8th July 2023
The Commissioner, Customs & Border Control
Kenya Revenue Authority
Times Towers
Nairobi, Kenya
cc: Chief Manager, Post Clearance Audit
Dear Madam,
REF: Objection to Proposed Classification of ATF Matic J Synthetic
We refer to your letters Ref: xxxxxxxx and xxxxxxxxx and a Virtual Conference held on 4th August 2023. The communication concerns the HS Classification of 7 synthetic automatic transmission fluids. The products were imported vide entry number 23MBAIM403900762 OF 12th July 2023. KRA has classified the ATF Matic J Synthetic in HS Code 2710.19.51 as lubricating oils in liquid form. We had classified the product in HS code 2710.19.56 which covers non lubricating oils. On further consultations with the manufacturer of the product we wish to revise our classification from 2710.19.56 to 3819.00.00.
The structure of the objection is sectionalised as follows:
What is Automatic Transmission Fluid
Automatic transmission fluid is a kind of multi-functional, multi duty liquid, which is mainly used in the automatic speed-changing system of vehicles, it is also used for the gearbox, power steering system etc. The hydraulic torque converter, gear mechanism, hydraulic gear, humid clutch etc. are all housed in automatic transmission, and they require the automatic transmission fluid for lubrication and transmission of energy. General automatic transmission fluid requires multiple additives such as viscosity index improver, purification agent, dispersion agent, oxidation inhibitor, extreme pressure anti-wear additives, rust-preventive agent, metal passivator, friction improver, and others.
What is Automatic Transmission Fluid
ATF consists of a base oil plus an additive package containing a wide variety of chemical compounds intended to provide the required properties of a particular ATF specification. Most ATFs contain some combination of additives that improve lubricating qualities, such as anti-wear additives, rust and corrosion inhibitors, detergents, dispersants and surfactants (which protect and clean metal surfaces); kinematic viscosity and viscosity index improvers and modifiers, seal swell additives and agents (which extend the rotational speed range and temperature range of the additives’ application); anti-foam additives and anti-oxidation compounds to inhibit oxidation and “boil-off” (which extends the life of the additives’ application); cold-flow improvers, high-temperature thickeners, gasket conditioners, pour point depressant and petroleum dye. All ATFs contain friction modifiers.
What is Automatic Transmission Fluid
Automatic transmission fluid (ATF) is a type of hydraulic fluid used in vehicles with automatic transmissions. It is typically coloured red or green to distinguish it from motor oil and other fluids in the vehicle.
The fluid is optimized for the special requirements of a transmission, such as valve operation, brake band friction, and the torque converter, as well as gear lubrication.
ATF is also used as a hydraulic fluid in some power steering systems, as a lubricant in some 4WD transfer cases, and in some modern manual transmissions.
Modern ATF consists of a base oil plus an additive package containing a wide variety of chemical compounds intended to provide the required properties of a particular ATF specification. Most ATFs contain some combination of additives that improve lubricating qualities, such as anti-wear additives, rust and corrosion inhibitors, detergents, dispersants and surfactants (which protect and clean metal surfaces); kinematic viscosity and viscosity index improvers and modifiers, seal swell additives and agents (which extend the rotational speed range and temperature range of the additives’ application); anti-foam additives and anti-oxidation compounds to inhibit oxidation and “boil-off” (which extends the life of the additives’ application); cold-flow improvers, high-temperature thickeners, gasket conditioners, pour point depressant and petroleum dye. All ATFs contain friction modifiers. Note that the friction modifier only means that the fluid sticks to the surface of the metal a little more strongly, and therefore only helps to prevent early wear.
Automatic Transmission Fluid Functions
This type of transmission fluid is designed for cars that have automatic transmissions. It’s also used in some more modern manual transmission cars. Automatic transmission fluid meets the requirements of automatic transmissions and helps with various functions, including Gear lubrication 2)Torque converter operation 3)Valve body operation 4)Clutch friction operation 5)Brake band friction 6)Transmission cooling.
Types of Automatic Transmission Fluids
While traditional transmission fluid is made from crude oil and the reshaping of hydrocarbons for specifications of different vehicles, synthetic transmission fluid is created through different chemical reactions. This type of transmission oil is less likely to break down, oxidize or thin out in high temperatures.
