CLA 2:CO:R:C:G 084845 JAS
Allan H. Kamnitz, Esq.
Sharretts, Paley, Carter & Blauvelt, P.C.
67 Broad Street
New York, N.Y. 10004
RE: Carbodies for Railway Passenger Coaches
Dear Mr. Kamnitz:
In your submission of June 15, 1989, on behalf of your client, C. Itoh Company (America) Inc., you inquire as to the tariff classification of merchandise described as carbodies or shells for self propelled and non self propelled railway coaches or passenger vehicles, from Japan. Our ruling follows.
FACTS:
Both the self propelled and non self propelled railway coaches will be imported in one of three component packages, with components to be added in the U.S. dependent on what
component package is imported. We will discuss the three component packages with respect to both vehicle types.
Non self propelled railway coaches may be imported in one of three ways. In situation one, the importation will consist of the carbody shell and certain of its component parts. The
shell will consist of two sides, two ends, and roof, all on a frame, of aluminum and/or steel construction. The shell will be outfitted with component parts identified as thermal and
acoustic wall and ceiling insulation, flooring panels, wiring and piping, and glass side windows. The remaining component parts of the shell consist of interior wall panels, lighting
fixtures and air diffusers, toilets, doors, hardware, couplers, seats, and miscellaneous parts will be installed in the U.S. Complete electrical and pneumatic subsassemblies, truck (the
assembly of parts comprising the structure which supports a car
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body at each end and which provides for attachment of the wheels and axles) and the brakes, wheels and axles will also be added in the U.S. The estimated cost of the imported components is $299,000, while the estimated cost of the components added domestically is $451,950.
In situation two, the importation will consist of the carbody shell, as described above, a portion of the flooring panels with acoustic insulation, all the wiring and piping, glass side windows, and miscellaneous parts. Ceiling and wall thermal insulation, a portion of the acoustic insulation, interior wall panels, lighting fixtures and air diffusers, toilets, doors, hardware, couplers, seats, and some miscellaneous parts are added in the U.S. Complete electrical
and pneumatic equipment, truck, and the brakes, wheels and axles will also be added in the U.S. The estimated cost of the imported components is $233,950, while the estimated cost of
the components added domestically is $517,300.
In situation three, the importation will consist only of the described carbody shell, the estimated cost of which is $160,700. The remainder of the components will be added in the
U.S. The estimated cost of these components is $590,550.
Self propelled railway coaches may be imported in one of three ways. In situation one, the importation will consist of the carbody shell, as previously described, and carbody parts
consisting of flooring panels, ceiling and wall thermal insulation, all wiring and piping, glass side windows, interior wall panels, doors, and some miscellaneous parts. Also imported will be a portion of the electrical and pneumatic equipment consisting primarily of communication equipment, console and switch panels for the cab. The estimated cost of these components is $445,000. Added in the U.S. will be the light fixtures and air diffusers, seats, miscellaneous parts, and that portion of the electrical and pneumatic equipment described as the air conditioner and pantograph. Also added in the U.S. will be the complete propulsion and underframe
equipment, as well as truck subassembly, traction motor, brakes and hardware. The estimated cost of these components is $827,000.
In situation two, the importation will consist of the carbody shell, wiring and piping, glass for the windows, doors, and miscellaneous parts. The estimated cost of these
components is $265,000. Added in the U.S. will be the flooring, thermal insulation, side windows minus glass, interior wall panels, lighting fixtures and air diffusers, seats, miscellaneous parts, all electrical, pneumatic, propulsion and underframe equipment, as well as the trucks. The estimated cost of these components is $1,007,000.
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In situation three, the importation will consist only of the carbody shell, the estimated cost of which is $139,000. The remainder of the components, as described in situations one
and two, will be added in the U.S. The estimated cost of these components is $1,133,000.
ISSUE:
Are the component packages for the non self propelled and self propelled railway coaches, or any of the packages, classifiable as unfinished railway or tramway coaches, either
in heading 8603 or heading 8605, or as parts of railway rolling stock, in heading 8607?
LAW AND ANALYSIS:
General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), provides that for legal purposes, classification shall be determined
according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to Rules 2 through 6. GRI
2(a) provides that any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article, whether imported unassembled or not, has the essential character of the complete or finished article.
Determining an article's essential character will depend, of course, on the merchandise. As the merchandise changes, so, too, may the factor or factors which determine its essential
character. Factors found to be relevant in other contexts are the significance of the imported components or their role in relation to the use or overall functioning of the completed
article and, to the extent that it validates that comparison, the cost or value of the completed article versus the cost or value of the imported components.
A railway or tramway passenger coach, whether self propelled or not, is a wheeled rail vehicle designed to carry passengers primarily for day travel. As designed, a complete
coach would ordinarily comprise the structural shell outfitted with seats and other customary furnishings relative to passenger comfort, an underframe and trucks to support the
shell, wheels, axles and brakes, pneumatic and electric subassemblies plus, in the case of self propelled vehicles, the mode of propulsion.
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We have compared each of the six component packages to a complete railway passenger coach both self propelled and non self propelled. These packages do not contain seats and other
accoutrements of passenger comfort, nor do they contain complete electrical and pneumatic assemblies. Moreover, these packages do not contain trucks, the structure which supports
the carbody, or the rolling gear. None of the packages of self propelled rail cars contains the means of propulsion. In our opinion, none of these packages, ranging in complexity from
carbody shell and frame (without seats) for a self propelled vehicle, outfitted with wall and ceiling insulation, floor panels, wiring and piping, and glass side windows, interior
wall panels and doors, to the bare carbody shell for both self propelled and non self propelled vehicles, possess the aggregate of distinctive component parts which identify the components in general as a wheeled rail vehicle and in particular as one designed to carry passengers. None of these component packages, therefore, have the essential character of a complete railway passenger coach. That the cost or value of each importation of non self propelled rail coach components represents between 21 and 38 percent of the cost or value of the completed coach, and each importation of self propelled rail coach components represents between 10 and 34 percent of the cost or value of the completed coach further supports this conclusion. Therefore, the described component packages are not classifiable as unfinished railway coaches, either in
heading 8603 or heading 8605.
HOLDING:
Components for railway passenger coaches, both self propelled and non self propelled, in each of the six described component packages, are classifiable under the provision for
other parts of railway or tramway locomotives or rolling stock, in subheading 8607.99.5000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), dutiable at the rate of 3.9 percent ad valorem.
Sincerely,
John Durant, Director
Commercial Rulings Division