OT:RR:CTF:EMAIN H328283 LCB
Port Director
U.S. Customs and Border Protection
1600 Airport Drive
Great Falls, Montana 59404
Attn: Tami Simmons, Import Specialist, CBP Petroleum Center for Excellence and Expertise
RE: Tariff classification of DM 30 II blasthole drill; AFR/Protest No. 2704-21-157614
Dear Port Director:
The following is our decision regarding the Application for Further Review ("AFR") of Protest No. 2704-21-157614 filed on behalf of Epiroc USA, LLC ("Protestant"). Protestant contests the tariff classification by U.S. Customs and Border Protection ("CBP") of the "DM 30 II" drilling machine, as well as CBP's decision regarding the applicability of subheading 9903.88.01, HTSUS. The subject entries occurred on December 11, 2019, and February 4, 2020, and were liquidated on April 23, 2021, and March 19, 2021, respectively, under subheading 8430.41.00, HTSUS, as well as subheading 9903.88.02, HTSUS.
FACTS:
The device that is the subject of the AFR is designated as the DM 30 II drilling machine, which is a top head driven, rotary blasthole drill rig that is suitable for multi-pass rotary and "Down the Hole" ("DTH") drilling applications. The device is crawler-mounted and self-propelled. A DTH drilling machine uses repetitive percussive forces to open a hole in a rock formation and contains a drill string that rotates while a drilling hammer continuously strikes down the rock formation. The DM 30 II is a type of DTH drilling machine that can achieve a clean hole depth of twenty-eight (28) feet in a single pass and is adapted for blasthole drilling. Blasthole drilling is a technique used in mining where a hole is drilled into the surface of a rock formation, then packed with explosive material and detonated. The initial hole into which the explosives are packed is called the "blasthole."
In addition to being used for blasthole drilling, DTH drilling machines can typically be used in many applications, including geothermal drilling, drilling for mineral exploration, creating water wells, oil and gas drilling, and in the construction industry, they can be used to place pilings, soil anchors, or nails. Although the DM 30 II is a DTH drilling machine, it is not designed for "well sinking" nor for petroleum or natural gas production. Instead, the DM 30 II is specifically designed for blasthole drilling.
The DM 30 II can be used as a standard DTH drill rig or can be fitted with rotary drill bits. When used as a standard DTH drill rig, the DM 30 II accepts a drill bit that is essentially a cylindrical disk with multiple carbide or diamond pick insertions that protrude from the face of the drill bit. Like handheld rock picks, the small picks that are inserted into the drill bit are designed to break rock by concentrating force into a small area. The concentrated force is applied via a quick succession of percussive strikes. The DM 30 II can also accept drill bits that contain three saucer-shaped rotating cutters with carbide or diamond rock pick inserts attached to the rotating elements. The following is a photograph of the subject merchandise provided in the Protestant's submission and also on the company's website:
ISSUE:
Whether the subject machine is classified under subheading 8430.31.00, HTSUS, which provides for, in pertinent part, "Rock breaking machines" or under subheading 8430.41.00, which provides for, in pertinent part, "Other boring or sinking machinery."
LAW AND ANALYSIS:
Initially, we note that the matters protested are protestable under 19 U.S.C. 1514(a) (2) as decisions on classification. The protest was timely filed, within 180 days of liquidation of the entries at issue. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. 1514(c) (3) (2006)). Further Review of Protest No. 2704-21-157614 is properly accorded to Protestant pursuant to 19 C.F.R. 174.24(a) because the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of CBP or his designee, or with a decision made by CBP with respect to the same or substantially similar merchandise. Specifically, protestant alleges that the classification of the merchandise at liquidation was inconsistent with Headquarter Rulings Letter (HQ) 966134, dated March 26, 2003.
Classification under the HTSUS is determined 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 based on 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.
In addition to the GRIs, in interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989). The HTSUS provisions under consideration in this ruling are as follows:
8430 Other moving, grading, leveling, scraping, excavating, tamping, compacting,
extracting or boring machinery, for earth, minerals or ores; pile-drivers and pile-extractors; snowplows and snowblowers:
* * *
Coal or rock cutters and tunneling machinery:
* * *
8430.31.00 Self-propelled
8430.31.0040 Rock-breaking machines
* * *
Other boring or sinking machinery:
* * *
8430.41.00 Self-propelled
* * * *
The EN to heading 84.30 provides, in pertinent part:
This heading covers machinery, other than the self-propelled machines of heading 84.29 and agricultural, horticultural or forestry machinery (heading 84.32), for "attacking" the earth's crust (e.g., for cutting and breaking down rock, earth, coal, etc.: earth excavation, digging, drilling, etc.), or for preparing or compacting the terrain (e.g., scraping, levelling, grading, tamping or rolling). It also includes pile-drivers, pile-extractors, snow-ploughs, and snow-blowers.
***
(III) EXTRACTING, CUTTING OR DRILLING MACHINERY
This is mainly used in mining, well-drilling, tunnelling, quarrying, clay cutting, etc.
A) Coal or rock cutters for cutting or breaking down coal, ores, etc. They consist of a bar or disc fitted with pricks, or, more often, of an endless cutting chain running round a metal jib which may be adjustable for level and angle of cut (universal cutters). They may be mounted or self-propelled wheeled or tracklaying chassis, and some (cutter loaders) may be very large, incorporating a number of cutting chains and a built-in conveyor for loading the cut material on to the face conveyor, tubs, etc.
