CLA-2-84:OT:RR:NC:N1:105
Natasha Albertini Deloitte Tax Services Pty Ltd Brookfield Place, Tower 2 123 St Georges Terrace Perth, WA, 6000 Australia
RE: The tariff classification of a Treater Module from Canada
Dear Ms. Albertini:
In your letter dated October 17, 2023, you requested a tariff classification ruling.
The item under consideration is described as a Treater Module (Module No. 233), which is a module that will be incorporated into the Nanushuk Processing Facility (NPF). The NPF, when completed, will process oil deposits from the Nanushuk reservoir into sales quality oil. The Treater Module is comprised of a treater building, treater, exhaust fans, exhaust fan motors, building heaters, and building heater motors. This module is intended to be shipped by barge as a completed module. The assembled module measures 70 feet 10 inches long by 23 feet 2 inches wide by 19 feet 11 inches high, and weighs 213,900 lbs. All elements listed above will be shipped as part of the complete module. These elements are piped together with this module comprising integral parts of the greater HP Flare, LP Flare, and Hydrocarbon Drain systems.
The Treater Module is a piece of equipment utilized in oil production to assist in filtering and purifying liquids. The combined crude oil and produced water enters the Treater Module following a separation process within a low-pressure separator (imported separately). The oil is then further processed and separated from produced water, leaving a filtered oil product. The Treater operates to separate water from the oil stream to obtain sales oil pipeline specification. The Treater Module uses residence time, internal baffles, and a dual frequency electric grid to separate the crude oil from the produced water. The produced water exits the separator and flows back to the NPF facility for additional processing, while the crude oil flows into crude coolers where a cooling medium cools the oil to the pipeline specification.
Section XVI Note 3 states: “Composite machines consisting of two or more machines fitted together to form a whole and other machine designed for the purposes of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.”
The Treater Module is comprised of several elements which combine to perform a common function. Each element varies in purpose, combining to perform the primary function which characterizes the overall article. As the module is designed and manufactured as a single unit, each element is produced to the precise specifications to ensure functionality. As the inputs are specifically designed for use within the module, the classification shall be dictated by the principal function of the composite good, which is to separate oil from produced water, creating a filtered oil product that can continue to be refined.
Accordingly, as you suggest in your letter, the applicable subheading for the Treater Module (Module No. 233) will be 8421.29.0015, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases; parts thereof: Filtering or purifying machinery and apparatus for liquids: Other: Other: Oil-separation equipment.” The general rate of duty will be free.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at https://hts.usitc.gov/current.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, please contact National Import Specialist Jason Christie at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division