CLA-2 OT: RR: CTF: TCM H078778 JER
Port Director
Port of Houston
U.S. Customs and Border Protection
7141 Office City Drive
Houston, TX 77087
RE: Classification of Hot Stabs; Internal Advice
Dear Port Director:
This is in response to your memorandum, dated September 24, 2009, in which you request internal advice, in accordance with U.S. Customs and Border Protection (CBP) Regulations, Part 177 (19 C.F.R. §177). The request pertains to the classification of certain hot stabs imported by Cameron International Corporation (Cameron), under the Harmonized Tariff Schedule of the United States (HTSUS). In reaching our decision, additional consideration has been given to the supplemental information provided by Cameron on November 4th and 5th 2009 and on March 22nd and 29th 2010.
FACTS:
The subject merchandise is described as a hot stab, an article used in sub-sea (offshore) oil and gas drilling operations. Generally, hot stabs are used to transfer pressurized fluid, usually hydraulic fluid to hydraulically powered sub-sea tools, equipment or machinery. The subject hot stab is 2.25 inches in diameter and is 21.7 inches in length including the handle. The subject hot stab also features a round plastic nose bolted to the end of the hot stab. The subject hot stab is designed to transfer fluid
pressurized up to 10,000 psi to a sub-sea tool or machine. The subject hot stab is connected via flexible hoses to an onboard Hydraulic Power Unit (HPU) of a Remotely Operated Vehicle (ROV). The ROV’s HPU is then used to hydraulically activate a torque tool for opening and closing valves on a sub-sea Christmas tree valve.
The additional information provided by Cameron states that the “the hot stab has no mechanical element whatsoever [and]…does not include internal valves [and]…is simply a conduit for hydraulic fluid.” The hot stab does not monitor or regulate the flow or pressure of fluids and has no mechanical moving parts. The additional information further states that: before an ROV is launched sub-sea, the hot stab is connected to the HPU of the ROV. After the ROV is at sub-sea level, the ROV mechanical manipulator grabs the hot stab and inserts the round nose of the hot stab into a receptacle of the sub-sea tool (or machinery). Once the hot stab is inserted into the receptacle, the ROV activates the HPU to supply hydraulic fluid through the hydraulic circuit (i.e., the HPU, flexible hose, the hot stab, the hot stab receptacle and the internal parts of the receiving tool). The hydraulic fluid is what activates the sub-sea tool. In this manner, an ROV can hydraulically power various sub-sea tools (or machinery). The submission also explains that primary purpose of the subject hot stab is to facilitate the transfer of hydraulic fluid from an HPU but notes that a hot stab can also facilitate the transfer of other fluids such as Methanol (MeOH) or Methyl-ethyl glycol fluid (MEG). A hot stab also can be attached to an HPU via an umbilical cable aboard the deck of a ship or attached via hoses not directly connected to an ROV.
Initially, the Port classified the subject merchandise under subheading 7307.29, HTSUS, which provides for tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: other stainless steel: other. Thereafter, the Port classified the hot stabs under heading 8481, HTSUS, as valve or similar appliance.
ISSUE:
Whether the subject hot stabs are classified as tubes or fittings under heading 7307, HTSUS, or as a part of a hydraulic power system under heading 8412, HTSUS, or as a part of an industrial robot under heading 8479, HTSUS, or as a valve under heading 8481, HTSUS.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). 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 2010 HTSUS provisions under consideration are as follows:
7307 Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel:
Other, of stainless steel:
7307.29.00 Other:
8412 Other engines and motors, and parts thereof:
Hydraulic power engines and motors:
8412.90 Parts:
8412.90.90 Other….
Of hydraulic power engines and motors:
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
8479.90.9440
8481 Taps, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves: parts thereof:
8481.90 Parts:
Of hand operated and check appliances
8481.90.90 Other…
Other:
Other:
8481.90.9085 Other
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding nor 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).
* * *
In your request for Internal Advice, you contend that the subject merchandise is classifiable under heading 8481, HTSUS, because, as you assert, that act of transfering fluid, performed by the subject hot stab, is similar to the function of a valve. Conversely, the importer for the subject merchandise asserts that the subject hot stabs are classified under heading 8479, HTSUS, as a part of a Remotely Operated Vehicle (ROV), which in their view is an industrial robot.
In order for an article to be classified as a “part” for tariff purposes, such article must either be (1) "an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article," or (2) "dedicated solely for use with an article." See Bauerhin Techs. Ltd. Pshp. v. United States, 110 F.3d 774, 778-779 (Fed. Cir. 1997) (quoting United States v. Willoughby Camera Stores, Inc., 21 C.C.P.A. 322, 324, Treas. Dec. 46851, Treas. Dec. Int. Rev. 46851 (1933), and reconciling it with United States v. Pompeo, 43 C.C.P.A. 9 (1955)). In Bauerhin, the Court held that because a certain canopy was dedicated solely for use with a particular car seat, that the canopy was classified as a part.
