Month.

    Volume losses and gains accounted for by weight.

Day 1

    Receipt into the refinery subzone during a 30-day month:

50,000 pounds privileged foreign (PF) class II crude oil.
50,000 pounds PF class III crude oil.
50,000 pounds domestic status class III crude oil.

Day 10

    Removal from the refinery subzone for exportation of 50,000 
pounds of aviation gasoline.
    The period of manufacture for the aviation gasoline is Day 1 to 
Day 10. The refiner must first attribute the designated source of 
the aviation gasoline.
    In order to maximize the duty benefit conferred by the zone 
operation, the refiner chooses to attribute the exported aviation 
gasoline to the privileged foreign status crude oil. Under the 
tables for potential production (T.V. 66-16), class II crude has a 
30% potential, and class III has a 40% potential. The maximum 
aviation gasoline producible from the class II crude oil is 15,000 
pounds (50,000  x  .30). The maximum aviation gasoline producible 
from the privileged foreign status class III crude oil is 20,000 
pounds (50,000  x  .40). The domestic class III crude would also 
make 20,000 pounds of aviation gasoline.
    The refiner could attribute 15,000 pounds of the privileged 
foreign class II crude oil, 20,000 pounds of the privileged foreign 
class III crude oil, and 15,000 pounds of the domestic class III 
crude oil as the source of the 50,000 pounds of the aviation 
gasoline that was exported; 35,000 pounds of class II crude oil 
would be available for further production for other than aviation 
gasoline, 30,000 pounds of privileged foreign class III crude oil 
would be available for further production for other than aviation 
gasoline, and 35,000 pounds of domestic status class III crude oil 
would be available for further production, of which up to 5,000 
pounds could be attributed to aviation gasoline.

Day 21

    Receipt in the refinery subzone:

50,000 pounds PF status class I crude oil.
50,000 pounds PF status class IV crude oil.

Day 30

    Removal from the refinery subzone:
30,000 pounds of motor gasoline for consumption.
10,000 pounds of jet fuel sold to the US Air Force for use in 
military aircraft.
10,000 pounds of aviation gasoline sold to a U.S. commuter airline 
for domestic flights.
10,000 pounds of kerosene for exportation.

    To the extent that the crude oils that entered production on Day 
1 are attributed as the designated sources for the products removed 
on Day 30, the period of manufacture is Day 1 to Day 30. If the 
refiner chooses to attribute the crude oils that were admitted on 
Day 21 as the designated sources of the products removed on Day 30 
using the production standards published in T.D. 66-16, the 
manufacturing period is Day 21 to Day 30. This choice will be 
important if a relative value calculation on the privileged foreign 
status crude oil is required, because [[Page 20635]] the law 
requires the value used for computing the relative value to be the 
average per unit value of each product for the manufacturing period. 
Relative value must be calculated if a source feedstock is separated 
into two or more products that are removed from the subzone 
refinery. If the average per unit value for each product differs 
between the manufacturing period from Day 1 to Day 30 and the 
manufacturing period from Day 21 to Day 30, the correct period must 
be used in the calculation.
    In order to minimize duty liability, the refiner would try to 
attribute the production of the exported kerosene and the sale of 
the jet fuel to the US Air Force to the privileged foreign crude 
oils. For the same reason, the refiner would try to attribute the 
removed motor gasoline and the aviation gasoline for the commuter 
airline to the domestic crude oil.
    Accordingly, the refiner chooses to attribute up to 5,000 pounds 
of the domestic status class III crude as the source of the 10,000 
pounds of aviation gasoline removed from the subzone refinery for 
the commuter airline. Since no other aviation gasoline could have 
been produced from the crude oils that were admitted into the 
refinery subzone Day 1, the refiner must attribute the remainder to 
the crude oils that entered production on Day 21. Again, using the 
production standards from T.D. 66-16, the class I crude could 
produce aviation gasoline in an amount up to 10,000 pounds (50,000 
x  .20). Likewise, the class IV crude oil could produce aviation 
gasoline in an amount up to 8,500 pounds (50,000  x  .17).
    The refiner selects use of the class I crude as the source of 
the aviation gasoline. The refiner could attribute up to 27,300 
pounds (35,000-5,000  x  .91) of the domestic class III crude oil as 
the source of the motor gasoline. This would leave 2,700 pounds of 
domestic class III crude available for further production for other 
than aviation gasoline or motor gasoline. The remaining motor 
gasoline removed (also 2,700 pounds) must be attributed to a 
privileged foreign crude oil. The refiner selects the privileged 
foreign class II crude oil that entered production on Day 1 as the 
source for the remaining 2,700 pounds of motor gasoline.
    This would leave 32,300 pounds of privileged foreign class II 
crude oil available for further production, of which no more than 
27,400 pounds could be designated as the source of motor gasoline. 
The refiner attributes the jet fuel that is removed from the 
refinery subzone for the US Air Force for use in military aircraft 
to the privileged foreign class II crude oil. The refiner could 
attribute up to 20,995 pounds of jet fuel from that class II crude 
oil (32,300  x  .65). Designating that class II crude oil as the 
source of the 10,000 pounds of jet fuel leaves 22,300 pounds of 
privileged foreign class II crude oil available for further 
production, of which up to 10,995 pounds could be attributed as the 
source of the jet fuel. Because the motor gasoline and the jet fuel, 
under the foregoing attribution, would be considered to have been 
separated from the privileged foreign class II crude oil, a relative 
value calculation would be required.
    The jet fuel is eligible for removal from the subzone free of 
duty by virtue of 19 U.S.C. 1309(a)(1)(A). The refiner could 
attribute the privileged foreign class II crude oil as being the 
source of the 10,000 pounds of jet fuel (22,300  x  .65). The 
refiner chooses to attribute the privileged foreign class III crude 
oil as the source of the jet fuel. The refiner could attribute to 
that class III crude oil up to 15,000 pounds of kerosene (30,000  x  
.50).

