CLA-2 OT:RR:CTF:TCM H058785 CkG
TARIFF NO: 8479.89.9850
Port Director
U.S. Customs and Border Protection
2350 N. Sam Houston Pkwy E. #1000 Houston, TX 77032-3100
RE: Request for Internal Advice #09/015; Tariff classification of collet connectors
Dear Port Director:
This letter is in reply to request for internal advice # 09/015, issued on February 23, 2009, pertaining to the tariff classification of four models of collet connectors imported by Cameron International Corporation. The importer takes the position that the subject article is properly classified in heading 8431 of the Harmonized Tariff Schedule of the United States (HTSUS), as parts of machinery of headings 8435 to 8430, HTSUS.
FACTS:
The importer describes four models of collet connectors, Models 70, HC, HCH4 and DWHC, used to connect blowout prevention stacks to the wellhead or lower rise assembly, to terminate sub-sea pipe ends and to connect sub-sea drilling pipes to pumps such as Christmas trees. According to the importer, the four models vary in their preload and structural load capabilities, but their basic design and construction are the same. The collets are hydraulically operated connectors used above the wellbore in subsea drilling systems for oil and gas.
ISSUE:
Whether the subject collet connectors are classifiable in heading 8431, HTSUS, as parts of a machine of heading 8430, HTSUS, or in heading 8479, HTSUS, as other machines having individual functions not elsewhere specified.
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The Harmonized Commodity Description and Coding System Explanatory Notes
(“ENs”) constitute the official interpretation of the HTSUS. While not legally binding or
dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS
and are generally indicative of the proper interpretation of these headings at the
international level. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
The HTSUS provisions under consideration are as follows:
8430: Other moving, grading, leveling, scraping, excavating, tamping, compacting, extracting or boring machinery, for earth, minerals or ores; pile-drivers and pile-extractors; snowplows and snowblowers:
Other boring or sinking machinery:
8430.49: Other:
8430.49.40: Offshore oil and natural gas drilling and production platforms…
* * * * * *
8431: Parts suitable for use solely or principally with the machinery of headings 8425 to 8430:
8431.43: Parts for boring or sinking machinery of subheading 8430.41 or 8430.49:
8431.43.40: Of offshore oil and natural gas drilling and production platforms . . .
* * * * * *
8479: Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
Other machines and mechanical appliances:
8479.89: Other:
8479.89.98: Other….
* * * * * *
Section XVI, Note 2 states:
Subject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:
Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;
Other parts, if suitable for use solely or principally with a particular kind of
machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517;
(c) All other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548.
Additional U.S. Rule of Interpretation 1(c) states, in pertinent part, the following:
In the absence of special language or context which otherwise requires…a provision for parts of an article covers products solely or principally used as a part of such articles but a provision for "parts" or "parts and accessories" shall not prevail over a specific provision for such part or accessory.
EN 84.30 provides, in pertinent part, as follows:
This heading covers machinery, other than the self propelled machines of heading 84.29 and agricultural, horticultural or forestry machinery (heading 84.32), for " attacking " the earth’s crust (e.g., for cutting and breaking down rock, earth, coal, etc.; earth excavation, digging, drilling, etc.), or for preparing or compacting the terrain (e.g., scraping, levelling, grading, tamping or rolling).
(III) EXTRACTING, CUTTING OR DRILLING MACHINERY
This is mainly used in mining, well drilling, tunnelling, quarrying, clay cutting, etc.
(D) Well sinking or boring machines for the extraction of petroleum, natural gases, sulphur (Frasch process), etc., for raising strata samples in mining and oil well prospecting, for the sinking of artesian wells, etc. These machines are of two main types :
(1) Rotary well sinking machinery consisting essentially of a derrick fitted with pulley tackle, a hoist drum with transmission and control gear (draw work), a swivel and a rotary table or gear wheel.
The power driven draw work imparts a rotary movement to the drill pipes by means of the rotary table or gear wheel, the drill pipes being suspended from the rotary swivel. The draw work also raises and lowers the drill pipes, when required, by means of the pulley tackle.
(2) Percussion machines consisting of an eccentric driven rocker beam, the see saw action of which causes the bit to strike continually into the well floor.
It should be noted that this heading covers only drillling machines as such. Other quite distinct machines normally used therewith are excluded even if presented with the drilling machines, e.g., pumps and compressors to force mud, stone, etc., out of the drilling (heading 84.13 or 84.14).
PARTS
Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the machines of this heading are classified in heading 84.31.
* * * * *
EN 84.79 provides, in pertinent part, as follows:
This heading is restricted to machinery having individual functions, which:
(a) Is not excluded from this Chapter by the operation of any Section or
Chapter Note.
and (b) Is not covered more specifically by a heading in any other Chapter of
the Nomenclature.
and (c) Cannot be classified in any other particular heading of this Chapter
since:
No other heading covers it by reference to its method of
functioning, description or type.
and (ii) No other heading covers it by reference to its use or to the
industry in which it is employed.
or (iii) It could fall equally well into two (or more) other such
headings (general purpose machines).
The machinery of this heading is distinguished from the parts of machinery, etc., that fall to be classified in accordance with the general provisions concerning parts, by the fact that it has individual functions.
For this purpose the following are to be regarded as having "individual functions":
(A) Mechanical devices, with or without motors or other driving force, whose
function can be performed distinctly from and independently of any
other machine or appliance.
