OT:RR:CTF:EMAIN H270907 SK
Port Director
U.S. Customs and Border Protection
Port of Pembina
112 W. Stutsman
Pembina, ND 58271
Attn: Jason Schmelz, Port Director; Lisa Thorlakson, Supervisory Entry Specialist; Heidi Olsonawski, Machinery CEE, Sr. Import Specialist; Lorie Vagle, Machinery CEE – Import Specialist
RE: Gamma ray assembly; Application for Further Review of Protest Number 3401-15-100084.
Dear Port Director:
This is in response to an Application for Further Review (AFR) of Protest No. 3401-15-100084, timely filed on September 8, 2015, by Precision Energy Services, Inc. (Protestant). The AFR concerns U.S. Customs and Border Protection’s (CBP) classification under the Harmonized Tariff Schedule of the United States (HTSUS) of gamma ray assemblies that detect and measure gamma rays in oil and gas exploration/production applications.
The subject merchandise was entered at the Port of Portal (3403), North Dakota on April 5, 2014, and liquidated as entered on April 10, 2015, under heading 9030, HTSUS, specifically subheading 9030.10.00, HTSUS, which provides for, in pertinent part, “[I]nstruments and apparatus for measuring or detecting alpha, beta, gamma, X-ray, cosmic or other ionizing radiations; parts and accessories thereof: instruments and apparatus for measuring or detecting ionizing radiations.” Protestant claims that the subject merchandise is classifiable under heading 9015, HTSUS, specifically subheading 9015.90.00, HTSUS, which provides for parts and accessories of “[S]urveying (including photogrammetrical surveying), hydrographic, oceanographic, hydrological, meteorological or geophysical instruments and appliances, excluding compasses; rangefinders.”
FACTS:
The subject gamma ray assembly consists of electronic components that detect gamma radiation and count the number of gamma rays received per second. After importation, it is used with an electromagnetic pulse “measurement-while-drilling” system to detect gamma rays in industrial oil and gas exploration and production applications. The subject merchandise is run with survey or directional down-hole tools to identify or define geological markers in down-hole applications to determine the path of the borehole by determining the basic bedding structure of the formation. For example, shale and clays have naturally high radioactivity and their locations indicate potential oil producing zones, while sandstone and limestone have low radioactivity and their locations indicate unlikely oil producing zones.
ISSUE:
Whether the subject merchandise is classifiable under heading 9015, HTSUS, which provides for, in pertinent part, “[S]urveying (including photogrammetrical surveying), hydrographic, oceanographic, hydrological, meteorological or geophysical instruments and appliances, excluding compasses” or under heading 9030, HTSUS, which provides for, in pertinent part, “[I]nstruments and apparatus for measuring or detecting alpha, beta, gamma, X-ray, cosmic or other ionizing radiations.”
LAW AND ANALYSIS:
This matter is protestable under 19 U.S.C. 1514(a)(2) as a decision on classification. The Protest was timely filed on September 8, 2015, within 180 days of liquidation, pursuant to 19 U.S.C. 1514(c)(3). Further Review of Protest No. 3401-15-100084 is properly accorded pursuant to 19 CFR § 174.24(b), as the Protestant has alleged that the decision against which the protest was filed involves questions of law or fact which have not been ruled on by the Commissioner of CBP or by his designee or by the Customs courts. The AFR was forwarded to CBP Headquarters for consideration.
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.
GRI 6 provides that classification of goods at the subheading level will be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the preceding GRIs on the understanding that only subheadings at the same level are comparable.