II. Attribution on a FIFO Basis

(Accounting for volume losses or gains by the weight method)

Day 1-5

    Transfer, into the Refinery Subzone, from one or more storage 
tanks into process 150 barrels of Privileged Foreign (PF) Class II 
crude oil, equivalent to 50,000 pounds.

Day 6

    Removal from the refinery subzone 119 barrels of residual oils 
to customs territory, equivalent to 40,000 pounds.
    Since the operator uses the FIFO method of attribution, as the 
product is removed from the subzone, or consumed or lost within the 
subzone, attribution must be to the oldest feedstock available for 
attribution. Accordingly, the 40,000 pounds of residual oils will be 
attributed to 40,000 pounds of the PF Class II crude oil from Day 1-
5.

Day 10

    Transfer, into the refinery subzone, from one or more storage 
tanks 4 barrels of domestic motor gasoline blend stock, equivalent 
to 1,000 pounds to motor gasoline blending tank.

Day 6-15

    Transfer, into the refinery subzone, from one or more storage 
tanks into process 320 barrels of Domestic Class III crude oil, 
equivalent to 100,000 pounds.

Day 16

    Removal from the refinery subzone 14 barrels of asphalt to 
customs territory, equivalent to 5,000 pounds.
    The 5,000 pounds of asphalt will be attributed to 5,000 pounds 
of PF Class II crude oil from Day 1-5.

Day 17

    Removal from the refinery subzone, 324 barrels of motor gasoline 
to customs territory, equivalent to 81,000 pounds.
    The 81,000 pounds of motor gasoline will be attributed to 1,000 
pounds of domestic motor gasoline blend stock from Day 10, to the 
remaining 5,000 pounds of PF Class II crude oil from Day 1-5 and 
75,000 pounds of domestic Class III crude oil from Day 6-15.

Day 16-20

    Transfer, into the refinery subzone, from one or more storage 
tanks into process 169 barrels of Privileged Foreign (PF) Class III 
crude oil, equivalent to 50,000 pounds.

Day 22

    Removal from the refinery subzone, 214 barrels of jet fuel for 
exportation, equivalent to 60,000 pounds.
    The 60,000 pounds of jet fuel will be attributed to the 
remaining 25,000 pounds of domestic Class III crude oil from Day 6-
15 and 35,000 pounds of PF Class III crude oil from Day 16-20.

Day 21-25

    Transfer, into the refinery subzone from one or more storage 
tanks into process, 143 barrels of domestic Class I crude oil, 
equivalent to 50,000 pounds.

Day 30 (End of the Manufacturing Period)

    It is determined that during the manufacturing period just 
ended, that 34 barrels of fuel, equivalent to 10,000 pounds was 
consumed, and 5 barrels of oil, equivalent to 1,500 pounds was lost 
in the refining production process within the refinery subzone.
    The 10,000 pounds of fuel consumed will be attributed 10,000 
pounds of PF Class III crude oil from Day 16-20. The 1,500 pounds of 
oil lost in the refining production process will be attributed to 
1,500 pounds of PF Class III crude oil from Day 16-20. The remaining 
3,500 pounds of PF Class III crude oil from Day 16-20 will be the 
first to be attributed during the next manufacturing period.

III. Relative Value Calculation

    Because privileged foreign feedstocks transferred into process 
during Day 1-5 and Day 16-20 have two or more products attributed to 
them, each feedstock will require a relative value calculation.
    Relative value calculation for UIN Day 1-5, 50,000 pounds, 
equivalent to 150 barrels.

----------------------------------------------------------------------------------------------------------------
                                                               DProduct                                         
                          ALbs        B BBLS       C$/BBL       value     ER.V.Factor    FR.V.BBL   GDutiableBBL
----------------------------------------------------------------------------------------------------------------
Residual oil........       40,000          119        15.00        1,785        .9047          108           108
Asphalt.............        5,000           14        13.00          182        .7840           11            11
Motor gasoline......        5,000           20        26.00          520       1.5682           31            31
                     -------------------------------------------------------------------------------------------
      Totals........       50,000          153  ...........        2,487  ...........          150          150 
----------------------------------------------------------------------------------------------------------------
A=Pounds Attributed.                                                                                            
B=Equivalent Barrels.                                                                                           
[[Page 20636]]                                                                                                  
                                                                                                                
C=Price of Product.                                                                                             
D=B x C.                                                                                                        
E=C/(Total of Column D/Attributed Crude BBLS).                                                                  
Residual Oil RV Factor=15.00/(2,487/150)=.9047.                                                                 
F=B x E.                                                                                                        
G=Dutiable Barrels.                                                                                             

    Since all products attributed to the 50,000 pounds (150 BBLS) of 
PF Class II crude entered customs territory duty equals $7.88 
(150 x .0525).
    Feedstock factor calculation for UIN Day 16-20, 46,500 pounds 
equivalent to 157 barrels.