Mechanical devices which cannot perform their function unless they are
mounted on another machine or appliance, or are incorporated in a
more complex entity, provided that this function :
is distinct from that which is performed by the machine or appliance whereon they are to be mounted, or by the entity wherein they are to be incorporated, and
(ii) does not play an integral and inseparable part in the operation of
such machine, appliance or entity.
* * * * *
The collet connectors are mechanical in nature because they are hydraulically operated. They therefore fall within the scope of Chapter 84. Because heading 8479, HTSUS, excludes machines specified elsewhere in Chapter 84, we must first address the applicability of heading 8431, HTSUS, to the subject articles.
Heading 8430, HTSUS, provides for, in relevant part, extracting or boring machinery, for earth, minerals or ores. Heading 8431, HTSUS, provides for parts suitable for use solely or principally with the machinery of headings 8425 to 8430. The importer contends that its collet connectors are an integral part of a machine of heading 8430, HTSUS, and is thus classifiable in heading 8431, HTSUS.
With regard to the importer’s argument that Additional U.S. Rule of Interpretation (AUSRI) 1(c) is applicable here, we disagree. AUSRI 1 is applicable unless the context otherwise requires. Section XVI, Note 2 is just such context as it covers the classification of parts within the Section. Note 2 to Section XVI thus supercedes
AUSRI 1 where the competing provisions at issue are within Section XVI. See e.g., Nidec Corp. v. United States, 861 F. Supp. 136, aff’d 68 F. 3d 1333 (Fed Cir. 1995); HQ 966963, dated April 30, 2004; HQ 087025, dated May 7, 1991.
The importer states that collet connectors are typically used for connection of the Blow Out Prevention (BOP) stack to the wellhead, to secure the lower rise assembly to the top of the BOP, to provide subsea pipe end terminations and to provide the remotely operated connections between subsea drilling and extraction facilities. Collet connectors are thus indisputably a part of a larger subsea drilling system. However, collet connectors are not solely or principally used with drilling machines as such. For example, a blowout preventer is described by Schlumberger Ltd., a leading provider of oilfield services, as:
a large valve at the top of a well that may be closed if the drilling crew loses control of formation fluids. By closing this valve (usually operated remotely via hydraulic actuators), the drilling crew usually regains control of the reservoir, and procedures can then be intiated to increase the mud density until it is possible to open the BOP and retain pressure control of the formation.
See http://www.glossary.oilfield.slb.com/Display.cfm?Term=blowout%20preventer. A wellhead is similarly described as “the system of spools, valves and assorted adapters that provide pressure control of a production well.” See http://www.glossary.oilfield.slb. com/Display.cfm?Term=wellhead. Neither the blowout preventer nor the wellhead can be said to “attack” the earth’s crust. Rather, they are distinct machines which control the flow and circulation of mud and fluids, and are thus not described by the terms of the heading. Furthermore, the instant merchandise is specifically excluded by the language of EN 84.30, excluding distinct machines even when presented with drilling machines. See also HQ H007677, dated December 22, 2008.
The additional uses of a collet connector described by the importer similarly indicate that its primary function is generally to connect and seal pipes and valves, aiding in the overall process of extraction of oil or gas from the earth, without actually being used in the boring or sinking process itself. A collet connector, while it may serve an integral role in the overall process of extracting oil from the earth, is thus not solely or principally used with a drilling machine of heading 8430, HTSUS, used in the oil extraction process. The instant collet connectors are therefore excluded from classification in heading 8431, HTSUS, as parts of a drilling machine, and are classified by application of Section XVI, Note 2(a), in the heading that describes them as a distinct good.
In the absence of a more specific provision within Chapter 84 for the subject collet connectors, they are described by the terms of heading 8479, HTSUS, as machines having individual functions and included there in accordance with Section XVI Note 2(a) as distinct goods. The importer objects that the language of this heading identifies “individual functions” in the plural, which excludes articles having only a single function. However, the EN to heading 8479, HTSUS, clearly references the “function” in the singular, of machines covered by heading 8479. EN 84.79 also provides numerous examples of machines having only one function, such as grinders, crushers, mills, presses, match-dipping machines, machines for coating electrodes or frosting glass…etc. In any case, the importer actually states two distinct functions for the instant merchandise: to connect other machines, and to terminate or cap subsea pipes. As such, the collet connectors provide a distinct function which is not integral to the function of the pipe, wellhead or BOP to which they are mounted. See EN 84.79(B) regarding “individual functions”.
The importer further contends that the collet connectors are excluded from heading 8479, HTSUS, because their function is integral to the drilling and extraction operation. However, as noted above, the collet connectors do not form an integral or indispensable part of a machine of this Chapter. They are therefore classifiable in heading 8479, HTSUS. We do, however, agree with the importer that the collet connectors are not classifiable in subheading 8479.89.9850, HTSUSA (Annotated), as oil and gas wireline and downhole equipment, as they do not appear to be used in the wellbore (aka “downhole”) itself. For statistical purposes, the collet connectors would fall under subheading 8479.89.9899, HTSUSA.
HOLDING:
The instant collet connectors are classified in heading 8479, HTSUS, specifically
subheading 8479.89.98, HTSUS, which provides for “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: Other: Other.” The 2009 column one, general rate of duty is 2.5% ad valorem.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts/.
You are to mail this decision to the internal advice requester no later than 60
days from the date of the decision. At that time, the Office of International Trade,
Regulations and Rulings, will make the decision available to CBP personnel and to the
public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of
the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division