B) Tunnelling machinery. Tunnelling shields have smooth outer surfaces and sharp front cutting edges which are pushed forward into the soil by a hydraulic jacking system.
C) Machines for boring drill holes in rock, coal, etc., and percussion type cutters in which the drill can be swung to make linear cuts. But the heading excludes such tools for working in the hand, pneumatic, hydraulic or with self-contained motor (heading 84.67).
***
(G) Ploughs, strippers, etc., consist of cutter blades, ploughs, picks, wedges, etc., which
are forced along the face, slicing off the coal, clay, etc., and loading it directly on to
face conveyors, etc.
The EN to heading 84.30 also provides a Subheading Explanatory Note, which states:
Subheadings 8430.31 and 8430.39
These subheadings cover the machines described in paragraphs (A), (B) and (G) of Part (III) of the Explanatory Note to heading 84.30.
Neither paragraph (A), (B) nor (G) describes the DM 30 II. Paragraph (A) covers coal or rock cutters that consist of a bar or disc fitted with picks and an endless cutting chain running around a metal jib. These machines also incorporate cutting chains and a built-in conveyor for loading the cut material onto the face conveyor, tubs, etc. Paragraph (B) covers tunneling machinery with tunneling shields that have smooth outer surfaces and sharp front cutting edges which are pushed forward into the soil by a hydraulic jacking system. Lastly, paragraph (G) covers ploughs and strippers that feature cutter blades, ploughs, picks, wedges, etc., which are forced along the face, slicing off the coal, clay, etc., and load the material directly onto face conveyors, etc. Collectively, the machines identified in the exemplars have a common purpose in that they are used to mine, collect, and keep the valued rock intact. They are not used for drilling.
In contrast, the DM 30 II is designed for blasthole drilling-a mining technique in which a hole is drilled into the surface of the rock formation, packed with explosive material, and detonated. The function of the DM 30 II is not to break, cut, tunnel, plough, or strip rock, but to bore a clean hole, assisted by percussive drilling. This hole can then be packed with explosives, which are the primary mechanism for breaking rock. Specialized for drilling, DTH drilling machines such as the DM 30 II do not split larger rocks into smaller, more manageable pieces. Using a DTH drilling machine as the only machine to break rock would be ineffective because it would simply drill clean holes in the rock formation. Additional machines would need to be brought in to finish the task. Although a DTH drilling machine may be used during the activity or process of breaking rock, its precise function is to drill a strategic borehole in a controlled manner, which is one of many steps during the overall process of rock breaking.
The availability of different drill bits and rotating cutters does not transform the DM 30 II into a rock cutting machine. Although the various drill bits may assist the DM 30 II to penetrate a rock formation and more easily bore a hole in the ground, they do not change the function of the DM 30 II. Regardless of the bit used, the function of the DM 30 II is to drill a borehole into the earth. The various drill bits are not designed to wedge, mine, or cut precision blocks of coal, rock, marble, etc., into slabs. Instead, the marketing literature for the DM 30 II indicates that the various drill bits facilitate higher productivity, higher penetration rates, and better control during drilling. The DM 30 II's method of operation does not convert the machine into a rock cutting or breaking machine, but simply allows it to penetrate a hard rock formation more efficiently.
We note that HQ 966134 classifies certain "extension rods, drifter rods, guide rods, guide tubes and down-the-hole drill tubes" under heading 8431.49, HTSUS, as other parts of machinery of heading 8426, 8429 or 8430. Protestant claims that these items were for a machine that was substantially similar to the instant merchandise. By extension, Protestant argues that because the parts at issue in HQ 966134 were not classified under subheading 8431.43, HTSUS, which provides for "parts for boring or sinking machinery of subheading 8430.41 or 8430.49" this dictates that instant DM 30 II drilling machine cannot be classified under heading 8430.41. Initially, we note that HQ 966134 pertained to whether the parts at issue were properly classified by constituent material under Chapters 72 or 73, or as a part of heading 8431, HTSUS. Upon review of HQ 966134, it is not clear that the machine for which the "extension rods, drifter rods, guide rods, guide tubes and down-the-hole drill tubes," which is identified only as the "Atlas Copco rock drilling machine ROC F9," is a machine of subheading 8430.31 or 8430.39. Moreover, we know that although the two headings share verbiage (i.e., the references to boring or sinking machinery), their structures are not perfectly aligned. In classifying the instant DM 30 II drilling machine, we are explicitly tasked with ascertaining whether the good before us falls under the provision for "Coal or rock cutters and tunneling machinery." and it does not.
In light of the above, the DM 30 II is properly classified under 8430.41.00, HTSUS, which provides for "Other moving, grading, leveling, scraping, excavating, tamping, compacting, extracting or boring machinery, for earth, minerals or ores; pile-drivers and pile-extractors; snowplows and snowblowers: Other boring or sinking machinery: Self-propelled." This ruling is consistent with New York Ruling Letter (NY) N287689 (July 26, 2017), which found that a different DTH drilling machine is also classified as "other boring or sinking machinery."
HOLDING:
By application of GRIs 1 and 6, the DM 30 II is classified in heading 8430, HTSUS, specifically in 8430.41.00 HTSUS, which provides, in pertinent part, for "...Other boring or sinking machinery: Self-propelled." The general, column one rate of duty is free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8430.41.00, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8430.41.00, HTSUS, listed above.
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 at www.usitc.gov. The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively.
You are instructed to DENY the Protest. You are instructed to notify the protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division