CLA-2 OT:RR:CTF:TCM H024751 RM
Mr. Chuck J. Thompson
XL Brokers International, Inc.
P.O. Box 60132, AMF
Houston, TX 77205
RE: Revocation of HQ 950196; Classification of the “Geolink Orienteer Directional Measurement-While-Drilling Surveying System”
Dear Mr. Thompson:
This is in reference to Headquarters Ruling Letter (“HQ”) 950196, dated January 8, 1992, issued to you on behalf of the Ensco Technology Corporation, concerning the tariff classification of the “Geolink Orienteer Directional Measurement-While-Drilling Surveying System” (hereinafter “Geolink Orienteer” or “Geolink”). In that ruling, U.S. Customs and Border Protection (“CBP”) determined that the Geolink Orienteer was classified under heading 9031 of the Harmonized Tariff Schedule of the United States (“HTSUS”), which provides in part for “Measuring or checking instruments … not specified or included elsewhere in [Chapter 90].” We have reviewed the ruling and found this classification to be incorrect.
Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. §1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation was published in the Customs Bulletin, Volume 44, No. 24, on June 9, 2010. No comments were received in response to this notice.
FACTS:
The Geolink Orienteer is a multi-part surveying system used in the course of measuring-while-drilling for oil (also known as “directional drilling”) to monitor, in real time, the inclination, temperature, and azimuth (the compass direction) of the borehole (the rock face that bounds a drilled hole). In HQ 950196, we described the merchandise as follows:
[The GEOLINK] is composed of a “downhole system” component that is attached to the drill, and a “surface system” component that receives and interprets the data from the drill.
The downhole system (which is contained in the Transmitter Sub), consists of the following components: the Power Section Assembly; the Survey Electronics Assembly; the Actuator Power Controller Assembly; and the Transmitter Assembly. The Transmitter Sub is a specially machined, non-magnetic drill collar section for housing the mud pulse transmitter. The Power Section Assembly supplies the power to the Transmitter Assembly and the Survey Electronics Assembly. The Survey Electronics Assembly collects the mud pulse data. This assembly includes triaxial magnetometers, inclinometers and control electronics. These instruments indicate the inclination, temperature, tool face, and azimuth of the drill. The Actuator Power Controller Assembly carries the power from the Power Section Assembly to the Transmitter Assembly. The Transmitter Assembly collects the data from the Survey Electronics Assembly and converts it into a mud pulse signal that is sent to the Standpipe Pressure Transmitter on the surface.
The surface system consists of the following components: the Standpipe Pressure Transmitter; the Pump Synchronization Sensors; a Systems Interface Box; a Control Terminal; a Laptop PC; a Strip Chart Recorder; a Printer; and a Rig Floor Display. The Standpipe Pressure Transmitter receives the mud pulse signal from the Transmitter Assembly and sends the signal to the Systems Interface Box. The Pump Synchronization Sensors synchronize the mud pumps with the Systems Interface Box to enhance pulse detection. The Systems Interface Box supplies power to the entire surface system, except the computer. It acts as the interface for the transmission of data between the various surface system components, except the printer. It converts raw signals into digital signals that are then sent to the computer. The Control Terminal is a hand-held interface that acts as a direct control device to the Systems Interface Box. The Laptop PC is a computer that analyzes the data from the drill. It is used for storage of data, printout, directional survey calculation, and other applications programs. The Strip Chart Recorder prints the data from the Systems Interface Box. The Printer produces hard copy output of data from the drill and other programs. The Rig Floor Display is a unit on the drill rig platform that displays the directional data of the drill. The data is sent from the computer through the Systems Interface Box.
You stated that the surface equipment does not and cannot control the downhole equipment – it can only be used to interpret the data sent to the surface from the downhole equipment. To change the drill's direction, the downhole equipment must be taken out of the ground.
ISSUE:
Is the Geolink Orienteer classified under heading 9015, HTSUS, as a geophysical instrument, or under heading 9031, HTSUS, as a measuring or checking instrument not specified or included elsewhere in Chapter 90?
