Petroleum Refineries in Foreign Trade Subzones

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 146

[T.D. 95-35]

RIN 1515-AB20

Petroleum Refineries in Foreign Trade Subzones

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document amends the Customs Regulations by adding special

procedures and requirements governing the operations of crude petroleum

refineries approved as foreign trade subzones, in implementation of

section 9002 of the Technical and Miscellaneous Revenue Act of 1988,

which amended the Foreign Trade Zones Act to make specific provision

for petroleum refinery subzones.

EFFECTIVE DATE: These regulations are effective October 24, 1995.

FOR FURTHER INFORMATION CONTACT: For Legal aspects: Bill Rosoff, Chief,

Entry Rulings Branch (202)482-7040. For Operational aspects: Louis

Hryniw, Regulatory Audit (202)927-1100.

SUPPLEMENTARY INFORMATION:

Background

On August 10, 1992 (57 FR 35530), Customs published a document in

the Federal Register proposing to amend the Customs Regulations to add

special procedures and requirements governing the operations of crude

petroleum refineries approved as foreign trade subzones, in

implementation of section 9002 of the Technical and Miscellaneous

Revenue Act of 1988 which amended the Foreign Trade Zones Act, 19

U.S.C. 81c(d), to make specific provision for petroleum refinery

subzones.

Briefly, as stated in the August 10, 1992, notice of proposed

rulemaking, the statutory amendment obviates the need to determine

exactly when and where in the manufacturing process crude and other

feedstocks become other products. In so doing, it permits refiners as

well as Customs to assess the relative value of such multiple products

at the end of the manufacturing period during which such products were

produced, when the actual quantities of these products resulting from

the refining process can be measured with certainty. Also, the

amendment permits the products refined in a subzone during a

manufacturing period to be attributed to a given crude or other

feedstocks introduced into production during the period, to the extent

that such products were producible (could have been produced) therefrom

in the quantities removed from the subzone.

As a result of extensive and varied input received from the oil

refinery and foreign trade zone communities, as well as from other

interested parties, in response to the initial notice of proposed

rulemaking, Customs published a significantly revised notice on March

4, 1994 (59 FR 10342) and solicited additional public comment on the

revised proposed rule.

The following discussion includes a summary of the various comments

received in response to the March 4, 1994, notice of proposed

rulemaking, together with an explanation and analysis regarding the

sections to be added, eliminated or further revised. The final rule as

revised is thereafter set forth.

Discussion of Comments

Comment: Two commenters suggested deletion of proposed

Sec. 146.92(a)(1), (2) and (3) because it is already covered in

proposed Sec. 146.93.

Customs Response: Customs agrees and, therefore, these three

subsections have been deleted.

Comment: Three commenters suggested that the definition in proposed

Sec. 146.92(b) be expanded to include products from natural gas

production and blendstocks and, additionally, that the definition state

that Customs may add other merchandise to this definition by way of a

ruling.

Two commenters suggested the inclusion of ``other hydrocarbon

feedstocks, light olefins, and other aromatics and their derivatives''

in this definition.

Customs Response: Regarding the suggestion that this definition may

be modified by a ruling, Customs regulations may not be modified or

changed by way of a ruling. Any changes to the regulations would have

to follow regulatory procedures. It is not clear to Customs how natural

gas production and blendstocks apply to producibility. Any change to

T.D. 66-16 to include feedstocks or products not listed must include

supporting records and a technical explanation of the change.

Therefore, this suggestion has not been adopted.

Comment: One commenter suggested that the word ``means'' in

proposed Sec. 146.92(c) be changed to ``is based on''. Another

commenter suggested deletion of ``utilizing T.D. 66-16 (see

Sec. 146.92(h)), and'' and insertion of ``volumetric'' between ``any''

and ``loss''.

Customs Response: The suggested change has been adopted with

respect to addition of the word ``volumetric'' and Sec. 146.92(c) has

been reworded. Customs disagrees that the phrase ``utilizing T.D. 66-

16'' should be deleted. The word ``means'' should be retained since

this section defines terms for use in this subpart.

Comment: The suggestion was made that proposed Sec. 146.92(d) be

re-worded to read as follows:

Final product means any product that is produced in a petroleum

refinery subzone from feedstock processed therein, and thereafter

removed therefrom or consumed within the zone.

Two commenters suggested that the phrase ``and or hydrocarbon

product'' be inserted after ``product'' and before ``that''. Another

commenter suggested that the phrase ``lost or destroyed in the subzone

as provided in Sec. 146.53(c)(1)(iv)'' be inserted after ``therefrom''.

Customs Response: The first suggestion regarding the rewording of

Sec. 146.92(d) has been adopted. The use of attribution by records

requires that the amounts removed or consumed actually be measured;

such method is not acceptable to account for unmeasured losses. This

suggestion has not been adopted. It is Customs position that 19 U.S.C.

81c(d) applies only to crude petroleum products and not to hydrocarbons

in general. Therefore, this suggestion was not adopted.

Comment: Two commenters suggested that the words ``or

manufacturer'' be inserted after ``refiner'' and that the words

``production facility'' be inserted after ``refinery'' in proposed

Sec. 146.92(e). One commenter suggested deletion of the phrase ``for

which * * * subzone'' because attribution is addressed

[[Page 20629]] elsewhere in the regulations. Another commenter

recommended that the word ``for'' after ``month'' be deleted and

replaced with ``within''.

Customs Response: Regarding the first suggestion, the purpose of

these regulations is to implement 19 U.S.C. 81c(d). That statutory

provision only applies to crude petroleum refineries in foreign trade

zones. Therefore, there is no basis to extend these regulations to

``production facilities.'' The suggestion to remove the reference to

final products consumed or removed from the subzone has not been

adopted since the statute provides an attribution formula to be used at

specific subzones. The word ``for'' is shorter than ``within'' and

there is no change in substance.

Comment: One commenter proposed addition of a definition of

``Petroleum'' to read as follows:

Petroleum means a feedstock listed on the top line of the tables

set forth in T.D. 66-16 and includes any hydrocarbon feedstock produced

from natural gas liquids or comprised of natural gas liquids.

Customs Response: Customs disagrees that such a definition is

necessary and, therefore, has not included this definition in the final

rule.

Comment: Two commenters recommended that the phrase ``listed on the

top line of the tables set forth in T.D. 66-16'' be replaced with ``as

defined herein into final products as defined herein''. One commenter

suggested that the following phrase be added at the end of proposed

Sec. 146.92(f):

* * * and includes any facility that processes a hydrocarbon

feedstock utilizing one or more of the units in the definition of a

refinery operating unit.

Two other commenters advocated re-naming this definition

``Petroleum refinery or production facility'' and then adding the

following:

Production facility means a facility that primarily converts

hydrocarbon feedstocks, light olefins, aromatics and their derivatives

into primarily light olefin products such as ethylene or propylene or

other products such as toluene, benzene, or derivatives of olefins and

aromatic products such as cyclohexane, acrylates, alcohols,

caprolactam, or other petrochemical products.

Customs Response: As previously stated, there is no authority to

extend the application of 19 U.S.C. 81c(d) beyond a crude petroleum

refinery.

Comment: Two commenters proposed deletion of ``market'' and ``each

month'' from the definition in proposed Sec. 146.92(g).

Customs Response: Customs disagrees with this suggestion. A refiner

has the option to use the market value of each product or a published

standard value such as Platts.

Comment: Two commenters suggested addition of the phrase ``is an

inventory control'' before the word ``method'' in proposed

Sec. 146.92(h) and replacement of the phrase ``set forth in T.D. 66-

16'' with ``as verified and adopted by the Secretary of the Treasury''.

Customs Response: The suggested changes have not been adopted.

Producibility is not an inventory control because it does not reflect

actual feedstocks in inventory at any given time. It is a statutory

method to account for import duties owed on privileged foreign

feedstocks. The Industry Standards of Potential Production are set

forth in T.D. 66-16 and, even if that Treasury Decision is modified in

the future, the reference will always be to ``T.D. 66-16 as modified by

T.D.----''.

Comment: Four commenters suggested replacement of the definition in

proposed Sec. 146.92(i) with the following language:

Relative value means a factor assigned to each final product

attributed to the separation from a privileged foreign feedstock equal

to the ratio of its ``price of product'' to the average ``price of

product'' for all final products at the time of separation.

Customs Response: Customs disagrees with this suggestion because

``relative value'' is a dollar value assigned to products and not a

factor. Therefore, the definition remains as proposed.

Comment: Two commenters suggested addition of ``or production

operating unit'' to the title of Sec. 146.92 and insertion of the

following language in the definition:

Production operating unit means a unit in a production facility in

which feedstock is processed such as a thermal cracking furnace or

distillation tower.

Four commenters suggested deletion of proposed Sec. 146.92(j)

(definition of ``Refinery operating unit'') in its entirety.

Alternatively, one commenter suggested the definition should read as

``a facility within a refinery wherein feedstocks lose their unique

physical identity or may undergo changes in physical characteristics''.

Another commenter agreed with the proposed definition but also

suggested adding the words, ``including, but not limited to, API

gravity, distillation traits, chemical characteristics, etc.'' Yet

another commenter proposed deletion of any reference to ``operating

unit'' in this section and in proposed Secs. 146.93(a) (1) and (4),

146.93(b), 146.94(a), and 146.96(a)(1).

