IRS ADDS SODIUM NITRIOLOTRIACETATE MONOHYDRATE, DIPHENYL OXIDE, AND TETRACHLOROPHTHALIC ANHYDRIDE TO TAXABLE SUBSTANCES LIST.

Notice 94-83

TAX ON CERTAIN IMPORTED SUBSTANCES (SODIUM NITRIOLOTRIACETATE MONOHYDRATE, ET AL.); NOTICE OF DETERMINATIONS

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 sodium nitriolotriacetate monohydrate, diphenyl oxide, and tetrachlorophthalic anhydride.

EFFECTIVE DATE: This modification is effective April 1, 1993.

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 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 30, 1994, the Secretary determined that sodium nitriolotriacetate monohydrate, diphenyl oxide, and tetrachlorophthalic anhydride should be added to the list of taxable substances in section 4672(a)(3), effective April 1, 1993.

The rate of tax prescribed for sodium nitriolotriacetate monohydrate, under section 4671(b)(3), is $2.45 per ton. This is based upon a conversion factor for methane of 0.24, a conversion factor for sodium hydroxide of 0.52, a conversion factor for prophylene of 0.25, and a conversion factor for ammonia of 0.10.

The rate of tax prescribed for diphenyl oxide, under section 4671(b)(3), is $8.13 per ton. This is based upon a conversion factor for benzene of 1.05 and a conversion factor for propylene of 0.62.

The rate of tax prescribed for tetrachlorophthalic anhydride, under section 4671(b)(3), is $5.87 per ton. This is based upon a conversion factor for chlorine of 1.22 and a conversion factor for xylene of 0.53.

The petitioner of 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.

SODIUM NITRIOLOTRIACETATE MONOHYDRATE

HTS number: 2922.49.60.00

CAS number: 18622-53-8

Sodium nitriolotriacetate monohydrate is derived from the taxable chemicals methane, sodium hydroxide, propylene, and ammonia. Sodium nitriolotriacetate monohydrate is a solid produced predominantly by the reaction of formaldehyde with hydrogen cyanide in the presence of a catalyst, which is then further reacted with sodium hydroxide to produce sodium nitriolotriacetate monohydrate.

The stoichiometric material consumption formula for sodium nitriolotriacetate monohydrate is:

3(methane) + 3(sodium hydroxide) + (propylene) + (ammonia) + 4.5(oxygen) ---> (sodium nitriolotriacetate monohydrate) + 5(water) + 3(hydrogen)

Sodium nitriolotriacetate monohydrate 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 61.1 percent by weight of the materials used in its production.

DIPHENYL OXIDE

HTS number: 2909.30.00.00

CAS number: 101-84-8

Diphenyl oxide is derived from the taxable chemicals benzene and prophylene. Diphenyl oxide is a solid produced predominantly by the catalytic condensation of phenol.

The stoichiometric material consumption formula for diphenyl oxide is:

2(benzene) + 2(propylene) + 2(oxygen) ---> (diphenyl oxide) + 2 (acetone) + (water)

Diphenyl oxide 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 78.9 percent by weight of the materials used in its production.

TETRACHLOROPHTHALIC ANHYDRIDE

HTS number: 2916.19.00.00

CAS number: 117-08-8

Tetrachlorophthalic anhydride is derived from the taxable chemicals chlorine and xylene.

Tetrachlorophthalic anhydride is a solid produced predominantly by the high temperature reaction of phthalic anhydride with chlorine. Phthalic anhydride is produced by the reaction of o-xylene with air in the presence of a catalyst.

The stoichiometric material consumption formula for tetrachlorophthalic anhydride is:

4(Chlorine) + (xylene) + 3(oxygen) ---> (tetrachlorophthalic anhydride) + 3(water) + 4(hydrogen chloride)

Tetrachlorophthalic anhydride 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 80.0 percent by weight of the materials used in its production.

                                   Dale D. Goode,