CLA-2 CO:R:C:M 952234 DWS
Area Director
New York Seaport
U.S. Customs Service
6 World Trade Center
New York, NY 10048
RE: IA 44/92; Railway Carbodies; Railway Passenger Cars Not
Self-Propelled; Unfinished Railcars; GRI 2(a); HQ 089208;
HQ 950118; American Import Co. v. U.S.; General Explanatory
Note to Chapter 86; Explanatory Note 86.07; 8607.99.10
Dear Area Director:
This is in response to your memorandum of June 26, 1992
(CLA-2-86:S:N:N1-106), forwarding a letter dated April 3, 1992,
from Barnes, Richardson & Colburn on behalf of Mitsui & Company
(U.S.A.), Inc., requesting internal advice concerning the tariff
classification of eight carbodies for railway passenger coaches
under the Harmonized Tariff Schedule of the United States
(HTSUS).
The importer's contract calls for it to supply 10 railway
passenger coaches to the Long Island Railroad. This decision is
limited to the components for coaches designated 3 through 10.
Coaches designated 1 and 2 were separately ruled upon in HQ
089208, dated December 26, 1991.
FACTS:
The merchandise consists of eight carbodies for railway
passenger coaches. After importation into the United States, the
carbodies were assembled with imported trucks and other
components into not self-propelled, bi-level passenger cars.
These cars are similar to self-propelled cars with married pairs,
i.e., they contemplate use as an A and B pair. However, although
intended to be used as a pair, after final assembly in the United
States, each A and B car is complete and capable of independent
use as a passenger railway car.
In their condition as imported, the eight carbodies were not
complete. They consisted of two sides, two ends, and a roof, all
of aluminum and/or steel construction. The carbodies also
contained a low voltage power supply unit, an air conditioning
unit, a passenger area luggage rack, frames for seats, coat
hooks, windows, doors, toilets, wall cabinets, and ceiling and
flooring materials. Counsel for the importer claims that the
carbodies as imported represent 48.7 percent of the final value
of the completed railway cars.
After importation, the carbodies were fitted with truck
assemblies (the undercarriage), radio equipment, power supply and
control equipment for the air conditioning system, coupling
equipment, brake hoses and valves, seat cushions, and other minor
accessories.
ISSUE:
Whether, for classification purposes, the subject carbodies
impart the essential character of not self-propelled railway
passenger coaches?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification is determined
according to the terms of the headings and any relative section
or chapter notes.
The carbodies involved in HQ 089208, at the time of
importation, consisted of two sides, two ends, and a roof, all of
aluminum and/or steel construction. Included were the windows
and doors, toilets, wall cabinets, ceiling and flooring
materials, the radio with antenna and power supply unit, the air
conditioning unit with electrical supply, an electric coupler
with a battery and cables, brake hoses and valves, the passenger
and saloon area luggage racks, the exterior indicator light, set
frames with cushions, the door access panel, and stairway and
exterior handles. Counsel for the importer claimed that the
value of the carbodies at importation represented 74 percent of
the value of the completed passenger coach.
We held in HQ 089208 that carbodies 1 and 2 are classifiable
under subheading 8605.00.00, HTSUS, which provides for:
"[r]ailway or tramway passenger coaches, not self-propelled."
Counsel for the importer argued, as in the present case, that the
carbodies are classifiable under subheading 8607.99.10, HTSUS,
which provides for: "[p]arts of railway or tramway locomotives or
rolling stock: [o]ther: [o]ther: [f]or vehicles of heading 8605
or 8606,except brake regulators."
In determining whether an unfinished article imparts the
essential character of that same article completed, GRI 2(a) must
be consulted. It states that:
[a]ny 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 has the essential character of the
complete or unfinished article. It shall also include a
reference to that article complete or finished (or falling
to be classified as complete or finished by virtue of this
rule), entered unassembled or disassembled.
The term "unfinished" was defined in American Import Co. v.
