HQ 081157: Classification of gasoline blendstock from the Netherlands

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            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.















                                        - 2 -


          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











                                        - 3 -


          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.



















                                        - 4 -


          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