----------------------------------------------------------------------------------------------------------------
                                                                Product     Feedstock                  Dutiable 
                           Lbs          BBLS        $/BBL        value        factor      R.V. BBL       BBL    
----------------------------------------------------------------------------------------------------------------
Jet Fuel.............       35,000          125        27.00        3,375       1.1030          138            0
Fuel.................       10,000           34        12.00          408       0.4902           17            0
Consumed Process Loss        1,500            5        12.00           60       0.4902            2            0
                      ------------------------------------------------------------------------------------------
      Totals.........       46,500          164  ...........        3,843  ...........          157            0
----------------------------------------------------------------------------------------------------------------

    Since jet fuel was exported, no duty is applicable. Fuel 
consumed for refinery process was consumed within the subzone 
premises and did not enter customs territory, thus no duty is 
applicable (assume refinery not barred by duty-free consumption 
restriction). Likewise, the process loss occurred entirely within 
the subzone. Therefore, no duty is applicable.

IV. Attribution to Privileged Foreign Feedstock; Relative Value; 
Monthly Manufacturing Period, Weekly Entries, Attribution to a Prior 
Period; Volume Loss or Gain Shown by Volume Differences.

    An operator who elects to attribute on a monthly basis files the 
following estimated removal of final products for the first week in 
September:

Jet Fuel (deemed exported on international flights)...........    20,000
Gasoline--Domestic Consumption................................    15,000
Duty-free certified as emergency war material.................    10,000
Petroleum coke exportations...................................    10,000
Distillate for consumption....................................     5,000
Petrochemicals exported.......................................    10,000
                                                               ---------
      Total removals..........................................    70,000
                                                                        

    Because it does not elect to make attributions for feedstocks 
that were charged to operating units during the same week, the 
operator attributes the estimated removals to final products made 
during August from the following feedstocks:

Class II PF (privileged foreign) crude........................    20,000
Class III PF crude............................................    35,000
Class III D (domestic) crude..................................    20,000
Class III NPF (nonprivileged foreign crude....................    20,000
                                                               ---------
                                                                  95,000
                                                                        

    During August the operator produced from those feedstocks:

Jet..........................................................     35,000
Gasoline.....................................................     40,000
Petroleum Coke...............................................     10,000
Distillate...................................................      5,000
Petrochemicals...............................................     15,000
                                                              ----------
                                                                 105,000
                                                                        

There is a gain of 105,000-95,000=10,000

    Using the tables in T.D. 66-16, the following choices are 
available for attribution:

----------------------------------------------------------------------------------------------------------------
                                                                             Petrolum                   Petro-  
                                      Charged        Jet        Gasoline       coke      Distillate    chemical 
----------------------------------------------------------------------------------------------------------------
Class II PF Crude.................       20,000       13,000       17,200        4,400       17,200        5,000
Class III PF Crude................       35,000       24,500       31,850       14,000       31,150       10,150
Class III D Crude.................       20,000       14,000       18,200        8,000       17,800        5,800
Class III NPF Crude...............       20,000       14,000       18,200        8,000       17,800        5,800
----------------------------------------------------------------------------------------------------------------

    Feedstock factors are calculated:

----------------------------------------------------------------------------------------------------------------
                                                                                                      Feedstock 
                                                               Barrels    Valuebarrels     Value       factors  
----------------------------------------------------------------------------------------------------------------
Gasoline...................................................       40,000           $25   $1,000,000        .9117
Jet Fuel...................................................       35,000            23      805,000        .8388
Distillate.................................................        5,000            20      100,000        .7294
Petroleum Coke.............................................       10,000            10      100,000        .3647
Petrochemicals.............................................       15,000            40      600,000       1.4587
                                                            ----------------------------------------------------
[[Page 20637]]                                                                                                  
                                                                                                                
                                                                 105,000  ............    2,605,000             
                                                            ----------------------------                        
Gain.......................................................      -10,000    $2,605,000  ...........  ...........
                                                            ----------------------------                        
      Total................................................    \1\95,000                                        
(2)=$27.42 average value p/bbl                                                                                  
----------------------------------------------------------------------------------------------------------------

    Using the feedstock factor the refiner makes the following 
attributions:

                                                                        
                                                                        