Customs Response: Customs agrees with the position asserted by the

commenters that the manufacture and manipulation of feedstocks begins

on admission to a refinery subzone because a refiner deliberately mixes

various feedstocks on admission to achieve optimum characteristics for

processing. For that reason, proposed Sec. 146.92(j) is unnecessary and

has been deleted. Based on the assertion by refiners that the mixing

occurs on admission, the admission of feedstock in nonprivileged status

will be binding and a post-admission request for privileged status will

be denied unless the refiner establishes that the feedstock was not

manipulated or manufactured to effect a change in tariff

classification. A new Sec. 146.93(e) has been added to reflect this

position.

Comment: Two commenters suggested revising proposed Sec. 146.92(k)

to read as follows:

Time of separation in the case of privileged foreign feedstock

means the manufacturing period in which such feedstock is deemed to

have been separated into two or more final feedstocks.

Customs Response: Customs disagrees with this suggestion since it

merely adds words without changing the substance of the definition.

Comment: Three commenters proposed inclusion of the following

language in proposed Sec. 146.93(a) immediately following

``Attribution'' and before ``(1) Producibility'':

(a) Attribution. All final products removed from or consumed within

a petroleum refinery zone must be attributed to feedstock processed

within said petroleum refinery zone in the current or prior

manufacturing period. Attribution must be based on records maintained

by the operator. Attribution may be made by applying one of the

authorized inventory control methods set forth in this section. Records

may be maintained on a weight or volume basis.

Two commenters suggested that the phrase ``have been introduced

into a refinery operating unit'' in proposed Sec. 146.93(a)(1) be

replaced with ``are eligible for attribution, as set forth in paragraph

(b), of this section * * *''. Another commenter proposed replacement of

the same phrase with ``are eligible for attribution, as set forth in

paragraph (a)(4) of this section * * *''. A third commenter recommended

replacement of the same phrase with the words ``are eligible for

attribution * * *''.

Two other commenters suggested the inclusion of the phrase ``or

production operating unit'' after ``refinery operating unit''.

Customs Response: Because Customs accepts the assertions of

refiners that [[Page 20630]] they begin to manipulate all feedstocks on

admission to achieve an optimum set of characteristics for processing,

Customs has modified Sec. 146.93(a)(1) accordingly.

Comment: Two commenters recommended that ``[i]n addition, an

operator may use such other inventory control method(s) as approved by

the Secretary of the Treasury that protects the revenue'' be added at

the end of proposed Sec. 146.93(a)(3).

Customs Response: Customs disagrees. The provision for additional

methods is covered by Sec. 146.96.

Comment: Two commenters suggested re-designating proposed

Sec. 146.93(a)(4) as (b). The commenters propose the section should

read as follows:

(b) Feedstock eligible for attribution. Feedstock admitted into the

refinery zone or subzone is eligible for attribution to any final

product in accordance with the operator's inventory control method.

One commenter suggested the entire proposed section be deleted and

replaced with:

(4) Feedstock eligible for attribution. Feedstock admitted into the

refinery zone or subzone is eligible for attribution to the extent that

such feedstock is not remaining in tank inventory at the end of the

manufacturing period as determined in accordance with the operator's

zone procedure. For a given manufacturing period, the quantity of

feedstock eligible for attribution may be computed as beginning

inventory, plus receipts less shipments of feedstock out of the zone,

minus ending inventory.

Customs Response: Customs has incorporated some of the suggested

language and, therefore, Sec. 146.93(a)(4) (redesignated as

Sec. 146.93(b)) has been reworded.

Comment: Four commenters suggested redesignating proposed

Sec. 146.93(b) as (c) and replacing the phrase ``introduced into a

refinery operating unit'' with ``eligible for attribution under

Sec. 146.93(b) * * *''.

Customs Response: Customs agrees and has so modified the wording of

this section (redesignated as Sec. 146.93(d)).

Comment: Four commenters suggested redesignating proposed

Sec. 146.93(c) as (d), and deletion of the sentence ``(a)d valorem * *

* relative value calculation'' because duties are not relevant to the

relative value calculation.

Customs Response: Customs disagrees and this language has been

retained.

Comment: One commenter recommended deletion of proposed

Sec. 146.94(a) in its entirety. Another commenter suggested that a

refiner should only be required to maintain appropriate inventory

records to substantiate feedstocks processed and remaining in ending

inventory. Two other commenters suggested that the section should read

as follows:

(a) Feedstock processed. The operator must maintain appropriate

inventory records during the manufacturing period to substantiate the

feedstock eligible for attribution under Sec. 146.93(a)(4) and in

accordance with the operator's selected inventory control method.

Another variation was offered by a commenter who suggested the

section should read as follows:

(a) Feedstock processed. The operator shall maintain appropriate

inventory records to establish the quantity of feedstock eligible for

attribution under Sec. 146.93(a)(4) during each manufacturing period.

Customs Response: Customs disagrees that this subsection should be

deleted in its entirety. However, Customs does agree with the suggested

changes and Sec. 146.94(a) has been reworded to reflect the refiners'

assertion that feedstocks are manipulated or manufactured on admission.

Comment: Two commenters proposed replacement of the language in

proposed Sec. 146.94(b) with the following:

The operator shall maintain records to establish the quantity of

products consumed in or removed from the zone or subzone during the

entry period.

Another commenter suggested replacing this proposed section with:

(b) Final product removed, consumed, lost or destroyed. The

operator shall maintain appropriate inventory records to establish the

quantity of final products removed from, consumed in, lost, or

destroyed in the subzone during the manufacturing period.

Customs Response: Customs disagrees with the suggested changes for

the reasons noted in the Customs Response with respect to

Sec. 146.92(d).

Comment: Three commenters suggested deletion of any references to

``week'' in proposed Sec. 146.94(c) and insertion of ``approved entry

period'' instead.

Customs Response: As was explained in the March 4, 1994, Federal

Register notice, while a manufacturing or accounting period may be

greater than a week, there is no authority to permit a consumption

entry covering products removed from a zone to exceed one week. Thus,

the language of Sec. 146.94(c) remains in substance as originally

proposed.

Comment: Two commenters suggested deletion of the phrase ``* * * is

dutiable if entered for consumption unless otherwise exempt from duty''

in proposed Sec. 146.94(d) and that it be replaced with ``shall be

treated as foreign merchandise when entered for consumption''.

Customs Response: The relevancy of this suggested change is not

understood and, therefore, the suggestion has not been adopted. All

merchandise, except for domestic status merchandise, when entered for

consumption is foreign merchandise.

Comment: One commenter suggested that the title to proposed

Sec. 146.94(e) should read ``Attributing gain or loss; acceptable

methods'' instead of the proposed title. Another commenter remarked

that the regulations should specify that determination of gain or loss

may be done either at time of separation (production) or at time of

removal from or consumption in the zone.

Customs Response: Neither of these suggested changes have been

adopted since they merely add words without changing the substance.

Comment: One commenter suggested that the word ``account'' in

proposed Sec. 146.94(e)(1) be replaced with ``attribute''.

Customs Response: Customs disagrees. Attribution refers to matching

actual measured amounts of privileged foreign feedstock consumed in, or

removed from, the subzone refinery in the form of final products

against the limits imposed by T.D. 66-16 or other approved method.

Comment: One commenter proposed insertion of the phrase ``or loss''

after ``volume gain'' in proposed Sec. 146.94(e)(2) and insertion of

the following at the end of the section:

The operator may determine the feedstock factor using values

associated with the total removals from and consumption in the zone or

subzone for the period in lieu of using such values for production

during the period.

Customs Response: Customs agrees with respect to the first

suggestion. Regarding the second suggestion, it is not clear which

``period'' the commenter is referring to. Customs has agreed with prior

comments that the manufacturing period will be up to a calendar month.

Therefore, this change was not adopted.

Comment: One commenter suggested insertion of the following

language at the end of proposed Sec. 146.94(e)(3):

* * * at either:

(A) The time of separation, or

(B) The time of removal from or consumption in the zone or subzone.

Customs Response: Customs disagrees. As noted above, prior

commentors had requested that the [[Page 20631]] manufacturing period

not exceed a calendar month and Customs revised the regulations

accordingly.

Comment: A commenter suggested that deviations from T.D. 66-16 be

provided for.

Customs Response: Customs agrees and has amended Sec. 146.95(a)(3)

to permit deviations from T.D. 66-16 with approval from Customs. It

requires that any such deviation not be inconsistent with any related

claim for drawback under 19 U.S.C. 1313.

Comment: Two commenters advocated incorporation of the entire

proposed Sec. 146.95 into proposed Sec. 146.96.

Customs Response: Customs agrees. Therefore, proposed Sec. 146.96

is now redesignated as Sec. 146.95.

Comment: Three commenters suggested that any references to ``listed

in'' in proposed Sec. 146.95(b) should be replaced with ``provided

for''.

Customs Response: Customs agrees with this suggestion and has so

changed Sec. 146.95(b) (redesignated as Sec. 146.95(a)(2)).

Comment: One commenter suggested the following: replacement of the

words ``using the * * * in T.D. 66-16'' in proposed Sec. 146.96(a)(1)

with the provisions of Sec. 146.95--to be denominated as new

subparagraphs (2) and (3); replacement of the words ``not listed'' with

the words ``not provided for''; and replacement of the reference to

``T.D. 66-16'' with the words ``industry standards of potential

production on a practical operating basis''.

One commenter noted that proposed Sec. 146.96(a)(1) should not be

limited to feedstocks introduced into the refinery operating unit.

Another commenter suggested replacing the phrase ``introduced into a

refinery operating unit'' with ``eligible for attribution''.