What is the meaning of synthetic in chemistry?
In chemistry, chemical synthesis (chemical combination) is the artificial execution of chemical reactions to obtain one or several products. This occurs by physical and chemical manipulations usually involving one or more reactions. In modern laboratory uses, the process is reproducible and reliable.
A chemical synthesis involves one or more compounds (known as reagents or reactants) that will experience a transformation when subjected to certain conditions. Various reaction types can be applied to formulate a desired product. This requires mixing the compounds in a reaction vessel, such as a chemical reactor or a simple round-bottom flask. Many reactions require some form of processing (“work-up”) or purification procedure to isolate the final product.
Categories of Base oil(Major Component in ATFs)
Base oils are used to manufacture products including lubricating greases, motor oil and metal processing fluids. Different products require different compositions and properties in the oil. One of the most important factors is the liquid’s viscosity at various temperatures. Whether or not a crude oil is suitable to be made into a base oil is determined by the concentration of base oil molecules as well as how easily these can be extracted.
Base oil is produced by means of refining crude oil. This means that crude oil is heated in order that various distillates can be separated from one another. During the heating process, light and heavy hydrocarbons are separated – the light ones can be refined to make petrol and other fuels, while the heavier ones are suitable for bitumen and base oils.
There are large numbers of crude oils all around the world that are used to produce base oils. The most common one is a type of paraffinic crude oil, although there are also naphthenic crude oils that create products with better solubility and very good properties at low temperatures. By using hydrogenation technology, in which Sulphur and aromatics are removed using hydrogen under high pressure, extremely pure base oils can be obtained, which are suitable when quality requirements are particularly stringent.
Chemical substances – additives – are added to the base oil in order to meet the quality requirements for the end products in terms of, for example, friction and cleaning properties. Certain types of motor oils contain more than twenty percent additives.
Production of mineral base oils
Mineral base oils are first distilled from petroleum, and they comprise the 26-40 carbon fraction. Aromatic compounds are initially removed by solvent extraction: The distillation cut is mixed with an immiscible solvent such as phenol or furfural. This solvent preferentially dissolves aromatic compounds well, and the aromatic compounds are separated together with the solvent.
Long chain alkanes form waxes that precipitate at relatively high temperature. They are removed either by crystallizing the waxes at low temperature, or they can be isomerized to branched alkanes. Various levels of hydrogenation are used thereafter to remove any remaining aromatic compounds and residual heteroatoms (in the form of nitrogen and sulphur compounds).
Very generally, heteroatoms (as nitrogen and sulphur compounds) and aromatic compounds are removed as the base oil is hydrogenated from Group I through Group III. Reduction in heteroatoms reduces formation of acids when engine oils are exposed to the combustion environment, acids being corrosive to the engine. The reduction in aromatic compounds improves the oxidative stability of the oil, delaying formation of sludge and varnish. Yet both effects lead to the oil becoming less polar, making it a poorer solvent for both the additive package of an engine oil, as well as accumulated oxidation byproducts.
API classifications
In 1993, the American Petroleum Institute (API), categorized base oils into five main groups. Chemical and physical characteristics are defined for Groups I through III that reflect how refined they are, correlating in some way to high and low-temperature viscosity, oxidative stability, volatility, and so on. Group IV oils comprise polyalphaolefins by definition, and Group V oils are those that do not fit into any previous category. The intent of such categorization is to help ensure that engine oils retain performance when different base oils are used.
Group I
Originating in the 1930s, the least refined type which is produced by solvent refining. It usually consists of conventional petroleum base oils. An improvement to the refining process in the 1960s called hydro-treating made this base oil more stable, less reactive, and longer lasting than the earlier base oils.
API defines group I as “base stocks contain less than 90 percent saturates and/or greater than 0.03 percent sulphur and have a viscosity index greater than or equal to 80 and less than 120”.
Group II
Originating in 1971, a better grade of petroleum base oil, which may be partially produced by hydrocracking. All impurities will be removed from the oil leading to clearer colour.
API defines group II as “base stocks contain greater than or equal to 90 percent saturates and less than or equal to 0.03 percent sulphur and have a viscosity index greater than or equal to 80 and less than 120”.