                                                                        
Jet Fuel..................       24,192  (20,291 feedstock attributed to
                                          Class III PF Crude).          
                                 10,808  Class III NPF Crude            
                                          (attribution of 9066 solely   
                                          for purpose of accounting for 
                                          the amount of NPF used).      
                           -------------                                
                                 35,000                                 
  Gasoline................        5,000  (4,559 feedstock attributed to 
                                          Class III PF Crude).          
                                  5,000  Class III NPF Crude            
                                          (attribution of 4599 solely   
                                          for purpose of accounting for 
                                          the amount of NPF used).      
                                 15,000  (13,676 feedstock attributed to
                                          Class III D Crude).           
                           -------------                                
Petroleum Coke............        8,418  (3,070 feedstock attributed to 
                                          Class II PF Crude).           
                                  1,582  Class III NPF Crude            
                                          (attribution of 577 solely for
                                          purposes of accounting for the
                                          amount of NPF used).          
                           -------------                                
                                 10,000                                 
Distillate................        5,000  (3,647 feedstock attributed to 
                                          Class III Domestic).          
Petrochemicals............        3,975  (5,800 feedstock attributed to 
                                          Class III NPF Crude).         
                                  6,025  (8,789 feedstock attributed to 
                                          Class III PF Crude).          
                           -------------                                
                                 10,000                                 
                                                                        

V. Weekly Entry, Weekly Manufacturing Period, and Relative Values 
Calculated on the Actual Weighted Average Values at the End of the 
Week.

    On the weekly estimated production CF 3461, the refiner is 
required to provide a pro forma invoice or schedule showing the 
number of units of each type of merchandise to be removed during the 
week and their zone and dutiable values. For example, on CF 3461 the 
refiner estimates the following shipments and relative values for 
the next week and files this on the preceding Friday.

----------------------------------------------------------------------------------------------------------------
                                                                   PF shipments    Value/barrel                 
                         Product week 1                               (MBBLS)        (platts)       Total value 
----------------------------------------------------------------------------------------------------------------
Motor Gasoline..................................................          20,000             $35        $700,000
Total Alkylate..................................................          25,000              35         875,000
Heavy Reformate.................................................          60,000              35       2,100,000
Reformer Feed...................................................         110,000              35       3,850,000
Raffinates......................................................         200,000              35       7,000,000
Jet Fuel........................................................         200,000              35       7,000,000
                                                                 ----------------                ---------------
      Total.....................................................         615,000  ..............     $21,525,000
----------------------------------------------------------------------------------------------------------------

    Attributed Feedstock--Class III Crude: 615,000@ $105=$64,575 
(estimated duties)
    During that week the refiner actually removes the following 
products and reports those on the CF 7501 filed within 10 business 
days after the CF 3461 is filed. Column 3 is the actual ``weighted 
average'' value for the manufacturing period, therefore, no 
reconciliation is necessary.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         3 Value/                                     5                                                                 
    1 Product              2            barrel(wt.     4 Totalvalue(2) x   Relativevaluefactor(3)/   6 Feedstockdistribu.(5) x      7 Liq.duties(6) x   
                  PFShipments(mbbls)       avg.)              (3)                    (8)                        (2)                      (10)(9)        
--------------------------------------------------------------------------------------------------------------------------------------------------------
Week 1:                                                                                                                                                 
    Motor                                                                                                                                               
     Gasoline...            19,977            $35.70           $713,179               1.104545                     22,065                     $2,317    
    Total                                                                                                                                               
     Alkylate...            22,907             42.50            973,548               1.314935                     30,121                      3,163    
    Heavy                                                                                                                                               
     Reformate..            58,164             31.42          1,827,513                .972123                     56,542                      5,937    
    Reformer                                                                                                                                            
     Feed.......           100,279             31.42          3,150,766                .972123                     97,484                     10,235    
    Raffinates..           170,293             29.55          5,032,158                .914266                    155,693                     16,348    
    Jet Fuel....           168,433             30.04          5,059,727                .929426                    156,546                     16,437    
                 ---------------------------------------------------------------------------------------------------------------------------------------
      Total.....           540,053    ..............         16,756,891    .......................                518,451                     54,437    
                                                                                                                      (9)                       (10)    
--------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 518,451 x $.105 = $54,437
Volumetric Gain 21,602
Avg. Value/Barrel Crude Consumed=$16,756,891518,451=$32.321 
(8)
    This example shows volumetric gain of 21,602 mbbls. However, in 
that PF was requested, liquidated duties are only on actual 
feedstock (class III crude) used in the refining process. (518,451 @ 
$.105=$54,437). [[Page 20638]] 

VI. Weekly Entry, Monthly Manufacturing Period, and Relative Values 
Calculated on the Actual Weighted Average Values at the End of the 
Month.

    For example, on the CF 3461 the refiner estimates the following 
shipments and relative values for the next week and files this on 
the preceding Friday.