In the instant case, the importer states that “the hot stab does not play an integral or inseparable part in the operation of an ROV.” As previously stated, ROVs have multiple uses which may or may not involve the use of a hot stab. See supra note 1. Further, unlike the article discussed in Bauerhin, the subject merchandise is not designed to fit a particular ROV model but may be used with a variety of ROV models. Likewise, the hot stab is an optional item and is sold separately from ROVs. Thus the rationale of Bauerhin does not extend to the instant merchandise. See HQ 965259, dated February 14, 2002 (which distinguished between an article which was classifiable as a “part” under Bauerhin from a crib tent which did not meet the definition of a part for tariff purposes as it was not sold with a particular crib and could be used with any crib). Accordingly, we find that the subject hot stab is not a “part” of an ROV.
More importantly, in order for the subject hot stab to be classifiable as a part, under heading 8479, HTSUS, it must first be established that the ROV in which it is used is prima facie classifiable in heading 8479, HTSUS. It has been established that ROVs are classified under heading 8906, HTSUS, rather than heading 8479, HTSUS, as opined by the importer. Specifically, an ROV is not an industrial robot of heading 8479, HTSUS, but instead is a submersible remotely operated under water vessel. In New York Ruling Letter (NY) N019900, dated December 4, 2007, CBP classified an ROV which was designed to perform various tasks including construction and military operations, under heading 8906, HTSUS, which provides for “[o]ther vessels, including
warships and life boats and other rowing boats.” Finally, the general EN to Chapter 89 provides that: “…this Chapter excludes all separately presented parts (other than hulls) and accessories of vessels or floating structures, even if they are clearly identifiable as such.” As such, the subject merchandise is not classifiable in either heading 8479 or 8906, HTSUS, as a part or accessory.
Likewise, the subject hot stab does not meet the terms of heading 8481, HTSUS, as it does not function as a valve of heading 8481, HTSUS nor does the HPU or ROV to which it is used so function. As the ENs to heading 8481, HTSUS, explain:
This heading covers, taps, cocks, valves and similar appliances, used on or in pipes…to regulate the flow (for supply or discharge, etc.), of fluids (liquids, viscous or gaseous), …[t]he heading includes such devices designed to regulate the pressure or the flow velocity of a liquid or a gas.
The appliances regulate the flow by opening or closing aperture (e.g., gate, disc, ball, plug, needle or diaphragm). They may be operated by hand…or by automatic device such as a spring, counterweight, float lever, thermostatic element or pressure capsule.
The subject hot stabs do not consist of any of the features or characteristics stated above nor does it function in the manner described by the ENs to heading 8481, HTSUS. As the importer’s submission(s) explain the subject merchandise does not consist of an internal valve, does not regulate or monitor the flow or pressure of fluids and does not consist of or perform any mechanical functions. Accordingly, we find that the subject merchandise is not classified as a valve under heading 8481, HTSUS.
Instead, the primary purpose of the subject hot stab is to facilitate the functioning of the onboard Hydraulic Power Unit (HPU) by acting as a conduit to transfer hydraulic fluid to a sub-sea tool (a torque tool for opening and closing valves on a sub-sea Christmas tree valve). Our research indicates that HPUs are used in sub-sea oil & gas operations and are designed to produce continuous hydraulic power to a variety of sub-sea tools and equipment. The subject merchandise is connected to the onboard HPU via flexible hoses and receives hydraulic fluid via its single and/or dual ports. The manipulator arm of the ROV grabs the hot stab’s handle inserting the nose connector of the hot stab into a receptacle of the sub-sea tooling. The ROV then activates the HPU which in turn supplies hydraulic fluid through the subject hot stab to the sub-sea tooling. The hydraulic fluid from the onboard HPU is what actually powers the sub-sea tool. Hence, the subject hot stab facilitates the transfer of hydraulic fluid for purposes of providing hydraulic power input.
CBP has previously classified hydraulic power systems under heading 8412, HTSUS, noting that “the ENs to 8412 discuss a variety of hydraulic power engines and motors” which include “Hydraulic systems consisting of a hydraulic power unit (comprising essentially a hydraulic pump, an electric motor, control valves and oil tank), hydraulic cylinders, and the pipes or hoses needed to connect the cylinders to the hydraulic power unit, the whole forming a functional unit within the meaning of Note 4 to Section XVI…” See HQ 967802, dated September 2005. Similarly, the ENs to heading 8412, HTSUS, explain that “parts of the engines and motors of this heading [84.12] are also classified here.” For example, in NY I82822, dated June 22, 2002, CBP classified hose couplings used to form fluid connections for a hydraulic power system under subheading 8412.90.90, HTSUS, as parts of hydraulic engines and motors.
Based on the aforementioned, we find that the subject Hot Stab is an integral component part of an HPU and is dedicated solely for use with an HPU or similar device for the purposes of transferring fluid to a sub-sea tool or machine.
HOLDING:
By application of GRI 1, the Hot Stab is classified in heading 8412, HTSUS. This item is specifically classified under subheading 8412.90.90, HTSUS, which provides for: “Other engines and motors, and parts thereof: Parts: Other: Of hydraulic engines and motors.” The 2010 column one, general rate of duty is Free.
You are to mail this decision to the internal advice inquirer no later than 60 days from the date of this letter. On that date, Regulations and Rulings of the Office of International Trade, will take steps to 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