Ethanol/Gasoline Blending – Customs Classification versus Excise Denaturing

When ethanol is blended with gasoline, it is important to distinguish between the concept of denaturing for customs classification purposes and complete denaturing for excise purposes. Although the terminology is similar, the two concepts serve different legal purposes and should not automatically be treated as equivalent.

For customs purposes, the starting point is the product as it exists at the point of customs classification. The composition and characteristics of the resulting product determine the applicable CN classification.

Additional Note 12 to Chapter 22 of the Combined Nomenclature provides specific rules for mixtures of ethyl alcohol used as raw material for the production of motor fuels. Where the alcoholic strength is 50% vol or higher, the mixture can fall under CN subheading 2207 20 – denatured ethyl alcohol, provided the relevant conditions are met. The note expressly recognises automotive petrol conforming to EN 228 as one of the substances that may be used for denaturing.

This provision was introduced by Commission Implementing Regulation (EU) No 626/2014.

A specific example is provided by Commission Implementing Regulation (EU) 2017/2157, which classifies a mixture consisting of 70% ethanol and 30% gasoline under CN 2207 20 00. The Commission considered that the gasoline renders the ethanol unfit for human consumption while the product remains suitable for industrial use.

This demonstrates that, from a customs perspective, gasoline can function as a customs-recognised denaturant. The assessment is based on the resulting product and the specific CN provisions applicable to it.

The 50% threshold should not, however, be interpreted as meaning that a product containing less than 50% ethanol is no longer “ethanol” in a general sense. Rather, it determines whether the specific Chapter 22 provision for ethanol mixtures under CN 2207 20 can apply. If the mixture falls outside that provision, its classification must be determined under the other applicable CN headings. A finished gasoline/motor-spirit blend may, depending on its composition and characteristics, fall under heading 2710.

The concept of complete denaturing under the excise legislation has a different purpose.

Article 27 of Council Directive 92/83/EEC provides an exemption from alcohol excise duty for alcohol that has been completely denatured in accordance with the applicable requirements.

Commission Regulation (EC) No 3199/93 concerns the mutual recognition of procedures for the complete denaturing of alcohol for the purposes of exemption from excise duty. It establishes the denaturing procedures and substances notified by the Member States.

The purpose of the excise denaturing requirement is therefore not primarily to determine the customs identity or classification of the resulting product. Rather, it establishes whether the alcohol has been legally completely denatured such that it qualifies for the applicable excise exemption. The prescribed denaturing procedure is intended to make the alcohol unsuitable for human consumption and to prevent the denaturing from being readily reversed for the purpose of recovering alcohol suitable for consumption.

For an ethanol/gasoline blending operation, the two assessments should therefore be performed separately.

Customs assessment:
Determine the composition of the product after blending and apply the relevant CN classification rules. Where the mixture meets the conditions of Additional Note 12 to Chapter 22, gasoline may constitute the denaturant for classification under CN 2207 20.

Excise assessment:
Separately determine whether the alcohol has undergone a denaturing procedure recognised under the excise legislation and whether the conditions for the excise exemption are met.

Consequently, the fact that a mixture is considered denatured ethanol for customs purposes does not, by itself, establish that it is completely denatured alcohol for excise purposes. Conversely, compliance with an excise denaturing procedure should not be used as the sole basis for determining the customs classification.

The relevant legal sources are:

• Commission Implementing Regulation (EU) No 626/2014 – customs classification and Additional Note 12 to Chapter 22.
• Commission Implementing Regulation (EU) 2017/2157 – classification of 70% ethanol/30% gasoline under CN 2207 20 00.
• Council Directive 92/83/EEC, Article 27 – excise exemption for completely denatured alcohol.
• Commission Regulation (EC) No 3199/93 – recognised procedures for complete denaturing of alcohol for excise purposes.