The HTSUS provisions under consideration are as follows:
90.15 Surveying (including photogrammetrical surveying), hydrographic, oceanographic,
hydrological, meteorological or geophysical instruments and appliances, excluding compasses; rangefinders; parts and accessories thereof:
90.30 Oscilloscopes, spectrum analyzers and other instruments and apparatus for measuring or checking electrical quantities, excluding meters of heading 9028; instruments and apparatus for measuring or detecting alpha, beta, gamma, X-ray, cosmic or other ionizing radiations; parts and accessories thereof:
Note 2 to Chapter 90, HTSUS, provides as follows:
Subject to note 1 above, parts and accessories for machines, apparatus, instruments or articles of this chapter are to be classified according to the following rules:
Parts and accessories which are goods included in any of the headings of this chapter or of chapter 84, 85 or 91 (other than heading 8485, 8548 or 9033) are in all cases to be classified in their respective headings;
* * *
Additional U.S. Rule of Interpretation 1(c) provides:
In the absence of special language or context which otherwise requires ... a provision for parts of an article covers products solely or principally used as a part of such articles but a provision for "parts" or "parts and accessories" shall not prevail over a specific provision for such part or accessory[.]
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While neither 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 the headings. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 90.15 provides, in pertinent part:
* * * * *
(VI) GEOPHYSICAL INSTRUMENTS
Many geophysical instruments are excluded, for example, gas, sludge or soil analysis apparatus, photoelectric fluorometers and fluoroscopes (instruments using ultra violet light to detect or identify numerous substances) (heading 90.27); electric or electronic measuring instruments (e.g., instruments for measuring resistivity, radioactivity counters, thermocouple instruments) (heading 90.30), etc.
* * * * *
EN 90.30 provides, in pertinent part:
(A) INSTRUMENTS AND APPARATUS FOR MEASURING OR DETECTING ALPHA, BETA, GAMMA, X RAY, COSMIC OR OTHER IONISING RADIATIONS
These instruments and apparatus are used in scientific research, for industrial purposes (metallurgy, petroleum prospecting, etc.), or for biological or medical purposes (in conjunction with radioactive tracers). * * *
* * * * *
Protestant submits that the subject merchandise is classifiable in heading 9015, HTSUS, as geophysical instruments and appliances pursuant to GRI 1. Specifically, Protestant cites to Agatec Corp. v. United States, 31 C.I.T. 847, 852 (Ct. Int’l Trade 2007) in which the court characterized heading 9015, HTSUS, as a “use” provision. Consequently, Protestant submits that classification of the subject merchandise is pursuant to Additional U.S. Rule of Interpretation 1(a), HTSUS, which provides:
“[A] tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.”
The U.S. Court of International Trade (CIT) has provided factors which are indicative, but not conclusive, to apply when determining whether particular merchandise falls within a class or kind. They include: general physical characteristics, the expectation of the ultimate purchaser, channels of trade, environment of sale (accompanying accessories, manner of advertisement and display), use in the same manner as merchandise which defines the class, economic practicality of so using the import, and recognition in the trade of this use. See Kraft, Inc., v. United States, USITR, 16 CIT 483, (June 24, 1992); G. Heilman Brewing Co. v. United States, USITR, 14 CIT 614 (Sept. 6, 1990); and United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F. 2d 373 (1976), cert. denied, 429 U.S. 979. Under a Carborundum factor analysis, Protestant submits that the principal use of the class of “measurement while drilling” tools to which the gamma ray assembly belongs is as geophysical instruments for oil/gas exploration and production applications. Therefore, Protestant argues that classification of the subject gamma ray assemblies is proper under heading 9015, HTSUS.
Alternatively, Protestant argues that if CBP does not agree that classification is proper under heading 9015, HTSUS, based on its principal use as a geophysical instrument, and it is determined that both headings 9015 and 9030, HSTUS, describe the subject merchandise, classification would be pursuant to GRI 3(a) analysis. GRI 3(a) provides that, when by application of rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings, classification shall be effected as follows:
The heading which provides the most specific description shall be preferred to headings providing a more general description. …
Protestant argues that the subject merchandise remains classifiable in heading 9015, HTSUS, as per GRI 3(a), in that the provision’s requirements are more difficult to satisfy than those of competing heading 9030, HTSUS, in that geophysical instruments are used only for the specific purpose of “studying the earth’s electrical, gravitational and magnetic fields and radiation” and radiation detectors have more general applications.
Protestant also submits that if CBP does not agree that the subject merchandise is a geophysical instrument or appliance, classification is proper under heading 9015, HTSUS, as an accessory to a geophysical instrument.
