HQ 0081157 - Classification of gasoline blendstock from the Netherlands - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1990 HQ Rulings > HQ 0080947 - HQ 0081405 > HQ 0081157

HQ 081157

April 25 1989

CLA-2 CO:R:C:G 081157 H

CATEGORY: CLASSIFICATION

TARIFF NO.: 407.16

District Director of Customs
Newark, NJ

RE: Classification of gasoline blendstock from the Netherlands

Dear Sir:

This is a decision on the application for further review of protest number 1001-7-000315.

Facts:

The protest involves the classification of unleaded gasoline blendstock which contains over 15 percent of dutiable benzenoids which were created in the distillation of the product. At entry, in April 1986, the importer entered the product under the provision for naphtha in item 475.35, TSUS. In the alternative it is claimed that it is classifiable as motor fuel in item 475.25, TSUS. Customs classified the import as a benzenoid mixture in item 407.16 (now 407.19), TSUS.

In addition to the brief filed, the protestant included an affidavit from an energy consultant, described as an authority on motor fuel, in which it was stated that the product would be considered a motor fuel, even though subsequent to importation, "the commodity had to be blended with other petroleum derivatives before sale." It was also stated that the commodity can be burned in any internal combustion engine and that it had the capability and can be used without difficulty to start and run a motor.

ISSUE:

Whether the "off-spec" leaded gasoline blendstock is classifiable as motor fuel in item 475.25, TSUS, naphtha in item 475.35, or a benzenoid mixture in item 407.16, TSUS.

LAW AND ANALYSIS:

Several arguments are advanced by the protestant in support of his claims. He is of the opinion that the blendstock was not classified as motor fuel by Customs because it did not meet the minimum 50 percent distillation characteristic, as set out in the ASTM D439, which Customs uses as a guide to determine whether a petroleum derivative import meets the headnote 2(b) definition of motor fuel in part 10, Schedule 4, TSUS. It is claimed that the product is of a class or kind of petroleum product considered as motor fuel, so that if most of the criteria for motor fuel is met, it should be so classified. However, the TSUS specifically defines what motor fuel is, and if the import does not meet these standards, it is not classifiable as motor fuel. United States V. Exxon Corp. 66 CCPA 129, C.A.D. 1233 (1979); Amorient Petroleum Co. V. United States 9 CIT 197 (1985).

In behalf of the importer it is further argued that deviations from ASTM specifications, which are non-mandatory, can be expected and would not affect the product's usability as motor fuel. However, it has always been Customs practice, as well as an industry practice, that any product which does not meet the ASTM D439 specifications may not be considered automotive gasoline for either Customs or commercial purposes. In fact, since the 50 percent distillation temperature of the product is considerably lower than the the D439 specification (the product's temperature at 50% evaporation is 126 degrees F. vs. a minimum 170 degrees F temperature in the standard), the product would have to be comprehensively altered before it could be considered commercially motor fuel.

As to the alternative classification, the product is not commonly and commercially known in the petroleum industry as a naphtha. Because of the temperature at which the naphtha cut is taken during the fractional distillation of the petroleum process, the naphtha should essentially have no dutiable benzenoids present. Although Customs allows a maximum of 5 percent dutiable benzenoids in naphtha, the presence of 15.9 percent dutiable benzenoids in the instant merchandise clearly indicates that it is not a petroleum naphtha classifiable in part 10 of Schedule 4, TSUS. The presence of these benzenoids in the the petroleum blendstocks is extremely important in the production of unleaded gasoline, since they act as octane boosters in the final blend.

It is also contended that a uniform and established practice of classification exists to classify this type of benzenoid mixture as a motor fuel, based on the change of practice involving leaded naphtha. T.D. 86-17. However, the leaded naphtha involved in that change of practice was a totally
different product from the benzenoid mixtures involved here. In classifying a benzenoid mixture, Customs has always followed the intent of Congress and construed the benzenoid provisions of the tariff very conservatively. In the "Tariff Classification Study, Explanatory Materials (C.I.E. 1/64)," headnote 1, part 10, Schedule 4, is said to be concerned with the relationship of the provisions of part 10 (petroleum) to the provisions of part 1 (benzenoid chemicals). It points out that fuel oils, motor fuels and lubricating oils and greases remain in part 10 unless the additives are over 25 percent by weight of such products. "The other products described in part 10 would be classified in part 1 if they contained any benzenoid additives." (emphasis supplied). Over the years court decisions have modified the "no" benzenoid rule, but not to the extent of 15 percent. In any event, the headnotes to part 10 specifically state which petroleum products may contain added benzenoids and remain classifiable in part 10, and naphtha is not one of them.

To be classified as a motor fuel under the TSUS, a product has to be a petroleum derivative which is chiefly used as a motor fuel as imported. This means commercially. The fact that the product is capable of starting an internal combustion engine is not sufficient. As imported the product has to be a commercially recognized motor fuel, without being modified in any way.

The intent of Congress in regard to the classification of blendstocks of this type can be seen from the addition to the TSUS of the new item -475.27- for blendstocks. This item was added by the Omnibus Trade & Competitiveness Act of 1988, and was carried over to the Harmonized Tariff Schedule of the United States.

As for the argument that, although the product contains over 15 percent dutiable benzenoids, they should be considered de minimis, as pointed out before, it is not only the amount of dutiable benzenoids present, but also that these benzenoids serve a vital function as octane enhancers.

Accordingly, a naphtha mixture containing over 15 percent dutiable benzenoids which were created in the distillation process is classifiable under the provision for benzenoid mixtures in item 407.16 (now 407.19) TSUS.

HOLDING:

The protest should be denied. A copy of this decision should be furnished the protestant along with the Form 19 Notice of Action.

Sincerely,

John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling