CLA-2-89:OT:RR:NC:N1:106
Helen M. Cousineau, Director
Deloitte Tax LLP, Customs and Global Trade
111 S. Wacker Drive
Chicago, IL 60606
RE: The tariff classification of an LNG production, storage and offloading vessel from South Korea
Dear Mr. Carlson,
In your letter dated December 7, 2012, you requested a tariff classification on behalf of Excelerate Liquefaction Solutions (Port Lavaca I), LLC of The Woodlands, Texas.
The item being considered is a “Floating Liquefaction Storage and Offloading Vessel” (FLSO). You state that this vessel, which is not self-propelled, will contain all the equipment necessary to transfer natural gas, liquefy natural gas and store the resulting liquefied natural gas (LNG), including any additional machinery for power and utilities. It is approximately 338 meters long, 62 meters wide and 33.4 meters deep. The main purpose of the FLSO will be to receive natural gas, liquefy the gas into LNG and then offload the LNG to a traditional LNG carrier or to another vessel such as a Floating Storage Regasification Unit (FSRU) that is capable of transforming the LNG back into its gaseous state.
In your ruling request, you suggested classification in heading 8905.90.5000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Light-vessels, fire-floats, dredgers, floating cranes, and other vessels the navigability of which is subsidiary to their main function; floating docks; floating or submersible drilling or production platforms: Other: Other.”
Classification of goods in the Harmonized Tariff Schedule of the United States (HTSUS) is governed by the General Rules of Interpretation (GRIs). GRI 1. states “ ... classification shall be determined according to the terms of the headings ... .”
The Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and the GRIs. The ENs to 89.05 state that this heading covers a group of floating or submersible drilling or production platforms. Such platforms are “generally” designed for the discovery or exploitation of off-shore deposits of oil or natural gas and contain living quarters for personnel. In addition, as you had stated in our telephone conversation on Friday, January 4, 2013, this platform has living quarters for personnel. [Emphasis added]
The process of liquefying natural gas is considered production for tariff purposes.
Therefore, the applicable classification subheading for the “Floating Liquefaction Storage and Offloading Vessel” (FLSO) will be 8905.20.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for, “Light-vessels, fire-floats, dredgers, floating cranes, and other vessels the navigability of which is subsidiary to their main function; floating docks; floating or submersible drilling or production platforms: Floating or submersible drilling or production.” The rate of duty will be Free.
Duty rates are provided for your convenience and are subject to change. The text of the most recent Harmonized Tariff Schedule of the United States and the accompanying duty rates are provided on the World Wide Web at http://www.usitc.gov/tata/hts/.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Matthew Sullivan at 646-733-3013.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division