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 headings under consideration are the following:
9015 Surveying (including photogrammetrical surveying), hydrographic, oceanographic, hydrological, meteorological or geophysical instruments and appliances, excluding compasses; rangefinders; parts and accessories thereof:
9015.80 Other instruments and appliances:
9015.80.80 Other …
* * *
9031 Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof:
9031.80 Other instruments, appliances and machines:
Other:
9031.80.80 Other …
* * *
Note 4 to Section XVI (which includes Chapter 85, HTSUS) provides:
Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables, or by other devices) intended to contribute together to perform a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.
Note 3 to Section XVII (which includes Chapter 90, HTSUS) provides that “[t]he provisions of notes 3 and 4 to section XVI apply also to this chapter.”
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. 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. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 90.15 provides, in relevant part:
(VI) GEOPHYSICAL INSTRUMENTS
The following remain in this heading:
…
(2) Magnetic or gravimetric geophysical instruments used in prospecting for ores, oil, etc. These highly sensitive instruments include magnetic balances, magnetometers, magnetic theodolites and gravimeters, torsion balances.
…
(5) Apparatus for measuring the inclination of a borehole.
EN 90.31 provides, in relevant part:
This heading covers measuring or checking instruments, appliances and machines, whether or not optical. It should, however, be noted that this group does not include any instruments … falling in headings … 90.15.
Note 3 to Section XVII (which incorporates Note 4 to Section XVI into Chapter 90, HTSUS) directs that, when a combination of machines contribute together to perform a clearly defined function covered by one of the headings in Chapter 90, HTSUS, they are to be classified in the heading appropriate to that function.
Heading 9015, HTSUS, provides in part for “Geophysical instruments.” The term “geophysical” is not defined in the HTSUS. When a tariff term is not defined by the HTSUS or its legislative history, “the term’s correct meaning is its common meaning.” See Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994). The common meaning of a term used in commerce is presumed to be the same as its commercial meaning. Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed. Cir. 1989). To ascertain the common meaning of a term, a court may consult “dictionaries, scientific authorities, and other reliable information sources” and “lexicographic and other materials.” C.J. Tower & Sons v. United States, 673 F.2d 1268, 1271 (CCPA 1982); Simod, 872 F.2d at 1576.
Schlumberger’s Oilfield Glossary defines the term “geophysics” as “[t]he study of the physics of the earth, especially its electrical, gravitational and magnetic fields and propagation of elastic (seismic) waves within it.” The Geolink Orienteer is a system comprised of several interconnected machines which work together to transmit down-hole data to the surface (e.g., the inclination, temperature and azimuth of the drilled borehole), and to decode that information so that it can be used by rig technicians in course of oil and gas exploration. Insofar as this function is “geophysical,” we conclude that the entire system is classified together, as a functional unit of heading 9015, HTSUS.
Our conclusion is in keeping with EN 90.15(VI) which indicates that “apparatus for measuring the inclination of a borehole” and “magnetic geophysical instruments used in prospecting for oil” are classified under heading 9015, HTSUS, as geophysical instruments. See EN 90.15 (VI)(2),(5). See also HQ W968458, dated May 8, 2009 (sonic imaging tool used to examine the condition of subsurface geological formations for purposes of oil exploration classified under heading 9015, HTSUS, as a geophysical instrument). As the Geolink Orienteer is classified under heading 9015, HTSUS, it is precluded from classification under heading 9031, HTSUS, by the terms of that heading. See also EN 90.31.
HOLDING:
By application of GRI 1 (Note 3 to Section XVII, HTSUS), the Geolink Orienteer is classified under heading 9015, HTSUS, specifically in subheading 9015.80.80 which provides for: “Geophysical instruments: Other instruments and appliances: Other: Other.” The 2010 column one, general rate of duty is Free.
Duty rates are provided for convenience only and are 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.
EFFECT ON OTHER RULINGS:
This ruling revokes HQ 950196, dated January 8, 1992. In accordance with 19 U.S.C. § 1625(c), this action will become effective 60 days after publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division