CLA-2-27:OT:RR:NC:N1: 137
Ross Youens
ExxonMobil Oil Corporation
22777 Springwoods Village Parkway, Office S2.2A.448 Spring, TX 77389
RE: The tariff classification and eligibility of the United States-Mexico-Canada Agreement (USMCA) of a bitumen and diluent blended product from Canada
Dear Mr. Youens:
In your letter dated December 16, 2022, you requested a binding ruling on the tariff classification and eligibility of a bitumen and diluent blended product under the United States-Mexico-Canada Agreement (USMCA).
The product in question is referred to as Western Canada Dilbit Blend (WDB) described as a bitumen and diluent blended crude oil product. The WDB consists of a blend of crudes produced at three different oil sands projects in Canada. The three crude streams that make up the WDB are diluted bitumen or “dilbit” which is a combination of bitumen with diluent. Dilbit is a relatively clean bitumen (containing less than 0.5% water and solids) diluted with 20-40 percent diluent by volume. The three crude streams that make up WDB are transported from each product site to a central terminal in Canada where they are blended together into WDB. The WDB has an A.P.I. gravity less than 25 degrees and contains less than 40 percent diluent. The diluent is noted to be sourced in North America, either produced in Canada or imported from the United States. After blending in Canada, the WDB will be transported via pipeline to the United States.
Classification:
The applicable subheading for the bitumen and diluent blended product will be 2709.00.1000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for petroleum oils and oils obtained from bituminous minerals, crude: testing under 25 degrees A.P.I. The general rate of duty will be 5.25 cents/barrel.
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 https://hts.usitc.gov/current.
USMCA:
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note ("GN") 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a "good originating in the territory of a USMCA country" only if-
(i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o));
GN 11(l) provides that a wholly obtained good is: “(1) A mineral good or other naturally occurring substance extracted or taken from the territory of one or more of the USMCA countries.”
For goods classified under heading 2709, GN 11(o) sets out the following product-specific rule of origin:
“6. A change to headings 2708 through 2709 from any other heading, including another
heading within that group.”
GN 11(o) also sets forth a heading rule for goods classified under heading 2709, providing that:
“For the purposes of determining whether or not a good of heading 2709 is an
originating good, the origin of diluent of headings 2709 or 2710 that is used to facilitate
the transportation between USMCA countries of crude petroleum oils and crude oils
obtained from bituminous minerals of heading 2709 is disregarded, provided that the
diluent constitutes no more than 40 percent by volume of the good.”
The WDB is a mineral good wholly obtained in the territory of Canada per GN 11(b) and (l). Further, the diluent that is added to the WDB for transportation is classified under 2710.12.4590, is typically sourced in North America and you state it will never exceed 40 percent by volume of the crude oil itself. Therefore, per the product-specific rule of origin and the heading rule for goods classified under heading 2709 set forth under GN11 (o), the Western Canada Dilbit Blend meets the criteria as an originating good.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Christina Allen at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division