SERVICE ADDS DI-2 ETHYL HEXYL PHTHALATE TO TAXABLE SUBSTANCES LIST.

Notice 94-80

INTERNAL REVENUE SERVICE

TAX ON CERTAIN IMPORTED SUBSTANCES (Di-2 ETHYL HEXYL PHTHALATE); NOTICE OF DETERMINATION

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

SUMMARY: This notice announces a determination, under Notice 89-61, that the list of taxable substances in section 4672(a)(3) will be modified to include di-2 ethyl hexyl phthalate.

EFFECTIVE DATE: This modification is effective October 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. 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 di-2 ethyl hexyl phthalate should be added to the list of taxable substances in section 4672(a)(3), effective October 1, 1993.

The rate of tax prescribed for di-2 ethyl hexyl phthalate, under section 4671(b)(3), is $3.42 per ton. This is based upon a conversion factor for xylene of 0.272 and a conversion factor for propylene of 0.431.

The petitioner is Aristech Chemical Corporation, a manufacturer and exporter of this substance. No material comments were received on this petition. The following information is the basis for the determination:

HTS number: 2917.32.00.00

CAS number: 117-81-7

Di-2 ethyl hexyl phthalate is derived from the taxable chemicals xylene and propylene. Di-2 ethyl hexyl phthalate is a liquid produced predominantly by acid catalyzed certification of phthalic anyhdride (derived from o-xylene) and 2-ethyl hexanol (derived from propylene).

The stoichiometric material consumption formula for di-2 ethyl hexyl phthalate is:

(xylene) + 4 (propylene) + 3 (oxygen) + 4 (carbon monoxide + 8 (hydrogen) ---> (di-2 ethyl hexyl phthalate) + 6 (water

Di-2 ethyl hexyl phthalate has been determined to be a taxable substance because a review of its stoichimetric material consumption formula shows that, based on the predomination method of production, taxable chemicals constitute 55 percent by weight of the materials used in its production.

                                   Dale D. Goode,