Schlumberger Technology Corp. v. United States
845 F.3d 1158
Fed. Cir.2017Background
- Schlumberger imported two models of bauxite proppants from China in 2010 used in hydraulic fracturing; each consisted primarily of non-metallurgical bauxite, granular, <1 mm in diameter, with specified crush strength and sphericity.
- Production steps: milling to powder, pan granulation (creating variable-sized granules), sieving to achieve ~90% within target size range, kiln firing, re‑sieving, and bulk packing for export.
- U.S. Customs classified the imports under HTSUS 6909.19.50 (ceramic wares) at 4% ad valorem; Schlumberger protested and sought classification under HTSUS 2606.00.00 (bauxite ores/concentrates, duty-free).
- The U.S. Court of International Trade granted summary judgment for Schlumberger, holding the proppants are not "ceramic wares" (Ch. 69) and instead fall under Heading 2606.
- The Government appealed the CIT judgment arguing the goods qualify as "ceramic wares" (HTSUS 6909) or "other ceramic articles" (HTSUS 6914), or alternatively are not within HTSUS 2606 because of processing, added dopants, or their finished condition.
Issues
| Issue | Plaintiff's Argument (Schlumberger) | Defendant's Argument (U.S.) | Held |
|---|---|---|---|
| Whether proppants are "ceramic wares" under HTSUS 6909 (eo nomine) | Proppants are fired ceramic products and thus fall within 6909 | Granulation, firing, and final form make them ceramic wares | Not ceramic wares — Chapter 69 requires shaping to a definite form after firing; proppants are bulk granules lacking definite shape |
| Whether proppants are "other ceramic articles" under HTSUS 6914 | Same as above | Same as above | Not covered — EN examples show individually shaped articles; proppants are bulk substances without definite formed shapes |
| Whether proppants qualify as "aluminum ores and concentrates" under HTSUS 2606 | Bauxite-based proppants are bauxite (an ore) and processes used are normal metallurgical steps; Heading 2606 eo nomine includes all forms | Goods are finished/usable as imported and/or not intended for metallurgy, so not ores | Yes — proppants are bauxite ores/concentrates under 2606; eo nomine headings cover all forms and Chapter 26 notes allow ores even if intended for non‑metallurgical use |
| Whether processing (granulation, firing, dopants) excludes classification under 2606 (Note 2) | Processing steps (crushing, grinding, screening, agglomeration, drying) are normal to metallurgical industry; dopants did not alter basic bauxite compound as shown | Addition of dopants or non‑metallurgical processing removes the goods from Chapter 26 | No exclusion — processes are listed as normal in EN 26 and government failed to show dopants materially altered basic compound; Note 2 excludes only processes not normal to metallurgy |
Key Cases Cited
- Otter Prods., LLC v. United States, 834 F.3d 1369 (Fed. Cir.) (standard of review for CIT summary judgment and classification)
- Nan Ya Plastics Corp. v. United States, 810 F.3d 1333 (Fed. Cir.) (deference and weight accorded to CIT opinion)
- LeMans Corp. v. United States, 660 F.3d 1311 (Fed. Cir.) (two‑step tariff classification framework)
- Sigma‑Tau HealthSci., Inc. v. United States, 838 F.3d 1272 (Fed. Cir.) (consolidation of legal/ factual steps when no material facts in dispute)
- Wilton Indus., Inc. v. United States, 741 F.3d 1263 (Fed. Cir.) (HTSUS treated as statutory law)
- R.T. Foods, Inc. v. United States, 757 F.3d 1349 (Fed. Cir.) (heading/subheading interpretation rules)
- Kahrs Int’l, Inc. v. United States, 713 F.3d 640 (Fed. Cir.) (use of dictionaries and ENs for common meaning; eo nomine includes all forms)
- Fuji Am. Corp. v. United States, 519 F.3d 1355 (Fed. Cir.) (Explanatory Notes are persuasive guidance)
- Yates v. United States, 135 S. Ct. 1074 (U.S.) (noscitur a sociis canon — interpret a word by its surrounding words)
- Aromont USA, Inc. v. United States, 671 F.3d 1310 (Fed. Cir.) (distinguishing eo nomine and principal‑use headings)
- Jewelpak Corp. v. United States, 297 F.3d 1326 (Fed. Cir.) (application of noscitur a sociis in HTSUS interpretation)
- First Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253 (U.S.) (summary judgment requires significant probative evidence)