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SERVICE ADDS POLYS TO TAXABLE SUBSTANCES LIST.

MAR. 18, 1994

Notice 94-34; 1994-1 C.B. 347

DATED MAR. 18, 1994
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Treasury Department Internal Revenue Service
  • Code Sections
  • Subject Areas/Tax Topics
  • Index Terms
    toxics, imported, definitions and rules
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 59 F.R. 13037-13038
  • Tax Analysts Electronic Citation
    1994 TNT 56-12
Citations: Notice 94-34; 1994-1 C.B. 347

Notice 94-34

TAX ON CERTAIN IMPORTED SUBSTANCES; NOTICE OF DETERMINATION

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

SUMMARY: This notice announces a determination, under Notice 89-61, that the list of taxable substances in section 4672(a)(3) of the Internal Revenue Code will be modified to include poly (69/31 ethylene/cyclohexylenedimethylene terephthalate), poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate), and poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate).

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) of the Internal Revenue Code, and 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 March 10, 1994, the Secretary determined that poly (69/31 ethylene/cyclohexylenedimethylene terephthalate), poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate), and poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate) should be added to the list of taxable substances in section 4672(a)(3) of the Internal Revenue Code, effective October 1, 1990.

The rate of tax prescribed for poly (69/31 ethylene/ cyclohexylenedimethylene terephthalate), under section 4671(b)(3), is $6.89 per ton before January 1, 1992, and $3.54 per ton for imported poly (69/31 ethylene/cyclohexylenedimethylene terephthalate) first sold or used after December 31, 1991. This is based upon a conversion factor for xylene of 0.6372 and a conversion factor for ethylene of 0.0900.

The rate of tax prescribed for poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate), under section 4671(b)(3), is $6.36 per ton before January 1, 1992, and $3.41 per ton for imported poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate) first sold or used after December 31, 1991. This is based upon a conversion factor for xylene of 0.5616 and a conversion factor for ethylene of 0.1398.

The rate of tax prescribed for poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate), under section 4671(b)(3), is $6.32 per ton before January 1, 1992, and $3.40 per ton for imported poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate) first sold or used after December 31, 1991. This is based upon a conversion factor for xylene of 0.5554 and a conversion factor for ethylene of 0.1439.

The petitioner is Eastman Chemicals Division, Eastman Kodak 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.

POLY (69/31 ETHYLENE/CYCLOHEXYLENEDIMETHYLENE TEREPHTHALATE)

     HTS number: 3907.60.00.90

 

     CAS number: 26100-86-7

 

 

Poly (69/31 ethylene/cyclohexylenedimethylene terephthalate) is derived from the taxable chemicals ethylene and xylene. Poly (69/31 ethylene/cyclohexylenedimethylene terephthalate), a solid, is produced predominantly by reacting dimethyl terephthalate with ethylene glycol and cyclohexanedimethanol. Dimethyl terephthalate is produced by the air oxidation of p-xylene to yield terephthalic acid, and the acid is subsequently esterified to the dimethyl ester with methanol. Ethylene glycol is produced via reaction of ethylene with oxygen and water, and cyclohexanedimethanol is produced via the hydrogenation of dimethyl terephthalate.

The stoichiometric material consumption formula for Poly (69/31 ethylene/cyclohexylenedimethylene terephthalate) is:

  131 C8H10 (xylene) + 70 C2H4 (ethylene) + 428 O2 (oxygen) +

 

  70 H2O (water) + 217 H2 (hydrogen) --->

 

  C2H2O2(C10H8O4)69(C16H18O4)31

 

  (poly (69/31 ethylene/cyclohexylenedimethylene terephthalate)) +

 

  524 H2O (water)

 

 

Poly (69/31 ethylene/cyclohexylenedimethylene terephthalate) has been determined to be a taxable substance because a review of its stoichiometric material consumption formula shows that, based on the predominant method of production, taxable chemicals constitute 50.7 percent by weight of the materials used in its production.

POLY (96.5/3.5 ETHYLENE/CYCLOHEXYLENEDIMETHYLENE TEREPHTHALATE)

     HTS number: 3907.60.00.90

 

     CAS number: 26100-86-7

 

 

Poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate) is derived from the taxable chemicals ethylene and xylene. Poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate), a solid, is produced predominantly by reacting dimethyl terephthalate with ethylene glycol and cyclohexanedimethanol. Dimethyl terephthalate is produced by the air oxidation of p-xylene to yield terephthalic acid and the acid is subsequently esterified to the dimethyl ester with methanol. Ethylene glycol is produced via reaction of ethylene with oxygen and water, and cyclohexanedimethanol is produced via the hydrogenation of dimethyl terephthalate.

The stoichiometric material consumption formula for Poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate) is:

  103.5 C8H10 (xylene) + 97.5 C2H4 (ethylene) +

 

  359.25 O2 (oxygen) + 97.5 H2.O (water) + 24.5 H2 (hydrogen) --->

 

  C2H6O2(C10H8O4)96.5(C16H18O4)3.5

 

  (poly (96.5/3/5 ethylene/cyclohexylenedimethylene terephthalate)) +

 

  414 H2O (water)

 

 

Poly (96.5/3.5 ethylene/cyclohexylenedimethylene terephthalate) has been determined to be a taxable substance because a review of its stoichiometric material consumption formula shows that, based on the predominant method of production, taxable chemicals constitute 50.7 percent by weight of the materials used in its production.

POLY (98.5/1.5 ETHYLENE/CYCLOHEXYLENEDIMETHYLENE TEREPHTHALATE)

     HTS number: 3907.60.00.90

 

     CAS number: 26100-86-7

 

 

Poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate) is derived from the taxable chemicals ethylene and xylene. Poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate), a solid, is produced predominantly by reacting dimethyl therephthalate with ethylene glycol and cyclohexanedimethanol. Dimethyl terephthalate is produced by the air oxidation of p-xylene to yield terephthalic acid, and the acid is subsequently esterified to the dimethyl ester with methanol. Ethylene glycol is produced via reaction of ethylene with oxygen and water, and cyclohexanedimethanol is produced via the hydrogenation of dimethyl terephthalate.

The stoichiometric material consumption formula for Poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate) is:

  101.5C8H10 (xylene) + 99.5C2H4 (ethylene) + 354.25O2 (oxygen) +

 

  99.5H2O (water) + 10.5H2 (hydrogen) --->

 

  C2H6O2(C10H8O4)98.5(C16H18O4)1.5

 

  (poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate)) +

 

  406 H2 (hydrogen)

 

 

Poly (98.5/1.5 ethylene/cyclohexylenedimethylene terephthalate) has been determined to be a taxable substance because a review of its stoichiometric material consumption formula shows that, based on the predominant method of production, taxable chemicals constitute 50.7 percent by weight of the materials used in its production.

                                   Dale D. Goode,

 

                                   Federal Register Liaison Officer,

 

                                   Assistant Chief Counsel

 

                                     (Corporate).
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Treasury Department Internal Revenue Service
  • Code Sections
  • Subject Areas/Tax Topics
  • Index Terms
    toxics, imported, definitions and rules
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 59 F.R. 13037-13038
  • Tax Analysts Electronic Citation
    1994 TNT 56-12
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