A commenter proposed deletion of the sentence ``The operator is * *

* prior period.'' and the phrase ``* * * using the * * * T.D. 66-16''.

Customs Response: Customs does not agree that references to T.D.

66-16 should be deleted from these regulations. Attribution uses the

industry standards of potential production on a practical operating

basis as set forth in T.D. 66-16. End products which are admitted into

the zone and subsequently entered for consumption without any further

processing are eligible for attribution, and the text has been modified

to reflect this. The definition of a refinery in Sec. 146.92(f) refers

to feedstocks and products listed in T.D. 66-16. Thus, to avoid

confusion the same terminology is used here.

Comment: Two commenters suggested deletion of proposed

Sec. 146.96(a)(2) in its entirety. Other commenters suggested moving

the example in this proposed section to the Appendix.

Customs Response: Customs disagrees that Sec. 146.96(a)(2)

(redesignated at Sec. 146.95(b)) should be deleted. However, the

example has been moved to the appendix.

Comment: All of the comments received suggested that the appendix

include some introductory language to the effect that where there is

any inconsistency between an example and the regulation, the regulation

prevails.

Customs Response: Customs agrees and has incorporated this change.

Comment: Four of the comments received suggested that any

references to ``actual production records'' and ``recordation'' in

proposed Sec. 146.96(b) be changed to ``refinery accounting records''

and ``accounting principles'', respectively. The suggestion was also

made that the example be included in the appendix.

Customs Response: Customs disagrees regarding the rewording of

Sec. 146.96(b) (redesignated as Sec. 146.95(c)). Accounting records

could mean records that summarize net activity over a period. Customs

needs to verify actual amounts admitted into, removed from, or consumed

in a refinery subzone. Customs also needs to know if any adjustment was

made to those amounts recorded rather than a period-end summary which

nets the amount without disclosing the existence of any adjustment. The

example is more appropriately placed within the section because it

illustrates the precise principle applied.

Comment: One commenter proposed including introductory language in

proposed Sec. 146.97(a) as follows:

An operator may use the FIFO method of inventory accounting. The

use of this method is illustrated in the appendix to this subpart.

Customs Response: Customs disagrees because Sec. 146.93(a)(3)

already provides that FIFO may be used as an inventory method.

Comment: Most commenters suggested addition of a new Sec. 146.97(d)

to provide as follows:

(d) Appeal to the Commissioner. In the event that the Director,

Office of Regulatory Audit fails to approve a request under paragraph

(c) of this section, an operator may file an appeal with the

Commissioner of Customs for further review. Denial by the Commissioner

of Customs may be appealed to the Court of International Trade under 28

U.S.C. 1581(i).

Customs Response: Customs disagrees with this suggestion. The

proposal would change the statutory scope of jurisdiction of the Court

which is beyond this rulemaking.

Comment: One commenter noted that the proposed regulations do not

address zone-to-zone transfers and accounting for non-privileged

foreign goods.

Customs Response: It is Customs position that these regulations are

not the appropriate vehicle for addressing the issue of accounting for

non-privileged status merchandise. Additionally, these regulations do

not authorize the use of zone-to-zone transfers where the start of a

manufacturing period in one zone refinery would be carried over to

another zone refinery. Customs would consider promulgating regulations

to handle such transfers but only if interested parties submitted

detailed mathematical examples, with dates, showing how such transfers

would be recorded by both the first and subsequent refineries, together

with how the end products that are removed from the last zone would be

entered for consumption, consumed in the zone, or withdrawn for

exportation as defined in Secs. 146.92 (e), (g), (i), and (j). Such a

proposal must discuss the responsibilities of each refiner in the

transfer chain with respect to recordkeeping and duty liability if

there was a failure to maintain these records by one or more of the

transferors.

Comment: A commenter noted that privileged foreign merchandise

``liquidations'' are not liquidations within the meaning of 19 U.S.C.

1500. Customs has the right to correct the classification and

appraisement until the bulletin notice of liquidation is posted and the

protest period begins. Prior to such final notice, the importer has the

right and obligation to change classification when conditions warrant.

Such change of classification does not affect zone status.

Customs Response: Customs basically agrees and has made modified

Sec. 146.65 to clarify this point.

Conclusion

Based on the above, Customs believes that the proposed regulatory

amendments should be adopted as a final rule with the following

changes: Sec. 146.65 is revised to reflect Customs authority under 19

U.S.C. 1500 to fix the final classification of merchandise classified

as privileged merchandise; Sec. 146.91 is revised to eliminate

unnecessary references to eligible feedstock (the second sentence) and

to include a new third sentence to clarify that these regulations do

not address [[Page 20632]] zone-to-zone transfers; in Sec. 146.92, one

definition is deleted (Sec. 146.92(j)) and one definition is added

(Sec. 146.92(k)); Sec. 146.93 is expanded to include privileged status

after admission (paragraph (e)) and new paragraph (b) is added to

clarify feedstock eligible for attribution; in Sec. 146.94, paragraph

(a) is revised to clarify recordkeeping requirements applicable to

feedstocks admitted into the subzone; and in Sec. 146.95, language is

added to subparagraphs (a)(3) (i) and (ii) regarding attribution to

product or feedstock not listed in T.D. 66-16, and to subparagraphs (b)

regarding Customs use of refinery operating records. Other changes to

the proposed regulations involve the renumbering of two provisions

caused by the incorporation of proposed Sec. 146.95 into the text of

proposed Sec. 146.96, which is redesignated as Sec. 146.95; a

corresponding renumbering changes occur in proposed Sec. 146.97, which

is now redesignated as Sec. 146.96. Also, the example contained in

proposed Sec. 146.96(a)(2) is moved to the appendix, which contains

expanded examples.

The Regulatory Flexibility Act and Executive Order 12866

Based on the supplementary information set forth above, pursuant to

the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq.,

it is certified that the regulations will not have a significant

economic impact on a substantial number of small entities. Accordingly,

the regulations are not subject to the regulatory analysis or other

requirements of 5 U.S.C. 603 and 604. This document does not meet the

criteria for a ``significant regulatory action'' as specified in E.O.

12866.

Paperwork Reduction Act

The collection of information requirements contained in these final

regulations have been reviewed and approved by the Office of Management

and Budget (OMB) in accordance with Paperwork Reduction Act of 1980 (44

U.S.C. 3507) under control number 1515-0189. The estimated average

annual burden associated with this collection is 18,824 hours, or 2,353

hours per respondent or recordkeeper. Comments concerning the accuracy

of this burden estimate and suggestions for reducing this burden should

be directed to the U.S. Customs Service, Paperwork Management Branch,

Room 6316, 1301 Constitution Avenue, NW., Washington, DC 20229, or the

Office of Management and Budget, Attention: Desk Officer for the

Department of the Treasury, Office of Information and Regulatory

Affairs, Washington, DC 20503.

Drafting Information

The principal author of this document was Russell Berger,

Regulations Branch, U.S. Customs Service. However, personnel from other

offices participated in its development.

List of Subjects in 19 CFR Part 146

Customs duties and inspection, Entry, Exports, Foreign-trade zones,

Imports, Penalties, Petroleum, Reporting and recordkeeping

requirements.

Amendments to the Regulations

For the reasons stated above, the proposed amendments to part 146

of the Customs Regulations (19 CFR part 146), which were published at

59 FR 10342 on March 1, 1994, are adopted as a final rule as set forth

below.

PART 146--FOREIGN-TRADE ZONES

1. The general authority citation for part 146 is revised to read

as follows:

Authority: 19 U.S.C. 66, 81a-81u, 1202 (General Note 20,

Harmonized Tariff Schedule of the United States (HTSUS)), 1623,

1624.

* * * * *

2. In Sec. 146.65, paragraph (a)(1) is amended by adding a sentence

at the end to read as follows:

Sec. 146.65 Classification, valuation, and liquidation.

(a) Classification.--(1) * * * Notwithstanding the grant of

privileged status, Customs may correct any misclassification of any

such entered merchandise when it posts the bulletin notice of

liquidation under Sec. 159.9 of this chapter.

* * * * *

3. Part 146 is amended by adding a new subpart H and appendix to

read as follows:

Subpart H--Petroleum Refineries in Foreign-Trade Subzones

Sec.

146.91 Applicability.

146.92 Definitions.

146.93 Inventory control and recordkeeping system.

146.94 Records concerning establishment of manufacturing period.

146.95 Methods of attribution.

146.96 Approval of other recordkeeping systems.

Appendix to Part 146--Guidelines for Determining Producibility and

Relative Values for Oil Refinery Zones

Subpart H--Petroleum Refineries in Foreign-Trade Subzones

Sec. 146.91 Applicability.

This subpart applies only to a petroleum refinery (as defined

herein) engaged in refining petroleum in a foreign-trade zone or

subzone. Further, the provisions relating to zones generally, which are

set forth elsewhere in this part, including documentation and document

retention requirements, and entry procedures, such as weekly entry,

shall apply as well to a refinery subzone, insofar as applicable to and

not inconsistent with the specific provisions of this subpart. It does

not cover zone-to-zone transfers in which the fact of removal from one

zone is ignored.

Sec. 146.92 Definitions.

(a) Attribution. ``Attribution'' means the association of a final

product with its source material.

(b) Feedstocks. ``Feedstocks'' means crude petroleum or

intermediate product that is used in a petroleum refinery to make a

final product.

(c) Feedstock factor. ``Feedstock factor'' means the relative value

of final products utilizing T.D. 66-16 (see Sec. 146.92(h)), and which

takes into account any volumetric loss or gain.