Group III
Originating in 1993, the most refined grade of petroleum base oil, since they are fully produced by hydrocracking, hydro isomerization, and hydrotreating, which make these oils purer.
API defines group III as “base stocks contain greater than or equal to 90 percent saturates and less than or equal to 0.03 percent sulphur and have a viscosity index greater than or equal to 120”.
Group IV
Originating in 1974, consists of synthetic oils made of polyalphaolefins (PAO). Group IV base oils have a viscosity index range of 125 – 200.
Polyalphaolefin oils have a higher oxidative stability in extreme temperatures, and also have exceptionally low pour points, which makes them much more suitable for use in very cold weather (as found in northern Europe), as well as in very hot weather (as in Middle East).
Group V
Originating in the 1940s, any type of base oil other than mentioned in the previously defined groups. Group V oils include alkylated naphthalene’s and esters.
What is the Composition of the ATF as per the Supplier
Group 3 and Group 4 base oils are considered synthetic base oils. Group 3 base oils are highly refined mineral oils that undergo a process called hydrocracking, which significantly improves their quality and performance characteristics. They have higher viscosity indices and lower levels of impurities compared to traditional mineral oils.
Group 4 base oils, also known as polyalphaolefins (PAOs), are fully synthetic oils made through the polymerization of alpha-olefin monomers. PAOs have excellent thermal stability, low volatility, and a high viscosity index, making them ideal for high-performance applications.
Petroleum oils under chapter 27 of the HS code refer to a broad category of oils that are derived from crude oil through refining processes. These oils include mineral oils, which are commonly used as lubricants and fuels. They are produced by distillation, cracking, and other refining methods. Petroleum oils are generally cost-effective and widely used due to their availability.
Chapter 27:Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes
Explanatory Notes.
2.‑ References in heading 27.10 to “petroleum oils and oils obtained from bituminous minerals” include not only petroleum oils and oils obtained from bituminous minerals but also similar oils, as well as those consisting mainly of mixed unsaturated hydrocarbons, obtained by any process, provided that the weight of the non
However, the references do not include liquid synthetic polyolefins of which less than 60 % by volume distils at 300 °C, after conversion to 1,013 millibars when a reduced‑pressure distillation method is used (Chapter 39).
Heading 27.10 Explanatory Notes
27.10 ‑ Petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70 % or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations; waste oils.
2710.12 – – Light oils and preparations
2710.19 – – Other
2710.20 – Petroleum oils and oils obtained from bituminous minerals (other than crude) and preparations not elsewhere specified or included, containing by weight 70 % or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, containing biodiesel, other than waste oils
2710.91 – – Containing polychlorinated biphenyls (PCBs), polychlorinated terphenyls (PCTs) or polybrominated biphenyls (PBBs)
2710.99 – – Other
(C) The oils described in (A) and (B) above to which various substances have been added to render them suitable for particular uses, provided the products contain by weight 70 % or more of petroleum oils or of oils obtained from bituminous minerals as a basis and that they are not covered by a more specific heading in the Nomenclature.
Examples of the types of products referred to are :
(2) Lubricants consisting of mixtures of lubricating oils with widely varying quantities of other products (e.g., products for improving their lubricating properties (such as vegetable oils and fats), antioxidants, rust preventives, anti-foam agents such as silicones). These lubricants include compounded oils, oils for heavy duty work, oils blended with graphite (graphite suspensions in petroleum oils or in oils obtained from bituminous minerals), upper cylinder lubricants, textile oils, and solid lubricants (greases) composed of a lubricating oil with about 10 to 15 % of soaps of aluminium, calcium, lithium, etc.
The heading does not include :
(b) Preparations containing less than 70 % by weight of petroleum oils or of oils obtained from bituminous minerals, e.g., textile greasing or oiling preparations and other lubricating preparations of heading 34.03 and hydraulic brake fluids of heading 38.19.
(c) Preparations containing petroleum oils or oils obtained from bituminous minerals in any proportion (even exceeding 70 % by weight) covered by a more specific heading in the Nomenclature or based on products other than petroleum oils or oils obtained from bituminous minerals. This is the case with the anti-rust preparations of heading 34.03, which consist of lanolin in solution in white spirit, the lanolin being the basic material and the white spirit acting merely as a solvent and evaporating after application. It is also the case with disinfecting, insecticidal, fungicidal, etc., preparations (heading 38.08), prepared additives for mineral oils (heading 38.11), composite solvents and thinners for varnishes (heading 38.14) and certain preparations of heading 38.24, such as starting fluid for petrol (gasoline) engines, the fluid consisting of diethyl ether, 70 % or more by weight of petroleum oils and also other constituents, the diethyl ether being the basic constituent.
