OT:RR:CTF:CPMM H306406 CkG
TARIFF NO: 7304.39.00, 7304.49.00, 7304.59.80
Tamamoto Milton
Nippon Express USA
230-19 International Airport Center Blvd
Suite 100
Jamaica NY 11413
RE: Request for binding ruling on the classification of steel coupling stock
Dear Mr. Milton:
This is in reply to your request of September 27, 2019, on behalf of Kanematsu USA Inc., for a binding ruling on the classification of steel coupling stock.
FACTS:
The product under consideration is described as hot-rolled seamless steel pipe, made to specification API (American Petroleum Institute) 5CT. It comes in grades L80 type 1, L80 type 13Cr, T95, P110, C110, or Q125. The outside diameter is 2.750 inches to 16.500 inches with a wall thickness of 0.400 inches to 2.5 inches. Its usage is defined as “mechanical tube” for accessory material and “coupling stock”. The ultimate purchasers of the instant merchandise in the U.S. then further process the coupling stock to manufacture couplings (i.e., pipe fittings) for tubing and casing or to manufacture accessories for oil and gas equipment using the coupling stock provided by the inquirers.
The instant merchandise was entered in subheading 7304.59, for tubes, pipes and hollow profiles of iron or steel, other than casing or tubing of a kind used in drilling for oil and gas. At entry, an import specialist reviewed the entry documents and reclassified the merchandise from 7304.59 to 7304.29 (casing or tubing of a kind used in drilling for oil and gas), due to the stated adherence of the merchandise to the API 5CT specification for oil and gas casing and tubing. You maintain that the instant merchandise is correctly classified in subheadings 7304.39, 7304.49, or 7304.5, depending on the grade, and furthermore, that you were granted an exclusion order for this merchandise under subheading 7304.59.8070 from the additional tariffs imposed on certain steel products by Presidential proclamation 9704.
ISSUE:
Whether the instant steel coupling stock is properly classified in subheading 7304.29, HTSUS, as casing or tubing of a kind used in drilling for oil or gas, or in subheadings 7304.3, 7304.4, or 7304.5, HTSUS, as other tubes or hollow profiles of other alloy steel, with a circular cross section.
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that classification shall be determined according to the terms of the headings 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 or notes do not require otherwise, the remaining GRIs 2 through 6 may be applied.
The 2019 HTSUS provisions at issue are as follows:
7304: Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel:
Casing, tubing and drill pipe, of a kind used in drilling for oil or gas:
7304.29: Other:
Other, of circular cross section, of iron or nonalloy steel:
7304.31: Cold-drawn or cold-rolled (cold-reduced):
7304.39.00: Other:
Other, or circular cross-section, of stainless steel:
7304.41: Cold-drawn or cold-rolled (cold-reduced):
7304.49.00: Other:
Other, of circular cross section, of other alloy steel:
7304.51: Cold-drawn or cold-rolled (cold-reduced):
7304.59: Other:
Other:
Other:
7304.59.80: Other:
Having an outside diameter exceeding 285.8 mm but not exceeding 406.4 mm:
7304.59.8070: Having a wall thickness of 19 mm or more
* * * *
At GRI 1, there is no dispute that the instant merchandise is classified in heading 7304, HTSUS, as a tube, pipe or hollow profile of steel. At issue is the proper subheading classification, which requires the application of GRI 6. GRI 6 requires that the GRI's be applied at the subheading level on the understanding that only subheadings at the same level are comparable.
You argue that the liquidated classification of 7304.29 is incorrect, and that the instant merchandise is properly classified in subheadings 7304.39-7304.59, HTSUS, as tube or pipe other than casing or tubing of a kind used in drilling for oil and gas. Specifically, you contend that adherence to the API 5CT standard is not necessarily indicative of actual use, that the instant product is not used as casing or tubing, and that the sizing of the product does not fall within the range specified by the API 5CT standard for casing and tubing.
The phrase “of a kind” indicates that subheading 7304.29 is a principal use provision. Under Additional U.S. Rule of Interpretation 1(a) (AUSR 1(a)), tariff classification under a principal use provision must be determined in accordance with the use in the United States of that class or kind to which the imported goods belong. In the instant case there is no dispute that the product at issue is principally used in oil and gas drilling; rather, you argue that as the coupling stock is not used as casing or tubing and is manufactured to different specifications than those of oil or gas casing or tubing, then it cannot be considered “of a kind” with casing or tubing for use in oil or gas drilling.