(d) Final product. ``Final product'' means any petroleum product

that is produced in a refinery subzone and thereafter removed therefrom

or consumed within the zone.

(e) Manufacturing period. ``Manufacturing period'' means a period

selected by the refiner which must be no more than a calendar month

basis, for which attribution to a source feedstock must be made for

every final product made, consumed in, or removed from the refinery

subzone.

(f) Petroleum refinery. ``Petroleum refinery'' means a facility

that refines a feedstock listed on the top line of the tables set forth

in T.D. 66-16 into a product listed in the left column of the tables

set forth in T.D. 66-16.

(g) Price of product. ``Price of product'' means the average per

unit market value of each final product for a given manufacturing

period or the published standard product value if updated each month.

(h) Producibility. ``Producibility'' is a method of attributing

products to feedstocks for petroleum manufacturing in accordance with

the Industry Standards of Potential Production set forth in T.D. 66-16.

(i) Relative value. ``Relative value'' means a value assigned to

each final product attributed to the separation from a privileged

foreign feedstock based on the ratio of the final product's value

compared to the privileged foreign feedstock's duty.

(j) Time of Separation. ``Time of separation'' means the

manufacturing period in which a privileged foreign status feedstock is

deemed to have been [[Page 20633]] separated into two or more final

products.

(k) Weighted Average. ``Weighted average'' means the relative value

of merchandise, which is determined by dividing the total value of

shipments in a given period by the total quantity shipped in the same

given period. See example in section VI of the appendix to this part.

Sec. 146.93 Inventory control and recordkeeping system.

(a) Attribution. All final products removed from or consumed within

a petroleum refinery subzone must be attributed to feedstock admitted

into said petroleum refinery subzone in the current or prior

manufacturing period. Attribution must be based on records maintained

by the operator. Attribution may be made by applying one of the

authorized methods set forth in this section. Records must be

maintained on a weight or volume basis.

(1) Producibility. The producibility method of attribution requires

that records be kept to attribute final products to feedstocks which

are eligible for attribution as set forth in this section during the

current or prior manufacturing period.

(2) Actual production records. An operator may use its actual

production records as provided for under Sec. 146.95(b) of this

subpart.

(3) Other inventory method. An operator may use the FIFO (first-in,

first-out) method of accounting (see Sec. 191.22(c) of this chapter).

The use of this method is illustrated in the appendix to this part.

(b) Feedstock eligible for attribution. Only a feedstock that has

been admitted into the refinery subzone is eligible for attribution.

For a given manufacturing period, the quantity of feedstock eligible

for attribution may be computed as beginning inventory, plus receipts

less shipments of feedstock out of the subzone, and less ending

inventory.

(c) Consumption or removal of final product. Each final product

that is consumed in or removed from a refinery subzone must be

attributed to a feedstock eligible for attribution during the current

or a prior manufacturing period. Each final product attributed as being

produced from the separation of a privileged foreign status feedstock

must be assigned the proper relative value as set forth in paragraph

(d) of this section.

(d) Relative value. A relative value calculation is required when

two or more final products are produced as the result of the separation

of privileged foreign status feedstock. Ad valorem and compound rates

of duty must be converted to specific rates of duty in order to make a

relative value calculation.

(e) Privileged status after admission. Nonprivileged status

feedstock is eligible for privileged status only if the request shows

to the satisfaction of the Customs Service that there was no

manipulation or manufacture of the feedstock to change its tariff

classification before the request is granted. The absence of such

manipulation or manufacture can be shown by demonstrating that the

feedstock was placed in an empty tank, in a tank that contained only

feedstock with the same nominal specifications or providing a sample

which shows there was no change in tariff status. The existence of

negligible amounts of other feedstocks may be disregarded only in

accordance with Sec. 146.95(b). A request for after-admission

privileged foreign status shall be denied unless the feedstock's tank

records from admission to the time that the request is made accompany

the request. A refiner who makes such a request shall not put any other

feedstock having different nominal specifications into the tank until

the request for privileged status is granted. The Customs Service will

deny or revoke a post-admission request if a refiner fails to retain

the integrity of the feedstock in the tank.

(f) Consistent use required. The operator must use the selected

method, measurement (weight or volume), and the price of product

consistently (see Sec. 146.92(g) of this subpart and paragraph (a) of

this section).

Sec. 146.94 Records concerning establishment of manufacturing period.

(a) Feedstock admitted into the refinery subzone. The operator must

maintain appropriate inventory records during the manufacturing period

to substantiate the feedstock(s) eligible for attribution under

Sec. 146.93(b) and in accordance with the operator's selected

attribution method.

(b) Final product consumed in or removed from subzone. The operator

must record the date and amount of each final product consumed in, or

removed from the subzone.

(c) Consumption or removal. The consumption or removal of a final

product during a week may be considered to have occurred on the last

day of that week for purposes of attribution and relative value

calculation instead of the actual day on which the removal or

consumption occurred, unless the refiner elects to attribute using the

FIFO method (see section II of the appendix to this part).

(d) Gain or loss. A gain or loss that occurs during a manufacturing

period must be taken into account in determining the attribution of a

final product to a feedstock and the relative value calculation of

privileged foreign feedstocks. Any gain in a final product attributed

to a non-privileged foreign status feedstock is dutiable if entered for

consumption unless otherwise exempt from duty.

(e) Determining gain or loss; acceptable methods.--(1) Converting

volume to weight. Volume measurements may be converted to weight

measurements using American Petroleum Institute conversion factors to

account for gain or loss.

(2) Calculating feedstock factor to account for volume gain or

loss. A feedstock factor may be calculated by dividing the value per

barrel of production per product category by the quotient of the total

value of production divided by all feedstock consumed. This factor

would be applied to a finished product that has been attributed to a

feedstock to account for volume gain.

(3) Calculating volume difference. Volume difference may be

determined by comparing the amount of feedstocks introduced for a given

period with the amount of final products produced during the period,

and then assigning the volume change to each final product

proportionately.

Sec. 146.95 Methods of attribution.

(a) Producibility.--(1) General. A subzone operator must attribute

the source of each final product. The operator is limited in this

regard to feedstocks which were eligible for attribution during the

current or prior manufacturing period. Attribution of final products is

allowable to the extent that the quantity of such products could have

been produced from such feedstocks, using the industry standards of

potential production on a practical operating basis, as published in

T.D. 66-16. Once attribution is made for a particular product, that

attribution is binding. Subsequent attributions of feedstock to product

must take prior attributions into account. Each refiner shall keep

records showing each attribution.

(2) Industry standards of potential production. The industry

standards of potential production on a practical operating basis

necessary for the producibility attribution method are contained in

tables published in T.D. 66-16. With these tables, a subzone operator

may attribute final products consumed in, or removed from, the subzone

to feedstocks during the current or a prior manufacturing period.

(3) Attribution to product or feedstock not listed in T.D. 66-16.

(i) For purposes [[Page 20634]] of attribution, where a final product

or a feedstock is not listed in T.D. 66-16, the operator must submit a

proposed attribution schedule, supported by a technical memorandum, to

the appropriate district director. The district director shall refer

the request to the Director, Office of Regulatory Audit (``ORA''), who

will verify the refiner's records and will coordinate with the

Director, Office of Laboratories and Scientific Services (``OLSS'').

The Director, ORA, shall either approve or deny the request. If the

request is approved, the Director, ORA, shall publish a modification of

T.D. 66-16. If an operator elects to show attribution on a

producibility basis, but fails to keep records on that basis, the

operator shall use its actual operating records to determine

attribution and any necessary relative value calculation upon the

Customs Service demand and subject to verification.

(ii) An operator may attribute a final product to a feedstock in

excess of the amount allowed under T.D. 66-16, when authorized by

Customs, without losing the ability to attribute under T.D. 66-16 for

all other feedstock-final product combinations. The operator must use

its actual production records for the requested feedstock-final product

combination. The operator must agree in writing that it will not, and

it will not enable any other person, to file a drawback claim under 19

U.S.C. 1313 inconsistent with those actual production records for that

feedstock-final product combination. The operator shall file its

request in accordance with paragraph (a)(3) of this section. The

Director, ORA, and the Director, OLSS, must determine whether T.D. 66-

16 needs to be modified and shall publish in the Customs Bulletin each

approval granted under this paragraph and request public comments with

each such approval.

(4) Attribution to privileged foreign feedstock; relative value. If

a final product is attributed to the separation of a privileged foreign

feedstock a relative value must be assigned (see section IV of the

appendix to this part).

(b) Refinery operating records. An operator may use the actual

refinery operating records to attribute the feedstocks used to the

removed or consumed products. Customs shall accept the operator's

operating conventions to the extent that the operator demonstrates that

it actually uses these conventions in its refinery operations. Whatever

conventions are elected by the operator, they must be used consistently

in order to be acceptable to Customs. Additionally, Customs may use

these records to test the validity of admissions into the subzone,

consumption within and removals from the subzone.

Example. If the operator mixes three equal quantities of

material in a day tank and treats that product as a three-part

mixture in its production unit, Customs will accept the resulting

product as composed of the three materials. If, in the alternative,

the operator assumes that the three products do not mix and treats

the first product as being composed of the first material put into

the day tank, the second product as composed of the second material

put into the day tank, and the third product as being composed of

the third material put into the day tank, Customs will accept that

convention also.

Sec. 146.96 Approval of other recordkeeping systems.

