Rev. Rul. 72-213

A company produces and sells compressed natural gas for use as a fuel in motor vehicles. The product is both stored and used in a gaseous state. When placed in the supply tank of a vehicle for use, it is contained under a pressure of approximately 2,400 to 3,600 pounds per square inch absolute and at normal ambient temperatures ranging from approximately 0 degrees Fahrenheit to 100 degrees Fahrenheit. The product is not commonly or commercially known or sold as gasoline.

Held, since compressed natural gas is gaseous in form and the tax imposed on special motor fuel by section 4041(b) of the Internal Revenue Code of 1954 applies specifically to liquids, compressed natural gas sold for use, or used, as a fuel in a motor vehicle or motorboat is not subject to the retailers excise tax imposed by that section.

Held further, inasmuch as compressed natural gas is not "gasoline" within the meaning of section 4082(b) of the Code, sales of such product by the producer thereof are not subject to the manufacturers excise tax imposed by section 4081 of the Code.