U.S., 26 CCPA 72, 74, T.D. 49612 (1938), wherein the court
stated:
[i]t has long been the generally accepted rule that a thing
may be classified for tariff duty purposes under the eo
nomine provision for the article unfinished if that thing
has been so far processed towards its ultimate completed
form as to be dedicated to the making of that article or
class of articles alone.
As stated in HQ 089208, "[a] railway or tramway passenger
coach is a wheeled rail vehicle designed to carry passengers
primarily for day travel. As designed, a complete or finished
coach would ordinarily comprise the structural shell outfitted
with seats and other customary furnishings relative to passenger
comfort, sometimes supported by an underframe, and trucks
consisting of the wheels, axles and brakes, plus pneumatic and
electric subassemblies."
It is our position that, as was held in HQ 089208, the
subject carbodies impart the essential character of complete
railway passenger coaches. The carbodies have been so far
processed toward their ultimate completed form as to be dedicated
to the making of railway passenger coaches.
Counsel for the importer argues that because only 48.7
percent of the value of the completed railway passenger coaches
is imported, the carbodies cannot impart their essential
character. We disagree. HQ 950118, dated December 10, 1991,
dealt with the classification of unfinished transit carbodies
under the HTSUS. At the time of importation, the transit
carbodies represented 49.7 percent of the value of the completed
transit cars. However, the carbodies were held to impart the
essential character of the completed transit cars.
In understanding the language of the HTSUS, the Harmonized
Commodity Description and Coding System Explanatory Notes may be
utilized. The Explanatory Notes, although not dispositive, are
to be used to determine the proper interpretation of the HTSUS.
54 Fed. Reg. 35127, 35128 (August 23, 1989). In part, General
Explanatory Note to chapter 86 (p. 1414), HTSUS, states that:
[i]ncomplete or unfinished vehicles are classified with the
corresponding complete or finished vehicles, provided they
have the essential character thereof. Such vehicles may
include:
(1) Locomotives or motorised railway or tramway coaches, not
fitted with a power unit, measuring instruments, safety
apparatus or service equipment.
(2) Passenger coaches not fitted with seats.
(3) Truck underframes complete with suspension and wheels.
On the other hand, bodies of motorised railway or tramway
coaches, of vans, wagons or trucks or of tenders, not
mounted on underframes, are classified as parts of railway
or tramway locomotives or rolling-stock (heading 86.07).
In part, Explanatory Note 86.07 (pp. 1418-1419), HTSUS,
states that:
[p]arts of railway or tramway locomotives or rolling-stock
include:
(10) Bodies (not mounted on underframes) for motorised or
non-self-propelled railway or tramway rolling-stock
(e.g., for coaches, trucks, wagons, etc.); parts of
such bodies (e.g., coach or truck doors, partitions,
hinged sides of wagons, side stanchions, running
boards, water tanks for tenders).
Counsel for the importer argues that because the subject
merchandise consists of bodies not mounted on underframes, under
General Explanatory Note to chapter 86, HTSUS, the carbodies are
classifiable as parts under heading 8607, HTSUS.
We disagree with counsel's argument. It is our position
that the subject carbodies are not the types of articles
contemplated in Explanatory Note 86.07, HTSUS. We find that the
bodies listed in that note are more like coach body shells. The
subject carbodies are equipped with much more than doors and
partitions. They contain articles such as a low power voltage
power supply unit, an air conditioning unit, toilets, and wall
cabinets.
Consequently, under General Explanatory Note to chapter 86,
HTSUS, the subject carbodies are classifiable under subheading
8605.00.00, HTSUS.
HOLDING:
The carbodies are classifiable under subheading 8605.00.00,
HTSUS, which provides for: "[r]ailway or tramway passenger
coaches, not self-propelled." The general, column one rate of
duty is 18 percent ad valorem. You should advise the internal
advice applicant of this decision.
Sincerely,
John Durant, Director
Commercial Ruling Division