(a) Approval procedure. An operator must seek prior approval of

another recordkeeping procedure by submitting the following to the

Director, Office of Regulatory Audit:

(1) An explanation of the method describing how attribution will be

made when a finished product is removed from or consumed in the

subzone, and how and when the feedstocks will be decremented;

(2) A mathematical example covering at least two months which shows

the amounts attributed, all necessary relative value calculations, the

dates of consumption and removal, and the amounts and dates that the

transactions are reported to Customs.

(b) Failure to comply. Requests received that fail to comply with

paragraph (a) of this section will be returned to the requester with

the defects noted by the Director, Office of Regulatory Audit.

(c) Determination by Director. When the Director, Office of

Regulatory Audit, determines that the recordkeeping procedures provide

an acceptable basis for verifying the admissions and removals from or

consumption in a refinery subzone, the Director will issue a written

approval to the applicant.

Appendix to Part 146--Guidelines for Determining Producibility and

Relative Values for Oil Refinery Zones

Where an example is set out in this appendix, the example is for

purposes of illustrating the application of a provision, and where

there is any inconsistency between the example and the provision,

the provision prevails to the extent of the inconsistency.

Alternative formats are also acceptable so long as they are

consistent with the provisions of this part.

I. Attribution Using Producibility Showing Manufacturing Periods From

Admission to Removal Within a Calender Month.

Volume losses and gains accounted for by weight.

Day 1

Receipt into the refinery subzone during a 30-day month:

50,000 pounds privileged foreign (PF) class II crude oil.

50,000 pounds PF class III crude oil.

50,000 pounds domestic status class III crude oil.

Day 10

Removal from the refinery subzone for exportation of 50,000

pounds of aviation gasoline.

The period of manufacture for the aviation gasoline is Day 1 to

Day 10. The refiner must first attribute the designated source of

the aviation gasoline.

In order to maximize the duty benefit conferred by the zone

operation, the refiner chooses to attribute the exported aviation

gasoline to the privileged foreign status crude oil. Under the

tables for potential production (T.V. 66-16), class II crude has a

30% potential, and class III has a 40% potential. The maximum

aviation gasoline producible from the class II crude oil is 15,000

pounds (50,000 x .30). The maximum aviation gasoline producible

from the privileged foreign status class III crude oil is 20,000

pounds (50,000 x .40). The domestic class III crude would also

make 20,000 pounds of aviation gasoline.

The refiner could attribute 15,000 pounds of the privileged

foreign class II crude oil, 20,000 pounds of the privileged foreign

class III crude oil, and 15,000 pounds of the domestic class III

crude oil as the source of the 50,000 pounds of the aviation

gasoline that was exported; 35,000 pounds of class II crude oil

would be available for further production for other than aviation

gasoline, 30,000 pounds of privileged foreign class III crude oil

would be available for further production for other than aviation

gasoline, and 35,000 pounds of domestic status class III crude oil

would be available for further production, of which up to 5,000

pounds could be attributed to aviation gasoline.

Day 21

Receipt in the refinery subzone:

50,000 pounds PF status class I crude oil.

50,000 pounds PF status class IV crude oil.

Day 30

Removal from the refinery subzone:

30,000 pounds of motor gasoline for consumption.

10,000 pounds of jet fuel sold to the US Air Force for use in

military aircraft.

10,000 pounds of aviation gasoline sold to a U.S. commuter airline

for domestic flights.

10,000 pounds of kerosene for exportation.

To the extent that the crude oils that entered production on Day

1 are attributed as the designated sources for the products removed

on Day 30, the period of manufacture is Day 1 to Day 30. If the

refiner chooses to attribute the crude oils that were admitted on

Day 21 as the designated sources of the products removed on Day 30

using the production standards published in T.D. 66-16, the

manufacturing period is Day 21 to Day 30. This choice will be

important if a relative value calculation on the privileged foreign

status crude oil is required, because [[Page 20635]] the law

requires the value used for computing the relative value to be the

average per unit value of each product for the manufacturing period.

Relative value must be calculated if a source feedstock is separated

into two or more products that are removed from the subzone

refinery. If the average per unit value for each product differs

between the manufacturing period from Day 1 to Day 30 and the

manufacturing period from Day 21 to Day 30, the correct period must

be used in the calculation.

In order to minimize duty liability, the refiner would try to

attribute the production of the exported kerosene and the sale of

the jet fuel to the US Air Force to the privileged foreign crude

oils. For the same reason, the refiner would try to attribute the

removed motor gasoline and the aviation gasoline for the commuter

airline to the domestic crude oil.

Accordingly, the refiner chooses to attribute up to 5,000 pounds

of the domestic status class III crude as the source of the 10,000

pounds of aviation gasoline removed from the subzone refinery for

the commuter airline. Since no other aviation gasoline could have

been produced from the crude oils that were admitted into the

refinery subzone Day 1, the refiner must attribute the remainder to

the crude oils that entered production on Day 21. Again, using the

production standards from T.D. 66-16, the class I crude could

produce aviation gasoline in an amount up to 10,000 pounds (50,000

x .20). Likewise, the class IV crude oil could produce aviation

gasoline in an amount up to 8,500 pounds (50,000 x .17).

The refiner selects use of the class I crude as the source of

the aviation gasoline. The refiner could attribute up to 27,300

pounds (35,000-5,000 x .91) of the domestic class III crude oil as

the source of the motor gasoline. This would leave 2,700 pounds of

domestic class III crude available for further production for other

than aviation gasoline or motor gasoline. The remaining motor

gasoline removed (also 2,700 pounds) must be attributed to a

privileged foreign crude oil. The refiner selects the privileged

foreign class II crude oil that entered production on Day 1 as the

source for the remaining 2,700 pounds of motor gasoline.

This would leave 32,300 pounds of privileged foreign class II

crude oil available for further production, of which no more than

27,400 pounds could be designated as the source of motor gasoline.

The refiner attributes the jet fuel that is removed from the

refinery subzone for the US Air Force for use in military aircraft

to the privileged foreign class II crude oil. The refiner could

attribute up to 20,995 pounds of jet fuel from that class II crude

oil (32,300 x .65). Designating that class II crude oil as the

source of the 10,000 pounds of jet fuel leaves 22,300 pounds of

privileged foreign class II crude oil available for further

production, of which up to 10,995 pounds could be attributed as the

source of the jet fuel. Because the motor gasoline and the jet fuel,

under the foregoing attribution, would be considered to have been

separated from the privileged foreign class II crude oil, a relative

value calculation would be required.

The jet fuel is eligible for removal from the subzone free of

duty by virtue of 19 U.S.C. 1309(a)(1)(A). The refiner could

attribute the privileged foreign class II crude oil as being the

source of the 10,000 pounds of jet fuel (22,300 x .65). The

refiner chooses to attribute the privileged foreign class III crude

oil as the source of the jet fuel. The refiner could attribute to

that class III crude oil up to 15,000 pounds of kerosene (30,000 x

.50).

II. Attribution on a FIFO Basis

(Accounting for volume losses or gains by the weight method)

Day 1-5

Transfer, into the Refinery Subzone, from one or more storage

tanks into process 150 barrels of Privileged Foreign (PF) Class II

crude oil, equivalent to 50,000 pounds.

Day 6

Removal from the refinery subzone 119 barrels of residual oils

to customs territory, equivalent to 40,000 pounds.

Since the operator uses the FIFO method of attribution, as the

product is removed from the subzone, or consumed or lost within the

subzone, attribution must be to the oldest feedstock available for

attribution. Accordingly, the 40,000 pounds of residual oils will be

attributed to 40,000 pounds of the PF Class II crude oil from Day 1-

5.

Day 10

Transfer, into the refinery subzone, from one or more storage

tanks 4 barrels of domestic motor gasoline blend stock, equivalent

to 1,000 pounds to motor gasoline blending tank.

Day 6-15

Transfer, into the refinery subzone, from one or more storage

tanks into process 320 barrels of Domestic Class III crude oil,

equivalent to 100,000 pounds.

Day 16

Removal from the refinery subzone 14 barrels of asphalt to

customs territory, equivalent to 5,000 pounds.

The 5,000 pounds of asphalt will be attributed to 5,000 pounds

of PF Class II crude oil from Day 1-5.

Day 17

Removal from the refinery subzone, 324 barrels of motor gasoline

to customs territory, equivalent to 81,000 pounds.

The 81,000 pounds of motor gasoline will be attributed to 1,000

pounds of domestic motor gasoline blend stock from Day 10, to the

remaining 5,000 pounds of PF Class II crude oil from Day 1-5 and

75,000 pounds of domestic Class III crude oil from Day 6-15.

Day 16-20

Transfer, into the refinery subzone, from one or more storage

tanks into process 169 barrels of Privileged Foreign (PF) Class III

crude oil, equivalent to 50,000 pounds.

Day 22

Removal from the refinery subzone, 214 barrels of jet fuel for

exportation, equivalent to 60,000 pounds.

The 60,000 pounds of jet fuel will be attributed to the

remaining 25,000 pounds of domestic Class III crude oil from Day 6-

15 and 35,000 pounds of PF Class III crude oil from Day 16-20.

Day 21-25

Transfer, into the refinery subzone from one or more storage

tanks into process, 143 barrels of domestic Class I crude oil,

equivalent to 50,000 pounds.

Day 30 (End of the Manufacturing Period)

It is determined that during the manufacturing period just

ended, that 34 barrels of fuel, equivalent to 10,000 pounds was

consumed, and 5 barrels of oil, equivalent to 1,500 pounds was lost

in the refining production process within the refinery subzone.