Heading 34.03 Explanatory Notes
34.03 – Lubricating preparations (including cutting-oil preparations, bolt or nut release preparations, anti-rust or anti-corrosion preparations and mould release preparations, based on lubricants) and preparations of a kind used for the oil or grease treatment of textile materials, leather, furskins or other materials, but excluding preparations containing, as basic constituents, 70 % or more by weight of petroleum oils or of oils obtained from bituminous minerals.
3403.11 – – Preparations for the treatment of textile materials, leather, furskins or other materials
3403.19 – – Other
3403.91 – – Preparations for the treatment of textile materials, leather, fur skins or other materials
3403.99 – – Other
Provided they do not contain, as basic constituents, 70 % or more by weight of petroleum oils or oils obtained from bituminous minerals (see heading 27.10), this heading includes, inter alia, prepared mixtures of the following types :
(A) Lubricating preparations designed to reduce friction between the moving parts of machinery, vehicles, aircraft or other appliances, apparatus, or instruments. Such lubricants usually consist of, or are based on, mixtures of animal, vegetable or mineral oils, fats, or greases, often with additives (e.g., graphite, molybdenum disulphide, talc, carbon blacks, calcium or other metallic soaps, pitch, or rust, oxidation, etc., inhibitors). However, the heading also includes synthetic lubricating preparations based on, for example, dioctyl or dinonyl sebacates, phosphoric esters, polychlorobiphenyls, poly(oxyethylene) (polyethylene glycol) or poly(oxypropylene) (polypropylene glycol). These synthetic lubricants, which include “greases” based on silicones or jet lube oils (or synthetic ester lubes), are designed to operate under specially exacting conditions (e.g., fire-resistant lubricants, lubricants for precision instrument bearings or jet engines).
Heading 38.11 Explanatory Notes
38.11 ‑ Anti‑knock preparations, oxidation inhibitors, gum inhibitors, viscosity improvers, anti‑corrosive preparations, and other prepared additives, for mineral oils (including gasoline) or for other liquids used for the same purposes as mineral oils.
(b) Synthetic lubricants :
(1) based on esters of organic acids (adipates, azelates, neopentyl polyol esters) or of inorganic acids (triaryl phosphates);
(2) based on polyether’s (poly(oxyethylene) (polyethylene glycol) or poly(oxypropylene) (polypropylene glycol));
(3) based on silicones.
Heading 38.19 Explanatory Notes
38.19 ‑ Hydraulic brake fluids and other prepared liquids for hydraulic transmission, not containing or containing less than 70 % by weight of petroleum oils or oils obtained from bituminous minerals.
This heading covers hydraulic brake fluids and other prepared liquids for hydraulic transmission, e.g., those consisting of mixtures of castor oil, 2‑ethoxyethanol or ethylene diricinoleate and butyl alcohol, or those composed of 4‑hydroxy‑4‑methylpentan‑2‑one (diacetone alcohol), diethyl phthalate and propane‑1,2‑diol as well as mixtures of glycols.
The heading also includes prepared hydraulic fluids based on polyglycols, silicones, or other polymers of Chapter 39.
Similar liquids containing 70 % or more by weight of petroleum oils or of oils obtained from bituminous minerals are, however, excluded (heading 27.10).
From our assessment, the ATF Matic J Synthetic, should be classified in HS code 3819.00.00: { Hydraulic brake fluids and other prepared liquids for hydraulic transmission, not containing or containing less than 70 % by
weight of petroleum oils or oils obtained from bituminous minerals.
Our Technical experts will be readily available for any clarification required.
In light of the above, we kindly request you set aside the proposed classification.
Please note that you cannot interchange the functions of the ATF and lubricating oils in the car as implied by KRAs ruling which implies that Automatic Transmission Fluid is equivalent to Lubricating Oils.
Thanking you for your valued consideration.
Yours faithfully,
Janron Consult
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