CLA-2 RR:CTF:TCM 967791 JAS
Port Director, U.S. Customs and Border Protection
610 S. Canal Street, Room 306 Chicago, IL 60607
RE: Protest 3901-04-101093; Transfer Case
Dear Port Director:
This is our decision on Protest 3901-04-101093, filed by counsel on behalf of Marmon-Herrington, against your classification of transfer cases under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).
The goods were entered under subheading 8483.90.5000, HTSUSA, as other transmission elements entered separately, parts of gearing, gear boxes and other speed changers. They were reclassified as other parts and accessories of motor vehicles, parts for power trains, in subheading 8708.99.6790, HTSUSA, and the entry liquidated on April 30, 2004, under this provision. This protest was timely filed on July 28, 2004. On protest, counsel asserts classification in subheading 8708.99.4000, HTSUSA, as other parts of tractors, parts for power trains.
FACTS:
Transfer cases are devices that split power between the front and rear axles in a two-wheel drive vehicle to create four-wheel drive. They lock the front-axle
driveshaft and rear-axle driveshaft so the wheels are forced to rotate at the same speed. Some transfer cases contain additional sets of gears called planetary gears which increase torque in the rotating crankshafts while reducing speed.
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The HTSUS provisions under consideration are as follows:
Transmission shafts…;…; gears and gearing;…; parts
thereof:
Toothed wheels, chain sprockets and other
transmission elements presented separately; parts:
Parts of gearing, gear boxes and other speed
changers
* * * *
Parts and accessories of the motor vehicles of headings
8701 to 8705:
Other parts and accessories:
Other:
Parts of other tractors (except road tractors):
8708.99.40 Other parts for power trains
Other:
Other:
8708.99.67 Other parts for power trains
ISSUE:
Whether the transfer cases are parts for power trains for tractors.
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.
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The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and are thus useful in ascertaining the classification of merchandise under the System. CBP believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
GRI 3(a), HTSUS, HTSUS, states, in part, that where goods are, prima facie, classifiable under two or more headings the heading which provides the most specific description shall be preferred to headings providing a more general description.
GRI 6 states that for legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, by appropriate substitution of terms, to Rules 1 through 5, on the understanding that only subheadings at the same level are comparable.
Additional U.S. Rule 1(a), states, in relevant part, that a classification controlled by use is determined by the use in the United States at, or immediately prior to, the date of exportation of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use. In addition, the 87.08 ENs state, in relevant part, that to be eligible under heading 8708 a part or accessory must be identifiable as being suitable for use solely or principally with the vehicles of headings 87.01 to 87.05. Principal use, in this context, is that use which exceeds any other single use of the good. See HQ 954370, dated September 1, 1993, and HQ 954256, dated September 29, 1994.
Initially, Section XVI, Note 1(l), HTSUS, excludes from that section articles of Section XVII. Section, XVII, Note 2(e), HTSUS, in relevant part, excludes from the expressions “parts” and “parts and accessories” articles of heading 8483, provided they constitute integral parts of engines or motors. As there is no indication that the transfer cases are within the Note 2(e) exclusion, they are provided for in the subheading of heading 8708 deemed most appropriate.
Counsel makes the following arguments in support of classification in subheading 8708.99.40: the transfer cases at issue convert a two-wheel drive vehicle into a four-wheel drive vehicle whose off-road use makes them akin to tractors of heading 8701; submitted literature depicts vehicles that incorporate these transfer cases which are, in fact, tractors albeit tractors that carry special purpose motor vehicle bodies such as concrete mixing machines and snow blowing machines, equipment for tree trimming or other agricultural uses; and, finally, Congressional intent and judicial precedent support classification of the transfer cases as parts for power trains for tractors.
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In assessing counsel’s claim as other parts for power trains for tractors, it is necessary to apply GRI 3(a) at the subheading level through GRI 6. At the first level of indentation the comparison is between “Parts of other tractors (except road tractors)” versus “Other.” The transfer cases at issue are prima facie classifiable in each subheading. Submitted literature depicts the MVG transfer case, models 750 and 2000, the latter for use with engines up to 600 hp. Both are advertised for use with on-off highway trucks, agricultural machinery, mining equipment and industrial vehicles. While tractors are provided for in heading 8701, lifting, handling, loading or unloading machinery typically used in the mining industry is provided for in heading 8428, other agricultural, horticultural and forestry machinery is provided for in heading 8436, motor vehicles for the transport of goods are provided for in heading 8704, while special purpose motor vehicles such as concrete mixers are provided for in heading 8705. Counsel has not demonstrated that the transfer cases at issue are parts for power trains principally used with tractors, nor is their evidence in the record from which we can independently make this determination. As noted above, principal use, in this context, is that use which exceeds any other single use of the good.
Counsel’s claim that Congressional intent supports classification of the transfer cases as parts for power trains for tractors is based on the fact that inasmuch as both off-road tractors of heading 8701 and special purpose motor vehicles of heading 8705 are duty-free, their respective parts should also be duty-free. To hold otherwise would result in tariff inversion, an anomalous result where the rate of duty on parts would be higher than the rate on the vehicles in which they are used. In our opinion, this claim is without merit because counsel has not established that the transfer cases are classifiable either as parts of off-road tractors or as parts of special purpose motor vehicles. Counsel’s claim as to judicial precedent relates to the fact that tariff inversion leads to anomalous results and, therefore, is not favored by the courts. As counsel has not established his principal use claim, there is no issue here of tariff inversion and his claim that judicial precedent supports his claimed classification is likewise without merit.
HOLDING:
Under the authority of GRI 1, the transfer cases are provided for in heading 8708. They are classifiable as other parts and accessories of motor vehicles, parts for power trains, in subheading 8708.99.6790, HTSUSA. The 2003 general column 1 rate of duty is 2.5 percent ad valorem.
The protest should be DENIED. In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the
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date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division