SERVICE ADDS DI-N-HEXYL ADIPATE, ORTHO-DICHLOROBENZENE, AND PARA- DICHLOROBENZENE TO TAXABLE SUBSTANCES LIST.
Notice 94-64; 1994-1 C.B. 374
- Institutional AuthorsTreasury Department Internal Revenue Service
- Code Sections
- Subject Areas/Tax Topics
- Index Termstoxics, imported, definitions and rules
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 59 F.R. 27652-27653
- Tax Analysts Electronic Citation1994 TNT 104-72
Notice 94-64
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice.
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 di-n-hexyl adipate, ortho-dichlorobenzene, and para-dichlorobenzene.
EFFECTIVE DATE: This modification is effective October 1, 1990.
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 May 23, 1994, the Secretary determined that di-n-hexyl adipate, ortho-dichlorobenzene, and para-dichlorobenzene should be added to the list of taxable substances in section 4672(a)(3), effective October 1, 1990.
The rate of tax prescribed for di-n-hexyl adipate, under section 4671(b)(3), is $4.67 per ton. This is based upon a conversion factor for ethylene of 0.58, a conversion factor for methane of 0.05, a conversion factor for benzene of 0.33, and a conversion factor for nitric acid of 0.29.
The rate of tax prescribed for ortho-dichlorobenzene, under section 4671(b)(3), is $5.55 per ton. This is based upon a conversion factor for benzene of 0.57 and a conversion factor for chlorine of 1.03.
The rate of tax prescribed for para-dichlorobenzene, under section 4671(b)(3), is $5.55 per ton. This is based upon a conversion factor for benzene of 0.57 and a conversion factor for chlorine of 1.03.
The petitioner is Monsanto 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
DI-N-HEXYL ADIPATE
HTS number: 2917.39.20.00
CAS number: 110-33-8
Di-n-hexyl adipate is derived from the taxable chemicals ethylene, methane, benzene, and nitric acid. Di-n-hexyl adipate is a liquid produced predominantly by reaction of n-hexyl alcohol with adipic acid in the presence of a catalyst. N-hexyl alcohol is produced from aluminum, natural gas (via hydrogen), and ethylene (via triethylaluminum). Oxidation of the intermediate mixed trialkylaluminum with air produces a mixed aluminum alkoxide, which is hydrolyzed to produce a mixture of alcohols, from which n-hexyl alcohol is recovered by distillation. Adipic acid is produced from benzene (via cyclohexane) and the methane in natural gas (via hydrogen). Oxidation of cyclohexane using air and nitric acid in a two-step process produces adipic acid.
The stoichiometric material consumption formula di-n-hexyl adipate is:
6 ethylene + 1.5 methane + benzene + 2.33 nitric acid + 2.83
water + 1.75 oxygen + 0.67 aluminum + 2.02 hydrogen ---> di-n-hexyl
adipate + 3 hydrogen + 1.5 carbon dioxide + 2.33 nitric oxide +
2water + 0.67 aluminum hydroxide
Di-n-hexyl adipate 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 76.6 percent by weight of the materials used in its production.
ORTHO-DICHLOROBENZENE
HTS number: 2903.61.20.00
CAS number: 95-50-1
Ortho-dichlorobenzene is derived from the taxable chemicals benezene and chlorine. Ortho-dichlorobenzene is a liquid produced predominantly by the reaction of chlorine with benzene.
The stoichiometric material consumption formula ortho- dichlorobenzene is:
benzene + 2 chlorine ---> o-dichlorobenzene + 2 hydrogen chloride
Ortho-dichlorobenzene 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 100 percent by weight of the materials used in its production.
PARA-DICHLOROBENZENE
HTS number: 2903.61.30.00
CAS number: 106-46-7
Para-dichlorobenzene is derived from the taxable chemicals benzene and chlorine. Para-dichlorobenzene is a solid produced predominantly by the reaction of chlorine with benzene.
The stoichiometric material consumption formula for para- dichlorobenzene is:
benzene + 2 chlorine ---> p-dichlorobenzene + 2 hydrogen chloride
Para-dichlorobenzene 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 100 percent by weight of the materials used in its production.
Dale D. Goode,
Federal Register Liaison Officer,
Assistant Chief Counsel
(Corporate).
- Institutional AuthorsTreasury Department Internal Revenue Service
- Code Sections
- Subject Areas/Tax Topics
- Index Termstoxics, imported, definitions and rules
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 59 F.R. 27652-27653
- Tax Analysts Electronic Citation1994 TNT 104-72