The 10,000 pounds of fuel consumed will be attributed 10,000

pounds of PF Class III crude oil from Day 16-20. The 1,500 pounds of

oil lost in the refining production process will be attributed to

1,500 pounds of PF Class III crude oil from Day 16-20. The remaining

3,500 pounds of PF Class III crude oil from Day 16-20 will be the

first to be attributed during the next manufacturing period.

III. Relative Value Calculation

Because privileged foreign feedstocks transferred into process

during Day 1-5 and Day 16-20 have two or more products attributed to

them, each feedstock will require a relative value calculation.

Relative value calculation for UIN Day 1-5, 50,000 pounds,

equivalent to 150 barrels.

----------------------------------------------------------------------------------------------------------------

DProduct

ALbs B BBLS C$/BBL value ER.V.Factor FR.V.BBL GDutiableBBL

----------------------------------------------------------------------------------------------------------------

Residual oil........ 40,000 119 15.00 1,785 .9047 108 108

Asphalt............. 5,000 14 13.00 182 .7840 11 11

Motor gasoline...... 5,000 20 26.00 520 1.5682 31 31

-------------------------------------------------------------------------------------------

Totals........ 50,000 153 ........... 2,487 ........... 150 150

----------------------------------------------------------------------------------------------------------------

A=Pounds Attributed.

B=Equivalent Barrels.

[[Page 20636]]

C=Price of Product.

D=B x C.

E=C/(Total of Column D/Attributed Crude BBLS).

Residual Oil RV Factor=15.00/(2,487/150)=.9047.

F=B x E.

G=Dutiable Barrels.

Since all products attributed to the 50,000 pounds (150 BBLS) of

PF Class II crude entered customs territory duty equals $7.88

(150 x .0525).

Feedstock factor calculation for UIN Day 16-20, 46,500 pounds

equivalent to 157 barrels.

----------------------------------------------------------------------------------------------------------------

Product Feedstock Dutiable

Lbs BBLS $/BBL value factor R.V. BBL BBL

----------------------------------------------------------------------------------------------------------------

Jet Fuel............. 35,000 125 27.00 3,375 1.1030 138 0

Fuel................. 10,000 34 12.00 408 0.4902 17 0

Consumed Process Loss 1,500 5 12.00 60 0.4902 2 0

------------------------------------------------------------------------------------------

Totals......... 46,500 164 ........... 3,843 ........... 157 0

----------------------------------------------------------------------------------------------------------------

Since jet fuel was exported, no duty is applicable. Fuel

consumed for refinery process was consumed within the subzone

premises and did not enter customs territory, thus no duty is

applicable (assume refinery not barred by duty-free consumption

restriction). Likewise, the process loss occurred entirely within

the subzone. Therefore, no duty is applicable.

IV. Attribution to Privileged Foreign Feedstock; Relative Value;

Monthly Manufacturing Period, Weekly Entries, Attribution to a Prior

Period; Volume Loss or Gain Shown by Volume Differences.

An operator who elects to attribute on a monthly basis files the

following estimated removal of final products for the first week in

September:

Jet Fuel (deemed exported on international flights)........... 20,000

Gasoline--Domestic Consumption................................ 15,000

Duty-free certified as emergency war material................. 10,000

Petroleum coke exportations................................... 10,000

Distillate for consumption.................................... 5,000

Petrochemicals exported....................................... 10,000

---------

Total removals.......................................... 70,000

Because it does not elect to make attributions for feedstocks

that were charged to operating units during the same week, the

operator attributes the estimated removals to final products made

during August from the following feedstocks:

Class II PF (privileged foreign) crude........................ 20,000

Class III PF crude............................................ 35,000

Class III D (domestic) crude.................................. 20,000

Class III NPF (nonprivileged foreign crude.................... 20,000

---------

95,000

During August the operator produced from those feedstocks:

Jet.......................................................... 35,000

Gasoline..................................................... 40,000

Petroleum Coke............................................... 10,000

Distillate................................................... 5,000

Petrochemicals............................................... 15,000

----------

105,000

There is a gain of 105,000-95,000=10,000

Using the tables in T.D. 66-16, the following choices are

available for attribution:

----------------------------------------------------------------------------------------------------------------

Petrolum Petro-

Charged Jet Gasoline coke Distillate chemical

----------------------------------------------------------------------------------------------------------------

Class II PF Crude................. 20,000 13,000 17,200 4,400 17,200 5,000

Class III PF Crude................ 35,000 24,500 31,850 14,000 31,150 10,150

Class III D Crude................. 20,000 14,000 18,200 8,000 17,800 5,800

Class III NPF Crude............... 20,000 14,000 18,200 8,000 17,800 5,800

----------------------------------------------------------------------------------------------------------------

Feedstock factors are calculated:

----------------------------------------------------------------------------------------------------------------

Feedstock

Barrels Valuebarrels Value factors

----------------------------------------------------------------------------------------------------------------

Gasoline................................................... 40,000 $25 $1,000,000 .9117

Jet Fuel................................................... 35,000 23 805,000 .8388

Distillate................................................. 5,000 20 100,000 .7294

Petroleum Coke............................................. 10,000 10 100,000 .3647

Petrochemicals............................................. 15,000 40 600,000 1.4587

----------------------------------------------------

[[Page 20637]]

105,000 ............ 2,605,000

----------------------------

Gain....................................................... -10,000 $2,605,000 ........... ...........

----------------------------

Total................................................ \1\95,000

(2)=$27.42 average value p/bbl

----------------------------------------------------------------------------------------------------------------

Using the feedstock factor the refiner makes the following

attributions:

Jet Fuel.................. 24,192 (20,291 feedstock attributed to

Class III PF Crude).

10,808 Class III NPF Crude

(attribution of 9066 solely

for purpose of accounting for

the amount of NPF used).

-------------

35,000

Gasoline................ 5,000 (4,559 feedstock attributed to

Class III PF Crude).

5,000 Class III NPF Crude

(attribution of 4599 solely

for purpose of accounting for

the amount of NPF used).

15,000 (13,676 feedstock attributed to

Class III D Crude).

-------------

Petroleum Coke............ 8,418 (3,070 feedstock attributed to

Class II PF Crude).

1,582 Class III NPF Crude

(attribution of 577 solely for

purposes of accounting for the

amount of NPF used).

-------------

10,000

Distillate................ 5,000 (3,647 feedstock attributed to

Class III Domestic).

Petrochemicals............ 3,975 (5,800 feedstock attributed to

Class III NPF Crude).

6,025 (8,789 feedstock attributed to

Class III PF Crude).

-------------

10,000

V. Weekly Entry, Weekly Manufacturing Period, and Relative Values

Calculated on the Actual Weighted Average Values at the End of the

Week.

On the weekly estimated production CF 3461, the refiner is

required to provide a pro forma invoice or schedule showing the

number of units of each type of merchandise to be removed during the

week and their zone and dutiable values. For example, on CF 3461 the

refiner estimates the following shipments and relative values for

the next week and files this on the preceding Friday.

----------------------------------------------------------------------------------------------------------------

PF shipments Value/barrel

Product week 1 (MBBLS) (platts) Total value

----------------------------------------------------------------------------------------------------------------

Motor Gasoline.................................................. 20,000 $35 $700,000

Total Alkylate.................................................. 25,000 35 875,000

Heavy Reformate................................................. 60,000 35 2,100,000

Reformer Feed................................................... 110,000 35 3,850,000

Raffinates...................................................... 200,000 35 7,000,000

Jet Fuel........................................................ 200,000 35 7,000,000

---------------- ---------------

Total..................................................... 615,000 .............. $21,525,000

----------------------------------------------------------------------------------------------------------------

Attributed Feedstock--Class III Crude: 615,[email protected] $105=$64,575

(estimated duties)

During that week the refiner actually removes the following

products and reports those on the CF 7501 filed within 10 business

days after the CF 3461 is filed. Column 3 is the actual ``weighted

average'' value for the manufacturing period, therefore, no

reconciliation is necessary.

--------------------------------------------------------------------------------------------------------------------------------------------------------

3 Value/ 5

1 Product 2 barrel(wt. 4 Totalvalue(2) x Relativevaluefactor(3)/ 6 Feedstockdistribu.(5) x 7 Liq.duties(6) x

PFShipments(mbbls) avg.) (3) (8) (2) (10)(9)

--------------------------------------------------------------------------------------------------------------------------------------------------------

Week 1:

Motor

Gasoline... 19,977 $35.70 $713,179 1.104545 22,065 $2,317

Total

Alkylate... 22,907 42.50 973,548 1.314935 30,121 3,163

Heavy

Reformate.. 58,164 31.42 1,827,513 .972123 56,542 5,937

Reformer

Feed....... 100,279 31.42 3,150,766 .972123 97,484 10,235

Raffinates.. 170,293 29.55 5,032,158 .914266 155,693 16,348

Jet Fuel.... 168,433 30.04 5,059,727 .929426 156,546 16,437

---------------------------------------------------------------------------------------------------------------------------------------

Total..... 540,053 .............. 16,756,891 ....................... 518,451 54,437

(9) (10)

--------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 518,451 x $.105 = $54,437

Volumetric Gain 21,602

Avg. Value/Barrel Crude Consumed=$16,756,891518,451=$32.321

(8)

This example shows volumetric gain of 21,602 mbbls. However, in

that PF was requested, liquidated duties are only on actual

feedstock (class III crude) used in the refining process. (518,451 @

$.105=$54,437). [[Page 20638]]

VI. Weekly Entry, Monthly Manufacturing Period, and Relative Values

Calculated on the Actual Weighted Average Values at the End of the

Month.