As set forth above, the subject merchandise consists of electronic components that detect and count gamma radiation. It is used with an electromagnetic pulse “measurement-while-drilling” system to detect gamma rays in industrial oil and gas exploration and production applications. As the subject merchandise is a geophysical instrument or appliance that functions to measure gamma radiations, classification under headings 9015 and 9030, HTSUS, initially merit consideration.
The ENs to these headings are instructive as to their intended scope. As regards the scope of “geophysical instruments” included in heading 9015, HTSUS, EN 9015 (VI) states:
Many geophysical instruments are excluded, for example, … electric or electronic measuring instruments (e.g., … radioactivity counters…)(heading 90.30), etc.”
(emphasis added)
As the subject merchandise is an electronic instrument that detects and counts gamma rays, which are a type of naturally occurring radioactivity, it is specifically excluded from the scope of geophysical instruments classifiable in heading 9015, HTSUS, and classification is directed to heading 9030, HTSUS.
EN 9030 (A) prescribes the intended scope of “instruments and apparatus for measuring or detecting … gamma … radiations” and states:
These instruments and apparatus are used … for industrial purposes (metallurgy, petroleum prospecting, etc.),… . (emphasis added)
As the subject merchandise detects and measures gamma radiations for industrial
petroleum prospecting purposes (i.e., oil and gas exploration/production applications), it is prima facie classifiable in heading 9030, HTSUS, specifically subheading 9030.10.00, HTSUS, which provides for, inter alia, “[I]nstruments and apparatus for measuring or detecting alpha, beta, gamma, X-ray, cosmic or other ionizing radiations; parts and accessories thereof: instruments and apparatus for measuring or detecting ionizing radiations.
In responding to the Protestant’s arguments, we note that even if we were to assume, arguendo, that the subject merchandise is prima facie classifiable in heading 9015, HTSUS, as geophysical instruments and appliances, the subject article nevertheless remains classified in heading 9030, HSTUS, as the latter heading (i.e., instruments and apparatus for measuring or detecting gamma radiations) is more specific. The surveying and geophysical instruments and appliances of heading 9015 cover a broader range of goods than do the narrower instruments and appliances of heading 9030, HTSUS, which describes the exact operation (i.e. measuring or detecting gamma radiation) conducted by the products falling under it. See Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1380 (Fed. Cir. 1999) (citing Orlando Food Corp. v. United States, 140 F.3d 1437, 1441 (Fed. Cir. 1998)), in which the Court of Appeals for the Federal Circuit stated that under GRI 3(a) "the court w[ill] look to the provision with requirements that are more difficult to satisfy and that describe the article with the greatest degree of accuracy and certainty." See also Arthur J. Humphreys et al. v. United States, 56 CCPA 67, C.A.D. 956, 407 F.2d 417 (1969) and F.L. Smidth & Company v. United States, 56 CCPA 77, C.A.D. 958, 409 F.2d 1369 (1969)), in support of the premise that merchandise is classifiable under the tariff provision having requirements/terms which are more difficult to satisfy and more restrictive.
Lastly, as regards Protestant’s assertion that if the subject merchandise is not considered classifiable as a geophysical instrument or appliance of heading 9015, HTSUS, it nevertheless is classifiable as an accessory thereof, we note that Additional U.S. Note 1(c) and Note 2(a) to Chapter 90, set forth supra, preclude such classification. As the subject articles are goods included in heading 9030, HTSUS, they are not classifiable as accessories of heading 9015, HTSUS.
HOLDING:
By application of GRIs 1 and 6, the subject merchandise is classified in heading 9030,
HTSUS, specifically subheading 9030.10.00, HTSUS, which provides for, in pertinent part, “[I]nstruments and apparatus for measuring or detecting alpha, beta, gamma, X-ray, cosmic or other ionizing radiations; parts and accessories thereof: instruments and apparatus for measuring or detecting ionizing radiations.”
The 2015 column one, general rate of duty is 1.6 percent ad valorem. 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 online at http://www.usitc.gov/tata/hts/.
You are instructed to DENY the protest. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, CBP will make the decision available to CBP personnel and the public via www.cbp.gov, the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division