CIT Rules Blended Mixture is a Motor Fuel, Not Petroleum Oil

June 7, 2010 by Barbara Chaves|Penalties and Courts

In BP Products North America Inc., v. U.S., the Court of International Trade ruled that a blended mixture of components known as 93 octane (premium grade) gasoline (“Conv. 93”) was properly classified as gasoline (motor fuel) under Harmonized Tariff Schedule subheading 2710.11.15 at 52.5 cents per barrel.

In December 2004 and February 2005, BP imported Conv. 93, a blended mixture of components, including at least 70 percent petroleum oils that after importation could be combined with certain additives and sold as automobile gasoline. Customs and Border Protection classified Conv. 93 under HTS 2710.11.15 and liquidated the entries.

While BP admitted that Conv. 93 was described by the terms of heading 2710, it contended its mixture was not a preparation, but instead petroleum oil that should be properly classified under 2707.50.00 free of duty.

First, the CIT reviewed Heading 2710 stating that this provision covered three distinct categories of products including “preparations containing by weight 70 percent or more petroleum oils”. The CIT considered the common definition, as well as the understanding of the word “preparation” in the Explanatory Notes to Heading 2710, determining that the term “preparation” included products destined for a specific use.

The CIT then considered the gasoline refinement process to determine if Conv. 93 was specially prepared for a specific use. The CIT concluded that Conv. 93 was derived from crude petroleum oil, to which a high aromatic blend stock was added, to create the preparation, a high octane unleaded gasoline. This preparation met typical U.S. requirements for automotive motor use and was capable of being used in automobile engines in its condition as imported. Thus Conv. 93 was a preparation since the mixture had been specially designed for a specific use.

BP Note

The CIT cited BP’s frequent references to Wikipedia in its description of the gasoline refinement process. (Wikipedia is a user-contributed online encyclopedia that allows users to directly edit any web page on their own.) The Court was aware that while several circuit courts have relied on its opinions, countless district courts have held that Wikipedia is not a reliable source. Based on the ability of any user to alter Wikipedia, the CIT was skeptical of it as a consistently reliable source of information and stated that at this time, it would not use information from this source.

(Slip Op 10-64)