----------------------------------------------------------------------------------------------------------------
                                                                                      3Value/                   
                          1Product                           2PFshipments(mbbls)  barrel(platts)    4Totalvalue 
----------------------------------------------------------------------------------------------------------------
Week 1:                                                                                                         
    Motor Gasoline.........................................             20,000               $35        $700,000
    Total Alkylate.........................................             25,000                35         875,000
    Heavy Reformate........................................             60,000                35       2,100,000
    Reformer Feed..........................................            110,000                35       3,850,000
    Raffinates.............................................            200,000                35       7,000,000
    Jet Fuel...............................................            200,000                35       7,000,000
                                                            ---------------------                ---------------
      Total................................................            615,000    ..............      21,525,000
----------------------------------------------------------------------------------------------------------------

Attributed Feedstock--Class III Crude: 615,000 @ $.105=$64,575 
(estimated duties)

    During the week the refiner actually removes the following 
products and reports those on the CF 7501 filed within 10 business 
days after the CF 3461 is filed. The reported relative values may be 
an estimate based on Platts, prior period actual prices, or the 
refiner's transfer prices. For this example, the estimates are based 
on the refiner's actual transfer prices. Listed below are the data 
to be shown on the weekly CF 7501s with actual quantities shipped 
and estimated values for weeks 1-5.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             3Value/                             5Relativevaluefactor(3)/                                                       
                     1Product                      2PFshipments(mbbls)  barrel(estimates)  4Totalvalue(2) x (3)             (8)            6Feedstockdistrib.(5) x (2)  7Liq.duties(6) x (10)(9)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Week 1:                                                                                                                                                                                         
    Motor Gasoline...............................             19,977              $35.70            $713,179                1.104545                      22,065                     $2,317     
    Total Alkylate...............................             22,907               42.50             973,548                1.314935                      30,121                      3,163     
    Heavy Reformate..............................             58,164               31.42           1,827,513                 .972123                      56,542                      5,937     
    Reformer Feed................................            100,279               31.42           3,150,766                 .972123                      97,484                     10,235     
    Raffinates...................................            170,293               29.55           5,032,158                 .914266                     155,693                     16,348     
    Jet Fuel.....................................            168,433               30.04           5,059,727                 .929426                     156,546                     16,437     
                                                  ----------------------------------------------------------------------------------------------------------------------------------------------
      Total......................................            540,053    .................         16,756,891     ........................                518,451                    $54,437     
                                                                                                                                                             (9)                       (10)     
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 518,451 x $.105=$54,437
Volumetric Gain 21,602
Avg. Value/Barrel Crude Consumed=$16,756,891518,451=$32.321 
(8)


----------------------------------------------------------------------------------------------------------------
                  2 PF shipments  3Value/ barrel                     5Relative      6Feedstock                  
    1Product          (mbbls)       (estimated)    4Total value    value factor      distrib.      7Liq. duties 
----------------------------------------------------------------------------------------------------------------
Week 2:                                                                                                         
    Motor                                                                                                       
     Gasoline...          20,651          $36.90        $762,022        1.145429          23,654          $2,484
    Total                                                                                                       
     Alkylate...          23,435           44.25       1,036,999        1.373584          32,190           3,380
    Heavy                                                                                                       
     Reformate..          59,819           30.35       1,815,507         .942108          56,358           5,918
    Reformer                                                                                                    
     Feed.......         101,167           30.10       3,045,127         .934347          94,526           9,925
    Raffinates..         172,317           29.30       5,048,888         .909514         156,726          16,456
    Jet fuel....         165,291           30.70       5,074,434         .952972         157,519          16,539
                 -----------------------------------------------------------------------------------------------
      Total.....         542,680  ..............     $16,782,977  ..............         520,973         $54,702
----------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 520,973 x $.105 = $54,702
Volumetric Gain 21,707
Avg. Value/Barrel Crude Consumed = $32.215

----------------------------------------------------------------------------------------------------------------
                  2 PF shipments  3Value/ barrel                     5Relative      6Feedstock                  
    1Product          (mbbls)       (estimated)    4Total value    value factor      distrib.      7Liq. duties 
----------------------------------------------------------------------------------------------------------------
Week 3:                                                                                                         
    Motor                                                                                                       
     Gasoline...          18,689          $34.90        $652,246        1.091819          20,405          $2,142
    Total                                                                                                       
     Alkylate...          21,511           40.25         865,818        1.259190          27,087           2,844
    Heavy                                                                                                       
     Reformate..          57,371           30.90       1,772,764         .966682          55,460           5,823
    Reformer                                                                                                    
     Feed.......          99,707           30.90       3,080,946         .966682          96,386          10,121
    Raffinates..         168,112           29.65       4,984,521         .927577         155,938         16,374 
[[Page 20639]]                                                                                                  
                                                                                                                
    Jet Fuel....         172,092           29.85       5,136,946         .933834         160,707          16,874
                 -----------------------------------------------------------------------------------------------
      Total.....         537,482  ..............     $16,493,241  ..............         515,983         $54,178
----------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 515,983 x $.105=$54,178
Volumetric Gain 21,499
Avg. Value/Barrel Crude Consumed=$31.965

