Tariff classification of oil-lifting machinery turned on whether recovering crude oil amounted to production of a commodity.

Machinery used to lift crude oil from a well was treated as machinery for production of a commodity for tariff purposes, because the relevant inquiry was whether bringing the natural resource up from the earth and making it fit for consumption involved production. The reasoning accepted that crude oil, like coal, requires human intervention before it becomes a consumable commodity. On that basis, classification under Heading 84.59(2) was correct, and classification under Heading 84.59(1) was not sustainable.

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Issues: Whether machinery used for lifting crude oil from a well was classifiable as machinery for production of a commodity under Heading 84.59(2), or under Heading 84.59(1).

Analysis: The relevant inquiry was whether recovery of crude oil involved production of a commodity. The reasoning accepted that crude oil, like coal, is a raw material that must be brought up from the earth by human activity and subjected to processes before it becomes fit for consumption. On that basis, the machinery used for such lifting was treated as machinery for production of a commodity.

Conclusion: The classification under Heading 84.59(2) was correct and the contrary classification under Heading 84.59(1) was not sustainable.

Final Conclusion: The appeal succeeded, the lower orders were set aside, and consequential relief followed.

Ratio Decidendi: Where human activity is required to raise a natural resource from the earth and bring it to a consumable state, the process amounts to production of a commodity for tariff classification purposes.

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