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HQ 967385




JANUARY 14, 2005

CLA-2 RR:CR:GC 967385 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8479.89.9850

Marian E. Ladner, Esq.
Strasburger & Price, LLP
1401 McKinney Street, Suite 2200
Houston, TX 77010-4035

RE: Packer, Mechanical Device for Redirecting the Flow of Oil Well Production Fluids

Dear Ms. Ladner:

Your ruling request to the Director, National Commodity Specialist Division, U.S. Customs and Border Protection (CBP), New York, dated September 15, 2004, on behalf of Baker Oil Tools, has been referred to this office for reply. At issue is the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of devices known as Packers. Supporting documentation was enclosed. Relevant facts and legal arguments were presented and addressed in a telephone conference with a member of my staff on January 7, 2004, which you confirmed by an email, dated January 13, 2005.

You maintain that the packer is classifiable as other lifting, handling, loading or unloading machinery, in subheading 8428.90.00, HTSUS. You propose an alternative classification for the packer as other machines and mechanical appliances, in subheading 8479.89.98, HTSUS.

FACTS:

The packer is a mechanical device which functions to direct the flow of fluids in a drilled hole or wellbore. A packer essentially seals or “packs off” the wellbore and consists generally of a body, expandable gripping fingers called slips, cones, lock ring, key and a tight fitting rubber sleeve or packing element. In operation, steel pipe or casing is placed in the wellbore to keep the walls of the hole intact. The packer is placed inside the casing as a conduit for the passage of oil and gas
to the surface. As rotational force is applied to the packer, the slips are forced outward along the cones to grip the inside wall of the casing. As the packer rotates, the packing element inflates and expands against the casing wall to seal off the annular space between the packer and the casing. After the packer is fully engaged in the set position, the cones provide support for the slips and withstand high tensile loads. The key fits into a corresponding groove to lock the packer in place and prevent further rotation, while the lock ring holds the packer’s set position. Packer assemblies may be used individually or in tandem to essentially block the oil or other reservoir fluids from flowing into the annular space and into production tubing inside the packer to the surface.

The HTSUS provisions under consideration are as follows:

Other lifting, handling, loading or unloading machinery:

Other machinery

Machines and mechanical appliances having individual functions, not specified or included elsewhere in [chapter 84]:

Other machines and mechanical appliances:

8479.89.98 Other

ISSUE:

Whether the packer is handling machinery of heading 8428.

LAW AND ANALYSIS:

Under General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States (HTSUS), goods are to be classified according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. Though not dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS. Customs and Border Protection believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Essentially, you maintain that the packer is described by heading 8428 because it “handles” the fluid generated in the production zone of the wellbore, by redirecting it into the production tubing for removal to the surface. You cite NY I81157, dated May 17, 2002, in support of this position. In that case, a hydraulically-operated tilting platform or dock leveler for accommodating variations between truck trailer height and the loading dock was held to be classifiable in subheading 8428.90.00, HTSUS. The dock leveler functions to support loads passing over it. This allows for the handling of merchandise between the loading dock and arriving truck and, in your opinion, is a function analogous to that of the packer. Similarly, you cite the 8428 EN description of roller supports, a series of castors fixed in the factory floor that provide a roller table system for handling sheet metal in rolling mills. These, you contend, are functionally similar to the packer. Finally, in consideration of your alternative classification in heading 8479, assuming that the packer is at least prima facie classifiable both in heading 8428 and in heading 8479, you maintain that GRI 3(a) requires classification in the former heading as it provides the most specific description for the packer.

We find that the arguments in support of classification in heading 8428 are not persuasive. The International Coiled Tubing Association, one function of which is to gather technical expertise for the coiled tubing industry, maintains a glossary of terms which defines a packer as a downhole tool used to block the flow of fluids through the annular space between the tubing and the wall of the casing by sealing the space between them. www.icota.com. Likewise, the Occupational Safety & Health Administration, Department of Labor, incorporates in its glossary an abridged version of the Dictionary of Petroleum Terms which defines a packer as a piece of downhole equipment that consists of a sealing device, a holding or setting device and an inside passage for fluids. www.osha.gov. The dock leveler in NY I81157 performs a support function which facilitates the movement of goods passing over it and is more akin to a true handling function. Likewise, the roller supports in the 8428 EN function in similar fashion. In our opinion, there is no compelling argument, based on the cited ruling and the EN, that the functions a packer performs, i.e., blocking and sealing, equate to the packaging and shipping of a good or material from one place to another. As we find that the packer is not described by heading 8428, a specificity analysis under GRI 3(a) is unnecessary.

As to your proposed alternative classification, machinery and mechanical appliances of heading 8479 perform “individual functions” and are not excluded from chapter 84 by any section of chapter notes, are not covered more specifically by any heading of chapter 84 or other heading in the HTSUS. See EN 84.79. While rotational force is no doubt applied to the packer by another machine or device, the packer is a mechanical device that performs its function of blocking and sealing independently of this machine or device. The packer is sufficiently mechanical and qualifies as a machine or mechanical appliance of heading 8479.

HOLDING:

Under the authority of GRI 1, the packer is provided for in heading 8479. It is classifiable in subheading 8479.89.9850, Harmonized Tariff Schedule of the United States Annotated (HTSUSA). The 2005 rate of duty is 2.5 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 on the World Wide Web at www.usitc.gov.

Sincerely,

Ieva K. O’Rourke for Myles B. Harmon, Director
Commercial Rulings Division


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