----------------------------------------------------------------------------------------------------------------
                  2 PF shipments  3Value/ barrel                     5Relative      6Feedstock                  
    1Product          (mbbls)       (estimated)    4Total value    value factor      distrib.      7Liq. duties 
----------------------------------------------------------------------------------------------------------------
Week 4:                                                                                                         
    Motor                                                                                                       
     Gasoline...          21,905          $32.85        $719,579        1.027237          22,502          $2,363
    Total                                                                                                       
     Alkylate...          22,552           38.75         873,890        1.211733          27,327           2,869
    Heavy                                                                                                       
     Reformate..          58,116           29.60       1,720,234        0.925607          53,791           5,648
    Reformer                                                                                                    
     Feed.......         101,058           29.40       2,971,105        0.919353          92,908           9,755
    Raffinates..         169,823           30.15       5,120,163        0.942806         160,110          16,812
    Jet Fuel....         171,493           31.05       5,324,858        0.970949         166,511          17,484
                 -----------------------------------------------------------------------------------------------
      Total.....         544,947  ..............     $16,729,829  ..............         523,149         $54,931
----------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 523,149 x $.105=$54,931
Gain 21,798
Avg. Value/Barrel Crude Consumed=$31.979

----------------------------------------------------------------------------------------------------------------
                  2 PF shipments  3Value/ barrel                     5Relative      6Feedstock                  
    1Product          (mbbls)       (estimated)    4Total value    value factor      distrib.      7Liq. duties 
----------------------------------------------------------------------------------------------------------------
Week 5:                                                                                                         
    Motor                                                                                                       
     Gasoline...           8,990          $37.25        $334,878        1.136260          10,215          $1,073
    Total                                                                                                       
     Alkylate...           9,984           45.10         450,278        1.375713          13,735           1,442
    Heavy                                                                                                       
     Reformate..          25,351           31.50         798,557        0.960864          24,360           2,558
    Reformer                                                                                                    
     Feed.......          43,492           31.35       1,363,474        0.956288          41,592           4,367
    Raffinates..          75,172           29.95       2,251,401        0.913583          68,677           7,211
    Jet fuel....          75,795           30.56       2,316,295        0.932190          70,654           7,418
                 -----------------------------------------------------------------------------------------------
      Total.....         238,784  ..............      $7,514,883  ..............         229,233         $24,069
----------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 229,233 x $.105=$24,069
Gain 9,551
Avg. Value/Barrel Crude Consumed=$32.783
    As provided in the regulations, the refiner files an amended CF 
7501 for each week based on the refiner's actual weighted average 
values for the month, as shown below.

------------------------------------------------------------------------
                                                                Value/  
                          Product                               barrel  
                                                               (MBBLS)  
------------------------------------------------------------------------
Month End:                                                              
    Motor Gasoline.........................................       $35.27
    Total Alkylate.........................................        41.84
    Heavy Reformate........................................        30.66
    Reformer Feed..........................................        30.54
    Raffinates.............................................        29.69
    Jet Fuel...............................................        30.42
------------------------------------------------------------------------


                                        Reconciliation of Week 1 Using Month's End Actual Weighted Average Values                                       
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           3 Value/                       5 Relative            6          7 Amended wt.
                       1 Product                        2 PF shipments    barrel (wt.    4 Total value   value factor   Feedstockdistri.    avg. duties 
                                                            (mbbls)      avg.) actual      (2) x (3)        (3)/(8)         (5) x (2)     (6) x (10) (9)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Motor Gasoline........................................          19,977          $35.27        $704,589        1.095716           21,889           $2,298
Total Alkylate........................................          22,907           41.84         958,429        1.299823           29,775            3,126
Heavy Reformate.......................................          58,164           30.66       1,783,308         .952499           55,401            5,817
Reformer Feed.........................................         100,279           30.54       3,062,521         .948771           95,141            9,990
Raffinates............................................         170,293           29.69       5,055,999         .922365          157,072           16,493
[[Page 20640]]                                                                                                                                          
                                                                                                                                                        
Jet Fuel..............................................         168,433           30.42       5,123,732         .945043          159,176           16,713
                                                       -------------------------------------------------------------------------------------------------
    Total.............................................         540,053  ..............     $16,688,578  ..............          518,454           54,437
                                                                                                                                    (9)             (10)
--------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Consumed = 518,454  x  $.105 = $54,437
Volumetric Gain 21,599
Avg.Value/Bbl Crude Consumed = $16,688,578  518,454 = 
$32.189 (8)

    Note: No change in amended total duties, because duty is 
computed on total quantity of class III crude used. The difference 
is amongst the various products, i.e., estimated weekly CF 7501 
duties paid for Motor Gasoline was $2,317, while the reconciled 
amount as shown above is $2,298. Additional duties owed or refunds 
due would depend on the reconciliation of the weekly entry as an 
entirety.

VII. Weekly entry, monthly manufacturing period, relative values 
calculated on prior manufacturing period's actual weighted average 
values. The prior period (PP) values are set forth below:

------------------------------------------------------------------------
                                                           Value/Barrel 
                         Product                            (wt. avg.)  
------------------------------------------------------------------------
Motor Gasoline..........................................      Sec. 35.28
Total Alkylate..........................................           41.90
Heavy Reformate.........................................           31.78
Reformer Feed...........................................           30.02
Raffinates..............................................           31.10
Jet Fuel................................................           28.80
------------------------------------------------------------------------

    Thereafter, the information provided or both the CF 3461 and CF 
7501 filed for each weekly entry with respect to relative values 
would remain the same. The only estimated amount would be the 
quantity to be removed on the CF 3461 as shown below. On the CF 3461 
the refiner estimates the following shipments and uses a prior 
manufacturing period's actual weighted average values.