For example, on the CF 3461 the refiner estimates the following

shipments and relative values for the next week and files this on

the preceding Friday.

----------------------------------------------------------------------------------------------------------------

3Value/

1Product 2PFshipments(mbbls) barrel(platts) 4Totalvalue

----------------------------------------------------------------------------------------------------------------

Week 1:

Motor Gasoline......................................... 20,000 $35 $700,000

Total Alkylate......................................... 25,000 35 875,000

Heavy Reformate........................................ 60,000 35 2,100,000

Reformer Feed.......................................... 110,000 35 3,850,000

Raffinates............................................. 200,000 35 7,000,000

Jet Fuel............................................... 200,000 35 7,000,000

--------------------- ---------------

Total................................................ 615,000 .............. 21,525,000

----------------------------------------------------------------------------------------------------------------

Attributed Feedstock--Class III Crude: 615,000 @ $.105=$64,575

(estimated duties)

During the week the refiner actually removes the following

products and reports those on the CF 7501 filed within 10 business

days after the CF 3461 is filed. The reported relative values may be

an estimate based on Platts, prior period actual prices, or the

refiner's transfer prices. For this example, the estimates are based

on the refiner's actual transfer prices. Listed below are the data

to be shown on the weekly CF 7501s with actual quantities shipped

and estimated values for weeks 1-5.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3Value/ 5Relativevaluefactor(3)/

1Product 2PFshipments(mbbls) barrel(estimates) 4Totalvalue(2) x (3) (8) 6Feedstockdistrib.(5) x (2) 7Liq.duties(6) x (10)(9)

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Week 1:

Motor Gasoline............................... 19,977 $35.70 $713,179 1.104545 22,065 $2,317

Total Alkylate............................... 22,907 42.50 973,548 1.314935 30,121 3,163

Heavy Reformate.............................. 58,164 31.42 1,827,513 .972123 56,542 5,937

Reformer Feed................................ 100,279 31.42 3,150,766 .972123 97,484 10,235

Raffinates................................... 170,293 29.55 5,032,158 .914266 155,693 16,348

Jet Fuel..................................... 168,433 30.04 5,059,727 .929426 156,546 16,437

----------------------------------------------------------------------------------------------------------------------------------------------

Total...................................... 540,053 ................. 16,756,891 ........................ 518,451 $54,437

(9) (10)

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 518,451 x $.105=$54,437

Volumetric Gain 21,602

Avg. Value/Barrel Crude Consumed=$16,756,891518,451=$32.321

(8)

----------------------------------------------------------------------------------------------------------------

2 PF shipments 3Value/ barrel 5Relative 6Feedstock

1Product (mbbls) (estimated) 4Total value value factor distrib. 7Liq. duties

----------------------------------------------------------------------------------------------------------------

Week 2:

Motor

Gasoline... 20,651 $36.90 $762,022 1.145429 23,654 $2,484

Total

Alkylate... 23,435 44.25 1,036,999 1.373584 32,190 3,380

Heavy

Reformate.. 59,819 30.35 1,815,507 .942108 56,358 5,918

Reformer

Feed....... 101,167 30.10 3,045,127 .934347 94,526 9,925

Raffinates.. 172,317 29.30 5,048,888 .909514 156,726 16,456

Jet fuel.... 165,291 30.70 5,074,434 .952972 157,519 16,539

-----------------------------------------------------------------------------------------------

Total..... 542,680 .............. $16,782,977 .............. 520,973 $54,702

----------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 520,973 x $.105 = $54,702

Volumetric Gain 21,707

Avg. Value/Barrel Crude Consumed = $32.215

----------------------------------------------------------------------------------------------------------------

2 PF shipments 3Value/ barrel 5Relative 6Feedstock

1Product (mbbls) (estimated) 4Total value value factor distrib. 7Liq. duties

----------------------------------------------------------------------------------------------------------------

Week 3:

Motor

Gasoline... 18,689 $34.90 $652,246 1.091819 20,405 $2,142

Total

Alkylate... 21,511 40.25 865,818 1.259190 27,087 2,844

Heavy

Reformate.. 57,371 30.90 1,772,764 .966682 55,460 5,823

Reformer

Feed....... 99,707 30.90 3,080,946 .966682 96,386 10,121

Raffinates.. 168,112 29.65 4,984,521 .927577 155,938 16,374

[[Page 20639]]

Jet Fuel.... 172,092 29.85 5,136,946 .933834 160,707 16,874

-----------------------------------------------------------------------------------------------

Total..... 537,482 .............. $16,493,241 .............. 515,983 $54,178

----------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 515,983 x $.105=$54,178

Volumetric Gain 21,499

Avg. Value/Barrel Crude Consumed=$31.965

----------------------------------------------------------------------------------------------------------------

2 PF shipments 3Value/ barrel 5Relative 6Feedstock

1Product (mbbls) (estimated) 4Total value value factor distrib. 7Liq. duties

----------------------------------------------------------------------------------------------------------------

Week 4:

Motor

Gasoline... 21,905 $32.85 $719,579 1.027237 22,502 $2,363

Total

Alkylate... 22,552 38.75 873,890 1.211733 27,327 2,869

Heavy

Reformate.. 58,116 29.60 1,720,234 0.925607 53,791 5,648

Reformer

Feed....... 101,058 29.40 2,971,105 0.919353 92,908 9,755

Raffinates.. 169,823 30.15 5,120,163 0.942806 160,110 16,812

Jet Fuel.... 171,493 31.05 5,324,858 0.970949 166,511 17,484

-----------------------------------------------------------------------------------------------

Total..... 544,947 .............. $16,729,829 .............. 523,149 $54,931

----------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 523,149 x $.105=$54,931

Gain 21,798

Avg. Value/Barrel Crude Consumed=$31.979

----------------------------------------------------------------------------------------------------------------

2 PF shipments 3Value/ barrel 5Relative 6Feedstock

1Product (mbbls) (estimated) 4Total value value factor distrib. 7Liq. duties

----------------------------------------------------------------------------------------------------------------

Week 5:

Motor

Gasoline... 8,990 $37.25 $334,878 1.136260 10,215 $1,073

Total

Alkylate... 9,984 45.10 450,278 1.375713 13,735 1,442

Heavy

Reformate.. 25,351 31.50 798,557 0.960864 24,360 2,558

Reformer

Feed....... 43,492 31.35 1,363,474 0.956288 41,592 4,367

Raffinates.. 75,172 29.95 2,251,401 0.913583 68,677 7,211

Jet fuel.... 75,795 30.56 2,316,295 0.932190 70,654 7,418

-----------------------------------------------------------------------------------------------

Total..... 238,784 .............. $7,514,883 .............. 229,233 $24,069

----------------------------------------------------------------------------------------------------------------

Class III Crude Consumed 229,233 x $.105=$24,069

Gain 9,551

Avg. Value/Barrel Crude Consumed=$32.783

As provided in the regulations, the refiner files an amended CF

7501 for each week based on the refiner's actual weighted average

values for the month, as shown below.

------------------------------------------------------------------------

Value/

Product barrel

(MBBLS)

------------------------------------------------------------------------

Month End:

Motor Gasoline......................................... $35.27

Total Alkylate......................................... 41.84

Heavy Reformate........................................ 30.66

Reformer Feed.......................................... 30.54

Raffinates............................................. 29.69

Jet Fuel............................................... 30.42

------------------------------------------------------------------------

Reconciliation of Week 1 Using Month's End Actual Weighted Average Values

--------------------------------------------------------------------------------------------------------------------------------------------------------

3 Value/ 5 Relative 6 7 Amended wt.

1 Product 2 PF shipments barrel (wt. 4 Total value value factor Feedstockdistri. avg. duties

(mbbls) avg.) actual (2) x (3) (3)/(8) (5) x (2) (6) x (10) (9)

--------------------------------------------------------------------------------------------------------------------------------------------------------

Motor Gasoline........................................ 19,977 $35.27 $704,589 1.095716 21,889 $2,298

Total Alkylate........................................ 22,907 41.84 958,429 1.299823 29,775 3,126

Heavy Reformate....................................... 58,164 30.66 1,783,308 .952499 55,401 5,817

Reformer Feed......................................... 100,279 30.54 3,062,521 .948771 95,141 9,990

Raffinates............................................ 170,293 29.69 5,055,999 .922365 157,072 16,493

[[Page 20640]]

Jet Fuel.............................................. 168,433 30.42 5,123,732 .945043 159,176 16,713

-------------------------------------------------------------------------------------------------

Total............................................. 540,053 .............. $16,688,578 .............. 518,454 54,437

(9) (10)

--------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Consumed = 518,454 x $.105 = $54,437

Volumetric Gain 21,599

Avg.Value/Bbl Crude Consumed = $16,688,578 518,454 =

$32.189 (8)

Note: No change in amended total duties, because duty is

computed on total quantity of class III crude used. The difference

is amongst the various products, i.e., estimated weekly CF 7501

duties paid for Motor Gasoline was $2,317, while the reconciled

amount as shown above is $2,298. Additional duties owed or refunds

due would depend on the reconciliation of the weekly entry as an

entirety.

VII. Weekly entry, monthly manufacturing period, relative values

calculated on prior manufacturing period's actual weighted average

values. The prior period (PP) values are set forth below:

------------------------------------------------------------------------

Value/Barrel

Product (wt. avg.)