“Tubing” generally covers any hollow, cylindrical length of metal, plastic, etc.—e.g., “a length or lengths of metal, plastic, glass, etc., in tubular form,” or “material in the form of a tube.” However. while the instant coupling stock is self-evidently a length of metal in tubular form, and it is eventually used in oil and gas drilling applications, it is not actually used as tubing. Rather, the coupling stock is further processed after importation to manufacture pipe couplings. Specifically, according to the API Specifications for Casing and Tubing, “casing” is defined as “pipe run from the surface and intended to line the walls of a drilled well,” “tubing” is “pipe placed within a well and serving to produce well fluids or to inject fluids,” and “coupling stock” is “seamless thick-wall tube or mechanical tube used for the manufacture of coupling blanks.” Thus the coupling stock is used to eventually produce pipe couplings, connecting pipes instead of directly carrying well fluids. Furthermore, according to the API 5CT and ISO 11960 standards for oil and gas casing or tubing, coupling stock is manufactured to different specifications and tolerances than either casing or tubing; for example, you note that the diameter and thickness requirements for casing and tubing listed in the API 5CT and ISO 11960 standards do not match the dimensions of the instant coupling stock; specifically, the permissible outside diameter of casing and tubing provided by the API and ISO standards ranges from 4 to 20 inches for casing (with no option for a casing with a 16.5 inch diameter, only 16 inches) and 1.050 to 4.5 for tubing (with options for 2.375 or 2.875 inch diameters, but not 2.75). Wall thickness, in turn, ranges from .205 to .797 inches for casing. Thus, the minimum diameter of 2.75 inches for the instant coupling stock falls outside the range for casing, and .113 to .63 inches for tubing. at a maximum diameter of 16.5 inches, the instant coupling stock falls well outside of the range for tubing. Similarly, a wall thickness of 2.5 inches falls well outside the range of either casing or tubing, and neither 2.75 inches nor 16.5 inches are available options for either casing or tubing diameter.
Hence, given that the actual use of the coupling stock differs from that of casing or tubing, as well as the differing specifications which indicate that the product is neither designed nor suitable for use as casing or tubing, we agree that the instant coupling stock is correctly classified as other tubes, pipes and hollow profiles of steel, in subheadings 7304.3-7304.5, depending on the grade. Furthermore, our research indicates that pipes, tubes, etc. of the grades in question are not cold drawn or cold-rolled; therefore, we agree that subheadings 7304.39, 7304.49, and 7304.59 are the correct 6-digit subheadings. This conclusion is consistent with prior CBP rulings. See e.g., NY N120265, dated September 23, 2010; NY B89609, dated October 8, 1997; and NY 856238, dated September 26, 1990.
Specifically, coupling stock with a grade of L80 steel contains 1.9% manganese, and is therefore classified in subheading 7304.59, HTSUS, as other tubes, pipes, etc., of other alloy steel, Grade L80 13CR coupling stock, as it contains between 12 and 14% chromium and less than 2% of carbon, is stainless steel, and is therefore classified in subheading 7304.49.00, HTSUS. Grade T95 contains between .25% and .85% molybdenum, .4%-1.5% chromium, and .99% nickel, and is therefore an other alloy steel of subheading 7304.59. P110 grade steel is a nonalloy steel of subheading 7304.39.00. Grade C110 contains between .35% and 1% molybdenum, .9% nickel, and between .4 and 1.5% chromium, and is therefore an other alloy steel of subheading 7304.59. Finally, grade Q125 steel contains .85% molybdenum, 1.5% chromium, and .99% nickel, and is therefore also classified as an other alloy steel of subheading 7304.59, HTSUS (specifically subheading 7304.59.80).
With respect to the exclusion order you received for the 10-digit subheading 7304.59.8070, HTSUS, which provides for tubes, hollow profiles, etc. with an outside diameter exceeding 285 mm (11.2 inches) and a wall thickness of 19mm (.7 inches) or more, the range of diameter and thickness provided for the instant products does not allow us to confirm this classification. With an outside diameter ranging from 2.750 inches to 16.500 inches and a wall thickness of 0.400 inches to 2.5 inches, the instant merchandise (of grades L80, T95, C110, and Q125) may be classified in various subheadings under 7304.59.80.
HOLDING:
By application of GRIs 1 and 6, the steel coupling stock of grades L80, T95, C110, and Q125i s classified in subheading 7304.59.80, HTSUS, which provides for “Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel: Other, of circular cross section, of other alloy steel: Other: Other: Other.” The 2019 column one, general rate of duty is Free.
The coupling stock of grade P110 steel is classified in subheading 7304.39.00, HTSUS, which provides for “Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel: Other, of circular cross section, of iron or nonalloy steel: Other.” The 2019 column one, general rate of duty is Free.
The coupling stock of grade L80 13CR is classified in subheading 7304.49.00, HTSUS, which provides for “Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel: Other, of circular cross section, of stainless steel: Other.” The 2019 column one, general rate of duty is Free.
On March 8, 2018, Presidential proclamations 9704 and 9705 imposed additional tariffs and quotas on a number of steel and aluminum mill products. Exemptions have been made on a temporary basis for some countries. Quantitative limitations or quotas may apply for certain exempted countries and can also be found in Chapter 99. Additional duties for steel of 25 percent and for aluminum of 10 percent are reflected in Chapter 99, subheading 9903.80.01 for steel and subheading 9903.85.01 for aluminum. Products classified under heading 7304, HTSUS, may be subject to additional duties or quota. At the time of importation, you must report the Chapter 99 subheading applicable to your product classification in addition to the Chapter 72, 73 or 76 subheading listed above. The Proclamations are subject to periodic amendment of the exclusions, so you should exercise reasonable care in monitoring the status of goods covered by the Proclamations and the applicable Chapter 99 subheadings.
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 the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public online at http://www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. The text of the most recent HTSUS and the accompanying duty rates are provided online at www.usitc.gov/tata/hts/.
Sincerely,
Craig T. Clark, Director,
Commercial and Trade Facilitation Division