----------------------------------------------------------------------------------------------------------------
                                                                                     3 Value/                   
                            1 Product                             2 PF shipments    barrel (PP)    4 Total value
                                                                      (mbbls)       (wt. avg.)                  
----------------------------------------------------------------------------------------------------------------
Week 1                                                                                                          
    Motor Gasoline..............................................          20,000          $35.28        $705,600
    Total Alkylate..............................................          25,000           41.90       1,047,500
    Heavy Reformate.............................................          60,000           31.78       1,906,800
    Reformer Feed...............................................         110,000           30.02       3,302,200
    Raffinates..................................................         200,000           31.10       6,220,000
    Jet Fuel....................................................         200,000           28.80       5,760,000
                                                                 -----------------------------------------------
      Total.....................................................         615,000  ..............      18,942,100
----------------------------------------------------------------------------------------------------------------

Attributed Feedstock--Class III Crude: 615,000 @ $.105 = $64,575 
(estimated duties)

    On the CF 7501, the refiner reports the following shipments and 
uses a prior manufacturing period's actual average values.

----------------------------------------------------------------------------------------------------------------
                                     3 Value/                       5 Relative      6 Feedstock                 
    1 Product     2 PF shipments    barrel (PP)    4 Total value   value factor    distri. (5) x   7 Liq. duties
                      (mbbls)       (wt. avg.)       (2) x (3)        (3)/(8)           (2)       (6) x (10) (9)
----------------------------------------------------------------------------------------------------------------
Week 1:                                                                                                         
    Motor                                                                                                       
     Gasoline...          19,977          $35.28        $704,789        1.097219          21,919          $2,902
    Total                                                                                                       
     Alkylate...          22,907           41.90         959,803        1.303104          29,850           3,134
    Heavy                                                                                                       
     Reformate..          58,164           31.78       1,848,452         .988368          57,486           6,036
    Reformer                                                                                                    
     Feed.......         100,279           30.02       3,010,376         .933632          93,623           9,830
    Raffinates..         170,293           31.10       5,296,112         .967220         164,710          17,295
    Jet Fuel....         168,433           28.80       4,850,870         .895689         150,863          15,840
                 -----------------------------------------------------------------------------------------------
      Total.....         540,053  ..............     $16,670,402  ..............         518,451         $54,437
                                                                                             (9)            (10)
----------------------------------------------------------------------------------------------------------------

Class III Crude Used 518,451  x  $.105 = $54,437
Volumetric Gain 21,602
Avg. Value/Barrel Crude Used = $16,670,402  518,451 = 
$32.154 (8)

                                                                                                                
[[Page 20641]]                                                                                                  
----------------------------------------------------------------------------------------------------------------
                                     3 Value/                                                                   
    1 Product     2 PF shipments    barrel (PP)    4 Total value    5 Relative      6 Feedstock    7 Liq. duties
                      (mbbls)       (wt. avg.)                     value factor       distri.                   
----------------------------------------------------------------------------------------------------------------
Week 2:                                                                                                         
    Motor                                                                                                       
     Gasoline...          20,651          $35.28        $728,567        1.096128          22,636          $2,377
    Total                                                                                                       
     Alkylate...          23,435           41.90         981,926        1.301808          30,508           3,203
    Heavy                                                                                                       
     Reformate..          59,819           31.78       1,901,048         .987386          59,064           6,202
    Reformer                                                                                                    
     Feed.......         101,167           30.02       3,037,033         .932704          94,359           9,908
    Raffinates..         172,317           31.10       5,359,059         .966259         166,503          17,483
    Jet Fuel....         165,291           28.80       4,760,381         .894799         147,903          15,529
                 -----------------------------------------------------------------------------------------------
      Total.....         542,680  ..............      16,768,014  ..............         520,973          54,702
----------------------------------------------------------------------------------------------------------------

Class III Crude Used 520,973 x $.105=$54,702
Volumetric Gain 21,707
Avg. Value/Barrel Crude Used=$32.186

----------------------------------------------------------------------------------------------------------------
                                     3 Value/                                                                   
    1 Product     2 PF shipments    barrel (PP)    4 Total value    5 Relative      6 Feedstock    7 Liq.duties 
                      (mbbls)       (wt. avg.)                     value factor       distri.                   
----------------------------------------------------------------------------------------------------------------
Week 3:                                                                                                         
    Motor                                                                                                       
     Gasoline...          18,689          $35.28        $659,348        1.099168          20,542          $2,157
    Total                                                                                                       
     Alkylate...          21,511           41.90         901,311        1.305418          28,081           2,948
    Heavy                                                                                                       
     Reformate..          57,371           31.78       1,823,250         .990124          56,803           5,964
    Reformer                                                                                                    
     Feed.......          99,707           30.02       2,993,204         .935290          93,254           9,792
    Raffinates..         168,112           31.10       5,228,283         .968938         162,889          17,103
    Jet Fuel....         172,092           28.80       4,956,250         .897280         154,414          16,214
                 -----------------------------------------------------------------------------------------------
      Total.....         537,482  ..............      16,561,646  ..............         515,983          54,178
----------------------------------------------------------------------------------------------------------------

