CLA-2 RR:CR:GC 966408 JAS
Matthew M. Nolan, Esq.
Miller & Chevalier
655 Fifteenth Street, N.W., Suite 900
Washington, D.C. 20005-5701
RE: Nonalloy Steel Pipes for Use in Offshore Oil and Gas Production Platform;
NY I89073 Affirmed
Dear Mr. Nolan:
In a letter, dated April 10, 2003, on behalf of ExxonMobil Canada Properties, you request reconsideration of NY I89073, which the Director of Customs National Commodity Specialist Division, New York, issued to you on January 9, 2003. The issue is the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of certain nonalloy steel pipes for use in an offshore oil and natural gas production platform. A bill of materials, packing list and drawings of the structural sub-assemblies that incorporate these pipes were included. You provided additional facts and legal arguments during a teleconference held on
July 16, 2003, at your request. These were confirmed in a facsimile transmittal,
dated July 22, 2003.
FACTS:
The merchandise was described in NY I89073 as nonalloy steel pipes of varying dimensions for use in building an offshore platform. They were of welded construction with diameters ranging from 700 mm to 2364 mm, wall thickness from 20 mm to 80 mm, and from 550 mm to 26167 in length. NY I89073 confirmed classification in provisions of heading 7305, HTSUS, as other tubes and pipes of iron or nonalloy steel, both longitudinally welded and non-longitudinally welded. The ruling also imposed additional duties on the pipes under subheading
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9903.73.84, HTSUS, in accordance with the Section 201 Relief for Certain Steel Products (“steel safeguard measures”), the subject of Presidential Proclamation 7529, issued on March 5, 2002.
The HTSUS provisions under consideration are as follows:
Other tubes and pipes…having circular cross sections, the external diameter of which exceeds 406.4 mm, of iron or steel:
Longitudinally welded
7305.39 Other
* * * *
Structures…and parts of structures…; rods, angles,
shapes sections, tubes and the like, prepared for use
in structures, of iron or steel:
Welded…tubes, pipes and hollow profiles…of
steel…provided for in subheading 7305.31.40
…7305.39.10
ISSUE:
Whether the nonalloy steel pipes, made to an ExxonMobil proprietary fabrication specification, uniquely for placement in a particular location on an offshore oil and natural gas production platform to support drilling apparatus placed thereon, have been “prepared for use in structures.”
LAW AND ANALYSIS:
Under General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States (HTSUS), goods are to be classified according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.
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The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. Though not dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS. Customs believes the ENs should always be consulted. See T.D. 89-80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
You characterize the goods at issue as structural sub-assemblies, each unique and unsuitable for uses other than at a particular location on the topsides and jacket sections of the offshore platform for which they were designed. You maintain they are tubes and the like “prepared for use in structures” because they are not designed and fabricated to general standards for tubular products established by the American Society and Testing and Materials (ASTM) and the American Petroleum Institute (API); rather, they are designed and fabricated according to private, proprietary specifications as structural members designed to withstand vertical load-bearing stresses in a specific platform. You cite relevant 7308 ENs which state that the structures of heading 7308 and their parts, once put in position, generally remain in that position. You note that the offshore platform, of which the merchandise at issue constitutes integral parts, will remain in position for the life of the well. In addition, heading 7308 covers parts such as rods, angles, shapes, sections and tubes which have been prepared (e.g., drilled, bent or notched) for use in structures. Specifically, you cite to a ruling in which heavy structural sub-assemblies, claimed to be substantially similar to the goods at issue, were found to be prepared for use in structures of heading 7308.
The General ENs to Chapter 73 state, in relevant part, that tubes and pipes of that Chapter may be polished, coated, bent (including coiled tubing), threaded and coupled or not, drilled, waisted, expanded, cone shaped or fitted with flanges, collars or rings. It is not sufficient, therefore, to conclude that tubes and pipes have been prepared for use in structures simply by virtue of having been drilled, bent or notched. Something more is required. Substantially similar issues were addressed in
HQ 965792, dated March 31, 2003, in the context of certain hot-rolled carbon steel
H-beams that were drilled and punched, specifically why they were found not to be prepared for use in structures. The ruling held that angles, shapes and sections that have plates, stiffeners, or other structural elements bolted or welded onto them, are considered “prepared for use in structures” for purposes of inclusion in heading 7308. In your submission to the Director of Customs National Commodity Specialist Division, New York, dated December 6, 2002, from which NY I89073 issued, the merchandise at issue was identified as “structural steel tubular joints and sub-assemblies.” You stated these were to be welded together and to other structural components such as plates, sections and seamless tubes to fabricate two main components (of the offshore platform) called the topsides and the jacket. However, this was accomplished in the U.S. fabrication yard and was post-importation processing. Your current submission, dated April 10, 2003, identifies the diameters, lengths and thickness of the merchandise you refer to as structural sub-assemblies, but there is no indication that
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they are anything other than welded steel pipes to be incorporated in the main structural components (topsides and jacket). The ruling which you cite in support of classification in heading 7308 is HQ 085145, dated September 15, 1989. At issue was so-called main piles and skirt piles, among other articles, for use as structural components in
offshore drilling and production platforms. Both were described as being “heavy tubular steel sections” identified by length, diameter, wall thickness and chemistry of the steel. However, further description indicates that so-called drive heads, drive shoes, cutting tips and stabbing guides were welded to the main and skirt piles. This, no doubt, led to the conclusion in HQ 085145 that “…the topside components which have been cut to length, coped, built-up, or reinforced with stiffeners are…sections and tubes and the like prepared for use in a structure, in subheading 7308.90, HTSUS.” Consistent with this decision is HQ 082905, dated October 21, 1988, in which structural pipe referred to as insert piles, used to repair damaged legs in offshore gas and oil drilling and production platforms, were held to be welded tubes of nonalloy steel of heading 7305, HTSUS. However, cited in this ruling, for purposes of distinction, was HQ 079943, dated
March 30, 1987, in which unassembled subsections of conductor piles, consisting of
26-inch (outside diameter) pipe of several wall thickness, were classified as parts of offshore platforms. It is significant that these subsections had stabbing guides that were fitted and welded inside the ends to facilitate the joining of the subsections.
HOLDING:
Under the authority of GRI 1, the tubular-shaped structural joints and
sub-assemblies of nonalloy steel are provided for in heading 7305. They are classifiable in subheading 7305.31.40, HTSUS, if longitudinally welded, or in subheading 7305.39.10, HTSUS, if welded other than longitudinally.
Pursuant to the Section 201 steel safeguard measures implemented by Presidential Proclamation 7529, welded pipes of steel not of a kind used in drilling for oil or gas, classifiable in the foregoing subheadings, are subject to the additional ad valorem duties specified by subheading 9903.73.84, HTSUS.
NY I89073, dated January 9, 2003, is affirmed.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division