The production of biodiesel inside and outside of the European Union is increasing dramatically. Because of the well-developed biodiesel market in the European Union, many undertakings are exporting biodiesel into this area from countries such as the US, Indonesia, Brazil and Argentina. Probably the largest portion of biodiesel currently being imported is of the type B99. This product is made up of 99 percent or more of organic biodiesel (B100) mixed with 1 percent or less of mineral oil.
Biodiesel is a renewable, emissions reducing fuel considered by many to be the ‘green fuel’ of choice in Europe and Asia. From a chemical point of view, it is a fatty acid methyl ester and is produced by removing glycerine from vegetable or other oils. The mineral oil added to the end product B99 does not generally have a technological function, but is added to achieve a tax relief in the US.
Same classification for B100 and B99
When biodiesel is imported into the European Union, it needs to be classified under a subheading of the Combined Nomenclature (CN). Apparently, some traders are uncertain on how biodiesel, especially B99, is to be classified. At the outset, we note that from a customs law point of view, there is no reason to differentiate between pure biodiesel and B99. The ‘golden drop’ of mineral oil added to pure biodiesel does not change the characteristics of the product. On the contrary, the organic biodiesel gives B99 its essential character. The same even applies if the added mineral oil is an additive that has a technological function for the use of the biodiesel as fuel. The end product B99 is still essentially biodiesel.
It is our understanding that both pure biodiesel and B99 are preparations of the chemical industry that come under CN Subheading 3824 9098. There is no other code in the Combined Nomenclature that could accommodate biodiesel; namely Chapter 29 CN, which generally only applies to separate chemically defined organic compounds. This classification is supported by the practice of customs authorities throughout the European Union, as evidenced by a large number of Binding Tariff Information (BTI) for B100 issued by Austrian, Dutch and German authorities and a recent BTI explicitly issued for B99 in Germany. Furthermore, this approach is confirmed by the Explanatory Notes to the Harmonised System administered by the World Customs Organization. Additionally, the European Union has – following an intensive lobbying by the European Biodiesel Board – decided to set up a special code in the Combined Nomenclature for biodiesel, which will be integrated soon (CN Subheading 3824 9091).