Class III Crude Used 515,983 x $.105=$54,178
Volumetric Gain 21,499
Avg. Value/Barrel Crude Used=$32.097

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           3 Value/                                                                     
                       1 Product                        2 PF shipments    barrel (PP)    4 Total value    5 Relative            6          7 Liq. duties
                                                            (mbbls)       (wt. avg.)                     value factor   Feedstockdistri.                
--------------------------------------------------------------------------------------------------------------------------------------------------------
Week 4:                                                                                                                                                 
    Motor Gasoline....................................          21,905          $35.28        $772,808        1.097390           24,038           $2,524
    Total Alkylate....................................          22,552           41.90         944,929        1.303306           29,391            3,086
    Heavy Reformate...................................          58,116           31.78       1,846,926         .988522           57,447            6,032
    Reformer Feed.....................................         101,058           30.02       3,033,761         .933777           94,365            9,908
    Raffinates........................................         169,823           31.10       5,281,495         .967371          164,281           17,250
    Jet Fuel..........................................         171,493           28.80       4,938,998         .895829          153,627           16,131
                                                       -------------------------------------------------------------------------------------------------
      Total...........................................         544,947  ..............      16,818,917  ..............          523,149           54,931
--------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Used 523,149 x $.105=$54,931
Volumetric Gain 21,798
Avg. Value/Barrel Crude Used=$32.149

----------------------------------------------------------------------------------------------------------------
                                     3 Value/                                                                   
    1 Product     2 PF shipments    barrel (PP)    4 Total value    5 Relative      6 Feedstock    7 Liq. duties
                      (mbbls)       (wt. avg.)                     value factor       distri.                   
----------------------------------------------------------------------------------------------------------------
Week 5:                                                                                                         
    Motor                                                                                                       
     Gasoline...           8,990          $35.28        $317,167        1.097698           9,868          $1,036
    Total                                                                                                       
     Alkylate...           9,984           41.90         418,330        1.303671          13,016           1,367
    Heavy                                                                                                       
     Reformate..          25,351           31.78         805,655         .988799          25,067           2,632
    Reformer                                                                                                    
     Feed.......          43,492           30.02       1,305,630         .934039          40,623           4,265
    Raffinates..          75,172           31.10       2,337,849         .967642          72,740           7,638
    Jet Fuel....          75,795           28.80       2,182,896         .896080          67,919           7,131
                 -----------------------------------------------------------------------------------------------
      Total.....         238,784  ..............       7,367,527  ..............         229,233          24,069
----------------------------------------------------------------------------------------------------------------

Class III Crude Used 229,233 x $.105=$24,069
Volumetric Gain 9,551
Avg. Value/Barrel Crude Used=$32.14

    At the end of the month, the refiner must calculate its actual 
weighted average values for use in the subsequent period.

                                                                                                                
[[Page 20642]]                                                                                                  
                                               Reconciliation of Relative Value for the Subsequent Period                                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           3 Value/                       5 Relative            6                       
                       1 Product                        2 PF shipments    barrel (PP)    4 Total value   value factor   Feedstockdistri.   7 Liq. duties
                                                            (mbbls)       (wt. avg.)        (2 x 3)         (3)/(8)          (5 x 2)       (6 x (10) (9)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Month End:                                                                                                                                              
    Motor Gasoline....................................          90,212          $35.27      $3,181,777        1.095682           98,844          $10,379
    Total Alkylate....................................         100,389           41.84       4,200,276        1.299783          130,484           13,701
    Heavy Reformate...................................         258,821           30.66       7,935,452         .952470          246,519           25,885
    Reformer Feed.....................................         445,703           30.54      13,611,770         .948742          422,857           44,400
    Raffinates........................................         755,717           29.69      22,437,238         .922336          697,025           73,188
    Jet Fuel..........................................         753,104           30.42      22,909,424         .945014          711,694           74,726
                                                       -------------------------------------------------------------------------------------------------
      Total...........................................       2,403,946  ..............      74,275,937  ..............        2,307,423          242,279
                                                                                                                                    (9)             (10)
--------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Used 2,307,423 x $.105=$242,279
Volumetric Gain 96,523
Avg. Value/Barrel Crude Used=$74,275,9372,307,423=$32.19 (8)

    Note: Actual monthly reconciliation data could result in 
attributions on a product basis that are less than or greater than 
weekly distributions. This is due to the ``weighing'' of the data 
i.e., motor gasoline on a weekly basis was $10,996 as compared to 
$10,379 as above. No additional duties are due to the averaging.
Michael H. Lane,
Acting Commissioner of Customs.

    Approved: April 5, 1995.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 95-10226 Filed 4-26-95; 8:45 am]
BILLING CODE 4820-02-P