H319171

HQ H319171 June 13, 2024 OT:RR:CTF:EMAIN H319171 MFT CATEGORY: Classification TARIFF NO.: 8431.43.80 Center Director, Machinery C.E.E. U.S. Customs and Border Protection Service Port of Seattle 7 South Nevada Street, Suite 100 Seattle, WA 98134 Attn: Courtney Collins, Import Specialist; Sanith S. Kimchrea, Supervisory Import Specialist Re: Application for Further Review of Protest No. 3029-21-100294; Classification of Stop Collars and Centralizers from the United Kingdom Dear Center Director: This letter is our decision on the Application for Further Review (AFR) of Protest No. 3029-21-100294, which was filed on March 29, 2021, on behalf of Halliburton Energy Services, Inc. This protest pertains to U.S. Customs and Border Protection’s (CBP’s) classification under the Harmonized Tariff Schedule of the United States (HTSUS) of certain stop collars and centralizers for offshore oil rigs. No samples were provided for examination. The AFR was forwarded to this office for consideration. In reaching this decision, we considered information included with the protest submission; information discussed during the meeting with the protestant and protestant’s counsel on Thursday, November 16, 2023; and supplemental information in response to certain CBP inquiries submitted on Wednesday, November 22, 2023. FACTS: The subject articles are stop collars and centralizers used in offshore oil and natural gas drilling. They are imported from the United Kingdom. To illustrate their uses, we briefly describe the offshore drilling operations in which the merchandise is employed. After a well is dug, a steel pipe (i.e., casing) is inserted into the hole. The casing supports the structure of the well by preventing the well from imploding and keeping rock debris (i.e., formation debris) from entering the well. The space between the wall of the casing and the surrounding formation is called the “annulus.” After the casing is inserted into the well, a cement slurry is pumped down through the casing and pushed back up the annulus. After hardening, the cement brings several benefits to the drilling process. For example, the cement can seal off the well from fluids known as “formation fluids,” which naturally occur within the pores of rock. These formation fluids are ubiquitous in deep wells and can be highly pressurized. In another example, for deep drilling operations, the cement supports intermediate casing (also known as protective casing) that prevents outside materials contaminating a special drill bit lubricant (known as drilling mud) and from interfering with drilling machinery. The subject centralizers are designed to center the casing string within the wellbore, guide the casing into the proper position, and facilitate the even distribution of cement through the annulus. Evenly distributing cement helps support the structure of the casing and, thus, the opportunity for continued drilling. This even distribution of cement also keeps the high-pressure formation fluids in deep wells from blowing out and delaying, if not outright terminating, the possibility for further extraction of oil and gas. Moreover, the centralizers are structurally engineered to operate under heavy loadbearing and high hydrostatic pressure environments, keeping the well from collapsing and preserving future drilling prospects. Further, the administrative record suggests that due to cost and engineering requirements, the subject centralizers have not been used in the past for other applications, such as infrastructure projects or public works. The subjects stop collars also attach to the casing. The purpose of the stop collars is to bookend the centralizers and prevent the centralizers (and other casing attachments) from moving along the casing string. The subject merchandise was entered on February 16, 2020, under heading 8431, HTSUS, which provides for “[p]arts suitable for use solely or principally with the machinery of headings 8425 to 8430.” CBP liquidated the subject merchandise under heading 7326, HTSUS, which provides for “[o]ther articles of iron or steel,” on September 11, 2020. On March 9, 2021, the protestant filed the instant Protest and Application for Further Review. The protestant argues that in New York Ruling Letter (NY) N254796, dated July 24, 2014, CBP classified substantially similar stop collars under heading 8431, HTSUS. The protestant also points to CBP’s classification of “float collars and float shoes” in Headquarters Ruling Letter (HQ) H243821 (dated December 23, 2015) as justification for classifying the subject merchandise under heading 8431, HTSUS. ISSUE: Whether the subject stop collars and centralizers are classified under 8431, HTSUS, as parts suitable for use solely or principally with the machinery of heading 8430, HTSUS, or under heading 7326, HTSUS, as other articles of iron or steel. LAW AND ANALYSIS: A decision on classification and the rate and amount of duties chargeable is a protestable matter under 19 U.S.C. § 1514(a)(2). The subject protest was timely filed on March 9, 2021, within 180 days of liquidation of the first entry, pursuant to 19 U.S.C. § 1514(c)(3). Further review of Protest No. 3029-21-100294 is properly accorded pursuant to 19 CFR § 174.24(a), as the decision against which the protest was filed is alleged to be inconsistent with a CBP ruling or decision with respect to the same or substantially similar merchandise. Classification under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods will 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 will then be applied in order. In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. The HTSUS headings under consideration are as follows: 7326 Other articles of iron or steel: * * * * * 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: * * * * * 8431 Parts suitable for use solely or principally with the machinery of headings 8425 to 8430: Note 1(f) to Section XV, HTSUS, which includes articles of heading 7326, HTSUS, provides that the Section XV does not cover articles of Section XVI, HTSUS (i.e., machinery, mechanical appliances, and electrical goods). Therefore, if the subject merchandise is classifiable under Section XVI which includes heading 8431, HTSUS, it is not covered under Section XV. Note 2(b) to Section XVI, HTSUS, provides as follows: 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: 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[.] The deciding question, then, is whether the subject stop collars and centralizers constitute “parts” that are “suitable for use solely or principally with a particular kind of machine,” namely “extracting or boring machinery, f

A decision on classification and the rate and amount of duties chargeable is a protestable matter under 19 U.S.C. § 1514(a)(2). The subject protest was timely filed on March 9, 2021, within 180 days of liquidation of the first entry, pursuant to 19 U.S.C. § 1514(c)(3). Further review of Protest No. 3029-21-100294 is properly accorded pursuant to 19 CFR § 174.24(a), as the decision against which the protest was filed is alleged to be inconsistent with a CBP ruling or decision with respect to the same or substantially similar merchandise. Classification under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods will 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 will then be applied in order. In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level.The HTSUS headings under consideration are as follows:7326 Other articles of iron or steel:* * * * *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:* * * * *8431 Parts suitable for use solely or principally with the machinery of headings 8425 to 8430: Note 1(f) to Section XV, HTSUS, which includes articles of heading 7326, HTSUS, provides that the Section XV does not cover articles of Section XVI, HTSUS (i.e., machinery, mechanical appliances, and electrical goods). Therefore, if the