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HQ 963780




September 6, 2000

CLA-2 RR:CR:GC 963780K

CATEGORY: CLASSIFICATION

TARIFF NO.: 2710.00.1518

Port Director
U.S. Customs Service
312 Fore St.
Portland, ME 04101

RE: Protest 0101-99-100017; Motor Fuel

Dear Port Director:

The following is our response to the referral by your office, dated February 25, 2000, of the request for further review of the above-referenced protest.

FACTS:

The consumption entry covering the imported fuel from Brazil was reported as being liquidated on July 16, 1999, under the provision for motor fuel in subheading 2710.00.1518, Harmonized Tariff Schedule of the Unites States (HTSUS). A timely protest under 19 U.S.C. 1514 was received on September 29, 1999. The protestant claimed that the subject entries are governed by the decision of the Court of International Trade (CIT) in Clarendon Marketing, Inc., v. U.S., 955 F.Supp. 1501 (CIT, January 17, 1997), and requested reliquidation of the entry under the provision for naphthas (except fuel or motor fuel blending stock), in subheading 2710.00.25, HTSUS. The protestant further requested that our decision be held in abeyance pending the opinion of the Court of Appeals for the Federal Circuit (CAFC). The CAFC issued a decision, in the case of Clarendon Marketing, Inc., v. U.S., 144 F.3d 1464, on May 22, 1998.

At the request of Customs, the importer submitted a laboratory analysis report which shows that samples of the shipment of gasoline were tested and found to meet the requirements of standard D-4814 of the American Society for Testing Materials (ASTM), that is used by the petroleum industry in identifying and classifying commercial gasoline in international commerce. The fuel meets the requirements for class A motor fuel.

ISSUE:

Whether the fuel is classified as motor fuel, motor fuel blending stock, or as naphthas (except motor fuel or motor fuel blending stock).

LAW AND ANALYSIS:

The classification of imported merchandise under the HTSUS is governed by the principles set forth in the General Rules of Interpretation (GRI). GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section and chapter notes and, unless otherwise required, according to the remaining GRI’s, taken in their appropriate order. Accordingly, we first have to determine whether the articles are classified under GRI 1. We are satisfied that the fuels in issue are classified by GRI 1 and 6. The applicable provisions of the HTSUS are the following subheadings of Chapter 27:

2710.00.15 Motor fuel
Gasoline:
10 Leaded

Unleaded:
14 Reformulated
16 Oxygenated
18 Other
20 Jet fuel, naphtha-type
30 Jet fuel, kerosene-type
50 Other

2710.00.18 00 Motor fuel blending stock

2710.00.20 00 Kerosene (except motor fuel or motor fuel blending stock) 2710.00.25 00 Naphthas (except motor fuel or motor fuel lending stock)

The applicable Chapter Notes are Additional U.S. Notes 3 and 4, Chapter 27, HTSUS, as follows:

3. For the purposes of subheading 2710.00.15, "motor fuel" is any product derived primarily from petroleum, shale or natural gas, whether or not containing additives, which is principally used as a fuel in internal-combustion or other engines.

4. For the purposes of subheading 2710.00.18, "motor fuel blending stock" means any product (except naphthas of subheading 2710.00.25) derived
primarily from petroleum, shale oil or natural gas, whether or not containing additives, to be used for direct blending in the manufacture of motor fuel.

In the case of Clarendon Marketing, Inc. v. U.S., 144 F.3d 1464 (Fed. Cir. 1998), the CAFC affirmed the decision of the CIT, 955 F. Supp. 1501 (Ct. Int’l Trade 1997) in favor of the importer. It was agreed that the fuel in Clarendon “falls within the accepted definition of ‘naphthas’ but is also suitable and commonly used as a motor fuel blending stock” and the question concerned statutory construction of the competing subheadings 2710. 00.18 motor fuel blending stock, and subheading 2710.00.25, naphthas (except motor fuel or motor fuel blending stock).

The CAFC noted Additional U.S. Notes 3 and 4 of Chapter 27 and concluded that subheading 2710.00.25 for naphthas “literally contains three types of tariff classification provisions: an eo nomine provision, an actual use provision, and a principal use provision.” In accordance with Additional U.S. Note 3, subheading 2710. 00.18, motor fuel blending stock, was an actual use provision. In Clarendon, a claim was not made for actual use upon the entry of the fuels and Customs could not force an importer to claim actual use. Accordingly, the Court held that the fuels met the requirements for “principal use” as naphthas and affirmed classification in subheading 2710.00.25.

Unlike subheading 2710.00.18 (motor fuel blending stock), subheading 2710.00.15 (motor fuel), is not an “actual use” provision as that term is defined in note 1(b), Additional U.S. Rules of Interpretation, HTSUS. The CAFC noted the following;

The “motor fuel” clause of the parenthetical (of subheading 2710. 00.25) corresponds to the motor fuel subheading of 2710.00.15 (motor fuel). As defined by Additional U.S. Note 3 to Chapter 27 of the HTSUS, the motor fuel subheading is a principal use provision: “motor fuel” is any productwhich is principally used as fuel in internal-combustion or other engines.

Based on the laboratory analysis report (Analytical Report No. 30448 dated September 5, 1998) furnished by the importer-protestant, samples of the shipment of gasoline were tested and found to meet the standard specifications for automotive spark-ignition engine fuel, standard D4814 of the ASTM used by the petroleum industry in identifying and classifying commercial gasoline in international commerce. The fuel meets the requirements for Class A Motor fuel used in internal combustion or other engines. Motor fuel is classified in subheading 2710.00.15, a principal use provision. The entry was correctly liquidated in accordance with GRI 1 and the decision of the CAFC in Clarendon. See Headquarters Ruling Letters (HRL) 962425 dated February 2, 1999 and 952114 dated July 8, 1998. See also HQ 962922 of this date for a similar decision.

HOLDING:

Motor fuel which is principally used as fuel in internal-combustion or other engines is classified in subheading 2710.00.15, HTSUS.

You are directed to deny the protest in full.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, Revised Protest Directive, dated August 4, 1993, a copy of this decision attached to Customs Form 19, Notice of Action, should be provided by your office to the protestant no later than 60 days from the date of this decision and any reliquidations of entries in accordance with this decision must be accomplished prior thereto. Sixty days from the date of this decision the Office of Regulations and Rulings will take steps to make this decision available to Customs personnel, and to the general public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division


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