Appeal No. AP-2000-040
27 March 2002
Appeal No. AP-2000-040
The issue in this appeal is whether the goods in issue are properly classified in heading Nos. 73.04, 73.05 and 73.06 as line pipe of a kind used for oil or gas pipelines, as determined by the respondent, or should be classified under tariff item No. 8479.89.99 as components of a functional unit, namely, a gas-processing machine, or, alternatively, under tariff item No. 8430.49.00 as components of fixed platforms, as claimed by the appellant.
The appellant argued that the offshore platforms at Thebaud, Venture and North Triumph gas fields and the onshore facilities at Goldboro and Point Tupper, Nova Scotia, constitute a functional unit, a gas-processing machine, whose objective is to take raw natural gas from the gas wells and transform it into saleable natural gas and byproducts. The appellant claims that the gas-processing machine should be classified as a functional unit in heading No. 84.79. The appellant argued that the line pipe in issue should also be classified with the functional unit, as the pipe is critical to the gas-processing function. Finally, while acknowledging that it can no longer appeal the classification of the other components of the functional unit because the time limits have passed, the appellant nevertheless argued that the fact that the goods entered under certain tariff items did not mean that they were properly classified and could not have been classified elsewhere.
The respondent argued that each facility carried out a specific function or, alternatively, a primary function that may have subsidiary functions, which would make the facility fall under a specific heading covered by Chapter 84. The respondent argued that the pipe is auxiliary to each of the functional units and is not a component of any of them. The line pipe is only a container and a means of transportation and does not contribute to the processing of the gas. Finally, the respondent argued that to accept that the facilities are a functional unit that should be classified as machines in heading No. 84.79 would lead to an absurd result, since a substantial number of the components were imported under different headings, subheadings and chapters. The Tribunal does not have the jurisdiction to make a ruling on any of these importations, as they are not before it.
HELD:
The appeal is dismissed. The Tribunal is satisfied that the offshore platforms and the onshore facilities at Goldboro and Point Tupper, taken together, constitute a machine or a combination of machines that encompasses plants, equipment and apparatus. Their components are interconnected by the line pipe in issue. The Tribunal is satisfied that the machinery was purchased as a turnkey project and was intended, from the outset, to accomplish a clearly defined function, that of processing natural gas from its raw state into a saleable product. Therefore, the Tribunal agrees that, on a technical basis, the entire system could be regarded as a functional unit. However, in order to classify the pipes in issue as components of a functional unit, there must either be a properly classified functional unit to whose function they are essential or one that is still eligible to be classified and designated as such. The goods were imported under numerous chapters, headings and subheadings. There is no evidence that the machine or combination of machines was classified under tariff item No. 8479.89.99, nor is there any evidence that any of the components were so classified. The Tribunal is of the view that components may not be classified in a heading appropriate to a functional unit that exists only in a technical sense. In the Tribunal's view, this would, for all practical purposes, permit the reclassification of goods that have already been classified and, as in this case, time-barred from reclassification. The Tribunal is not convinced that this was Parliament's intention.
In light of the above, the Tribunal concludes that it is not open to it to classify the pipe in issue under tariff item No. 8479.89.99. Therefore,