[Federal Register Volume 59, Number 116 (Friday, June 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14703]
[[Page Unknown]]
[Federal Register: June 17, 1994]
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DEPARTMENT OF THE TREASURY
Tax on Certain Imported Substances (Tetrahydrofuran, et al.);
Notice of Determinations
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice.
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SUMMARY: This notice announces determinations, under Notice 89-61, that
the list of taxable substances in section 4672(a)(3) will be modified
to include tetrahydrofuran and 1,4 butanediol.
EFFECTIVE DATE: This modification is effective October 1, 1994.
FOR FURTHER INFORMATION CONTACT: Tyrone J. Montague, Office of
Assistant Chief Counsel (Passthroughs and Special Industries), (202)
622-3130 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
Under section 4672(a), an importer or exporter of any substance may
request that the Secretary determine whether such substance should be
listed as a taxable substance. The Secretary shall add such substance
to the list of taxable substances in section 4672(a)(3) if the
Secretary determines that taxable chemicals constitute more than 50
percent of the weight, or more than 50 percent of the value, of the
materials used to produce such substance. This determination is to be
made on the basis of the predominant method of production. Notice 89-
61, 1989-1 C.B. 717, sets forth the rules relating to the determination
process.
Determination
On June 10, 1994, the Secretary determined that tetrahydrofuran and
1,4 butanediol should be added to the list of taxable substances in
section 4672(a)(3), effective October 1, 1994. However, if these
substances are produced from acetylene derived from coal they are not
taxable substances.
The rate of tax prescribed for tetrahydrofuran, under section
4671(b)(3), is $5.28 per ton unless it is produced from acetylene
derived from coal. This is based upon a conversion factor for acetylene
of 0.40 and a conversion factor for methane of 0.97.
The rate of tax prescribed for 1,4 butanediol, under section
4671(b)(3), is $4.20 per ton unless it is produced from acetylene
derived from coal. This is based upon a conversion factor for methane
of 0.77 and a conversion factor for acetylene of 0.32.
The petitioner is E. I. DuPont de Nemours and Company, a
manufacturer and exporter of these substances. No material comments
were received on these petitions. The following information is the
basis for the determinations.
Tetrahyrofuran
HTS number: 2932.11.00.00
CAS number: 109-99-9
Tetrahyrofuran is derived from the taxable chemicals methane and
acetylene. Tetrahyrofuran is a liquid produced predominantly by the
reaction of acetylene (derived from methane in natural gas) with
formaldehyde made by air oxidation and dehydrogenation of methanol
(derived from methane in natural gas) producing the intermediate
butynediol which is in turn reacted with hydrogen (derived from methane
in natural gas) to produce 1,4 butanediol. The 1,4 butanediol is ring
closed using an acid catalyst to produce tetrahydrofuran.
The stoichiometric material consumption formula for tetrahyrofuran
is:
C2H2 (acetylene) + 3 CH4 (methane) + 0.5 O2
(oxygen) + 2 H2O (water) C4H8O
(tetrahydrofuran) + 5 H2 (hydrogen) + CO2 (carbon dioxide)
Tetrahyrofuran has been determined to be a taxable substance
because a review of its stoichiometric material consumption formula
shows that, based on the predominant method of production, taxable
chemicals constitute 58.7 percent by weight of the materials used in
its production.
1,4 butanediol
HTS number: 2905.39.10.00
CAS number: 110-63-4
1,4 butanediol is derived from the taxable chemicals methane and
acetylene. 1,4 butanediol is a liquid produced predominantly by the
reaction of acetylene (derived from methane in natural gas) with
formaldehyde made by air oxidation and dehydrogenation of methanol
(derived from methane in natural gas) producing the intermediate
butynediol which is in turn reacted with hydrogen (derived from methane
in natural gas) to produce 1,4 butanediol.
The stoichiometric material consumption formula for 1,4 butanediol
is:
3 CH4 (methane) + C2H2 (acetylene) + 3 H2O
(water) + 0.5 O2 (oxygen) C4H10O2 (1,4
butanediol) + 5 H2 (hydrogen) + CO2 (carbon dioxide)
1,4 butanediol has been determined to be a taxable substance
because a review of its stoichiometric material consumption formula
shows that, based on the predominant method of production, taxable
chemicals constitute 51.3 percent by weight of the materials used in
its production.
Dale D. Goode,
Federal Register Liaison Officer, Assistant Chief Counsel (Corporate).
[FR Doc. 94-14703 Filed 6-16-94; 8:45 am]
BILLING CODE 4830-01-U
