HQ 081157
April 25 1989
CLA-2 CO:R:C:G 081157 H
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.
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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
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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.
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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