------------------------------------------------------------------------

Motor Gasoline.......................................... Sec. 35.28

Total Alkylate.......................................... 41.90

Heavy Reformate......................................... 31.78

Reformer Feed........................................... 30.02

Raffinates.............................................. 31.10

Jet Fuel................................................ 28.80

------------------------------------------------------------------------

Thereafter, the information provided or both the CF 3461 and CF

7501 filed for each weekly entry with respect to relative values

would remain the same. The only estimated amount would be the

quantity to be removed on the CF 3461 as shown below. On the CF 3461

the refiner estimates the following shipments and uses a prior

manufacturing period's actual weighted average values.

----------------------------------------------------------------------------------------------------------------

3 Value/

1 Product 2 PF shipments barrel (PP) 4 Total value

(mbbls) (wt. avg.)

----------------------------------------------------------------------------------------------------------------

Week 1

Motor Gasoline.............................................. 20,000 $35.28 $705,600

Total Alkylate.............................................. 25,000 41.90 1,047,500

Heavy Reformate............................................. 60,000 31.78 1,906,800

Reformer Feed............................................... 110,000 30.02 3,302,200

Raffinates.................................................. 200,000 31.10 6,220,000

Jet Fuel.................................................... 200,000 28.80 5,760,000

-----------------------------------------------

Total..................................................... 615,000 .............. 18,942,100

----------------------------------------------------------------------------------------------------------------

Attributed Feedstock--Class III Crude: 615,000 @ $.105 = $64,575

(estimated duties)

On the CF 7501, the refiner reports the following shipments and

uses a prior manufacturing period's actual average values.

----------------------------------------------------------------------------------------------------------------

3 Value/ 5 Relative 6 Feedstock

1 Product 2 PF shipments barrel (PP) 4 Total value value factor distri. (5) x 7 Liq. duties

(mbbls) (wt. avg.) (2) x (3) (3)/(8) (2) (6) x (10) (9)

----------------------------------------------------------------------------------------------------------------

Week 1:

Motor

Gasoline... 19,977 $35.28 $704,789 1.097219 21,919 $2,902

Total

Alkylate... 22,907 41.90 959,803 1.303104 29,850 3,134

Heavy

Reformate.. 58,164 31.78 1,848,452 .988368 57,486 6,036

Reformer

Feed....... 100,279 30.02 3,010,376 .933632 93,623 9,830

Raffinates.. 170,293 31.10 5,296,112 .967220 164,710 17,295

Jet Fuel.... 168,433 28.80 4,850,870 .895689 150,863 15,840

-----------------------------------------------------------------------------------------------

Total..... 540,053 .............. $16,670,402 .............. 518,451 $54,437

(9) (10)

----------------------------------------------------------------------------------------------------------------

Class III Crude Used 518,451 x $.105 = $54,437

Volumetric Gain 21,602

Avg. Value/Barrel Crude Used = $16,670,402 518,451 =

$32.154 (8)

[[Page 20641]]

----------------------------------------------------------------------------------------------------------------

3 Value/

1 Product 2 PF shipments barrel (PP) 4 Total value 5 Relative 6 Feedstock 7 Liq. duties

(mbbls) (wt. avg.) value factor distri.

----------------------------------------------------------------------------------------------------------------

Week 2:

Motor

Gasoline... 20,651 $35.28 $728,567 1.096128 22,636 $2,377

Total

Alkylate... 23,435 41.90 981,926 1.301808 30,508 3,203

Heavy

Reformate.. 59,819 31.78 1,901,048 .987386 59,064 6,202

Reformer

Feed....... 101,167 30.02 3,037,033 .932704 94,359 9,908

Raffinates.. 172,317 31.10 5,359,059 .966259 166,503 17,483

Jet Fuel.... 165,291 28.80 4,760,381 .894799 147,903 15,529

-----------------------------------------------------------------------------------------------

Total..... 542,680 .............. 16,768,014 .............. 520,973 54,702

----------------------------------------------------------------------------------------------------------------

Class III Crude Used 520,973 x $.105=$54,702

Volumetric Gain 21,707

Avg. Value/Barrel Crude Used=$32.186

----------------------------------------------------------------------------------------------------------------

3 Value/

1 Product 2 PF shipments barrel (PP) 4 Total value 5 Relative 6 Feedstock 7 Liq.duties

(mbbls) (wt. avg.) value factor distri.

----------------------------------------------------------------------------------------------------------------

Week 3:

Motor

Gasoline... 18,689 $35.28 $659,348 1.099168 20,542 $2,157

Total

Alkylate... 21,511 41.90 901,311 1.305418 28,081 2,948

Heavy

Reformate.. 57,371 31.78 1,823,250 .990124 56,803 5,964

Reformer

Feed....... 99,707 30.02 2,993,204 .935290 93,254 9,792

Raffinates.. 168,112 31.10 5,228,283 .968938 162,889 17,103

Jet Fuel.... 172,092 28.80 4,956,250 .897280 154,414 16,214

-----------------------------------------------------------------------------------------------

Total..... 537,482 .............. 16,561,646 .............. 515,983 54,178

----------------------------------------------------------------------------------------------------------------

Class III Crude Used 515,983 x $.105=$54,178

Volumetric Gain 21,499

Avg. Value/Barrel Crude Used=$32.097

--------------------------------------------------------------------------------------------------------------------------------------------------------

3 Value/

1 Product 2 PF shipments barrel (PP) 4 Total value 5 Relative 6 7 Liq. duties

(mbbls) (wt. avg.) value factor Feedstockdistri.

--------------------------------------------------------------------------------------------------------------------------------------------------------

Week 4:

Motor Gasoline.................................... 21,905 $35.28 $772,808 1.097390 24,038 $2,524

Total Alkylate.................................... 22,552 41.90 944,929 1.303306 29,391 3,086

Heavy Reformate................................... 58,116 31.78 1,846,926 .988522 57,447 6,032

Reformer Feed..................................... 101,058 30.02 3,033,761 .933777 94,365 9,908

Raffinates........................................ 169,823 31.10 5,281,495 .967371 164,281 17,250

Jet Fuel.......................................... 171,493 28.80 4,938,998 .895829 153,627 16,131

-------------------------------------------------------------------------------------------------

Total........................................... 544,947 .............. 16,818,917 .............. 523,149 54,931

--------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Used 523,149 x $.105=$54,931

Volumetric Gain 21,798

Avg. Value/Barrel Crude Used=$32.149

----------------------------------------------------------------------------------------------------------------

3 Value/

1 Product 2 PF shipments barrel (PP) 4 Total value 5 Relative 6 Feedstock 7 Liq. duties

(mbbls) (wt. avg.) value factor distri.

----------------------------------------------------------------------------------------------------------------

Week 5:

Motor

Gasoline... 8,990 $35.28 $317,167 1.097698 9,868 $1,036

Total

Alkylate... 9,984 41.90 418,330 1.303671 13,016 1,367

Heavy

Reformate.. 25,351 31.78 805,655 .988799 25,067 2,632

Reformer

Feed....... 43,492 30.02 1,305,630 .934039 40,623 4,265

Raffinates.. 75,172 31.10 2,337,849 .967642 72,740 7,638

Jet Fuel.... 75,795 28.80 2,182,896 .896080 67,919 7,131

-----------------------------------------------------------------------------------------------

Total..... 238,784 .............. 7,367,527 .............. 229,233 24,069

----------------------------------------------------------------------------------------------------------------

Class III Crude Used 229,233 x $.105=$24,069

Volumetric Gain 9,551

Avg. Value/Barrel Crude Used=$32.14

At the end of the month, the refiner must calculate its actual

weighted average values for use in the subsequent period.

[[Page 20642]]

Reconciliation of Relative Value for the Subsequent Period

--------------------------------------------------------------------------------------------------------------------------------------------------------

3 Value/ 5 Relative 6

1 Product 2 PF shipments barrel (PP) 4 Total value value factor Feedstockdistri. 7 Liq. duties

(mbbls) (wt. avg.) (2 x 3) (3)/(8) (5 x 2) (6 x (10) (9)

--------------------------------------------------------------------------------------------------------------------------------------------------------

Month End:

Motor Gasoline.................................... 90,212 $35.27 $3,181,777 1.095682 98,844 $10,379

Total Alkylate.................................... 100,389 41.84 4,200,276 1.299783 130,484 13,701

Heavy Reformate................................... 258,821 30.66 7,935,452 .952470 246,519 25,885

Reformer Feed..................................... 445,703 30.54 13,611,770 .948742 422,857 44,400

Raffinates........................................ 755,717 29.69 22,437,238 .922336 697,025 73,188

Jet Fuel.......................................... 753,104 30.42 22,909,424 .945014 711,694 74,726

-------------------------------------------------------------------------------------------------

Total........................................... 2,403,946 .............. 74,275,937 .............. 2,307,423 242,279

(9) (10)

--------------------------------------------------------------------------------------------------------------------------------------------------------

Class III Crude Used 2,307,423 x $.105=$242,279

Volumetric Gain 96,523

Avg. Value/Barrel Crude Used=$74,275,9372,307,423=$32.19 (8)

Note: Actual monthly reconciliation data could result in

attributions on a product basis that are less than or greater than

weekly distributions. This is due to the ``weighing'' of the data

i.e., motor gasoline on a weekly basis was $10,996 as compared to

$10,379 as above. No additional duties are due to the averaging.

Michael H. Lane,

Acting Commissioner of Customs.

Approved: April 5, 1995.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 95-10226 Filed 4-26-95; 8:45 am]

BILLING CODE 4820-02-P