SPECIAL FUELS.

SEC. 507. SPECIAL FUELS. (a) Exemption From Manufacturers’ Excise Tax.— (1) Amendment of section 3412 (c).—Section 3412 (c) (2) (relating to manufacturers’ excise tax on gasoline) is hereby amended to read as follows: “(2) the term ‘gasoline’ means all products commonly or commercially known or sold as gasoline (including casinghead and natural gasoline).” (2) Credits and refunds.—Except in the case of any liquid with respect to which tax was paid under section 3412 as in effect prior to the effective date of this section, clause (iii) of section 3443 (a) (3) (A) is hereby repealed, and clauses (iv), (v), (vi), and (vii) of section 3443 (a) (3) (A) are redesignated clauses (iii), (iv), (v),and (vi),respectively. (b) Imposition of Retailers’ Excise Tax.—Section 2450 of the Internal Revenue Code is hereby amended to read as follows: “SEC. 2450. TAX. “(a) Diesel Fuel.—There is hereby imposed a tax of 2 cents a gallon upon any liquid (other than any product taxable under section 3412)— “(1) sold by any person to an owner, lessee, or other operator of a diesel-powered highway vehicle, for use as a fuel in such vehicle; or “(2) used by any person as a fuel in a diesel-powered highway vehicle unless there was a taxable sale of such liquid under paragraph (1). “(b) Special Motor Fuels.—There is hereby imposed a tax of 2 cents a gallon upon benzol, benzene, naphtha, liquefied petroleum gas, or any other liquid (other than kerosene, gas oil, or fuel oil, or any product taxable under section 3412 or subsection (a) of this section) — “(1) sold by any person to an owner, lessee, or other operator of a motor vehicle, motorboat, or airplane for use as a fuel for the propulsion of such motor vehicle, motorboat, or airplane; or “(2) used by any person as a fuel for the propulsion of a motor vehicle, motorboat, or airplane unless there was a taxable sale of such liquid under paragraph (1). “(c) Rate Reduction.—On and after April 1, 1955, the taxes imposed by this section shall be 1½ cents a gallon in lieu of 2 cents a gallon.” (c) Technical Amendments.— (1) Credits and refunds.—Section 2452 (a) (relating to credits and refunds) is hereby amended to read as follows: “(a) Nontaxable Use or Sale by Vendee.—A credit against tax under this chapter, or a refund, may be allowed or made to a person in the amount or tax paid by him under this chapter with respect to his sale of any liquid to a vendee for use as fuel in a diesel-powered highway vehicle, or with respect to his sale of benzol, benzene, naphtha, liquefied petroleum gas, or any other liquid to a vendee for use as fuel for the propulsion of a motor vehicle, motorboat, or airplane, if such person establishes, in accordance with regulations prescribed by the Secretary, that— 68 Stat. 45 “(1) either— “(A) the vendee used such liquid otherwise than as fuel in such a vehicle, motorboat, or airplane or resold such liquid; or “(B) such liquid was used or was resold for use for any of the purposes, but subject to the conditions, provided in section 3451; and “(2) such person has repaid or agreed to repay the amount of such tax to such vendee, or has obtained the consent of the vendee to the allowance of the credit or refund. No interest shall be allowed with respect to any amount of tax credited or refunded under the provisions or this subsection.” (2) Tax-free sales.—Section 2453 (relating to tax-free sales) is hereby amended by striking out “as fuel in a diesel-powered highway vehicle” and inserting in lieu thereof “covered by this chapter”. (3) Certain vessels.—Chapter 20 (relating to special fuels) is hereby amended by adding at the end thereof the following new section: “SEC. 2456. EXEMPTION OF SPECIAL MOTOR FUELS USED FOR CERTAIN VESSELS.“The exemption from tax under chapter 29 provided in section 3451 shall also apply to the tax imposed under section 2450 (b).” (4) Clerical amendment.—The heading of chapter 20 is hereby amended to read as follows: “CHAPTER 20—SPECIAL FUELS” (d) Effective Date.—The amendments made by this section shall take effect on the first day of the first month which begins more than ten days after the date of the enactment of this Act. However, the tax imposed under section 2450 (b) shall not apply to any liquid which has been sold by a producer or importer prior to the effective date of this section and which is taxable under section 3412 (relating to gasoline tax) as in effect prior to the effective date of this section.