HQ 955417
FEBRUARY 23 1994
CLA-2:CO:R:C:M 955417 JAS
Mr. Ned Marshak, Esq.
Sharretts, Paley Carter & Blauvelt
67 Broad Street
New York, NY 10004
RE: Halfbody Shells for Light Rail Vehicles, Self-Propelled
Railway or Tramway Passenger Coaches, Unfinished, Heading
8603, Essential Character, GRI 2(a); Parts of Railway or
Tramway Rolling Stock, Heading 8607; HQ 084845, HQ 089208,
HQ 950118
Dear Mr. Marshak:
In a letter to the Area Director of Customs, New York
Seaport, dated November 9, 1993, on behalf of Breda Costruzioni
Ferroviarie S.p.a., you inquire as to the tariff classification
of certain light rail vehicle (LRV) halfbody shells from Italy.
Your letter, together with drawings and other materials were
forwarded to this office for reply.
FACTS:
As imported, each halfbody shell, designated either A
section or B section, will consist of two sides, windows and
doors, a roof and underframe. Both ends of each shell are open.
Each will have wall, ceiling and floor panels, heaters and cab
partitions, as well as incomplete lighting and electrical
equipment that will not be operational until completed after
importation. After importation, a halfbody shell will be
combined with a second previously imported halfbody shell, either
A or B, together with trucks and other subassemblies and
components into a LRV for use in a municipal subway system. Each
importation will consist entirely or either A halfbody shells or
B halfbody shells but no combination of the two.
You state that each completed LRV will consist of two
halfbodies (outfitted from one A shell and one B shell) joined by
an articulated section, with a powered motor truck at each end
and an unpowered trailer truck at the center of the articulation.
The following components or subassemblies, either of U.S. or - 2 -
separately imported foreign origin, will be added after
importation: propulsion system, two motor trucks per vehicle,
trailer truck, braking system, step system, wheel and axle
assemblies, air conditioning and heating systems, seats,
articulation, control system, internal windscreens and handrails,
batteries and bearings, and electrical current collector or
pantograph. Neither halfbody A nor B will ever be capable of
independent use as it is necessary to assemble separate
components or subassemblies onto each to make an LRV. Each
completed LRV will be 75 ft. long and 9 ft. wide with 60 seats.
There will be four doors on one side and four on the other, each
equipped with movable steps to accommodate high platform and
street level boarding. The approximate cost of each of the two
halfbody shells represents 21 percent of the cost of a completed
LRV.
Based on the rationale of two Headquarters rulings on the
issue of incomplete or unfinished railcars of chapter 86, you
conclude that the halfbody shells in issue here are not self-
propelled railway or tramway coaches of heading 8603; rather,
they are parts of railway or tramway locomotives or rolling stock
of heading 8607.
The provisions under consideration are as follows:
8603 Self-propelled railway or tramway coaches,
vans and trucks, other than those of heading
8604:
8603.10.00 Powered from an external source of
electricity ...6.3 percent
8603.90.00 Other...6.3 percent
* * * * *
8607.99.50 Parts of railway or tramway locomotives or
rolling stock: Other: Other...3.9 percent
ISSUE:
Whether a halfbody shell, as described, is an unfinished
railway or tramway coach of heading 8603.
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff
Schedule of the United States (HTSUS) in accordance with the
General Rules of Interpretation (GRIs). GRI 1 states in part
that for legal purposes, classification shall be determined
according to the terms of the headings and any relative section
or chapter notes, and provided the headings or notes do not - 3 -
require otherwise, according to GRIs 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.
The Harmonized Commodity Description And Coding System
Explanatory Notes (ENs) constitute the Customs Cooperation
Council's official interpretation of the Harmonized System.
While not legally binding on the contracting parties, and
therefore not dispositive, the ENs provide a commentary on the
scope of each heading of the Harmonized System and are thus
useful in ascertaining the classification of merchandise under
the System. Customs believes the notes should always be
consulted. See T.D. 89-80.
The Chapter 86 ENs indicate at p. 1414 that incomplete or
unfinished vehicles are classified with the corresponding
complete or finished vehicles, provided they have the essential
character thereof; such vehicles may include passenger coaches
not fitted with seats. On the same page, however, the ENs
continue by stating that bodies of motorized railway or tramway
coaches are classified as parts of heading 86.07. While these
notes suggest that the merchandise in issue here may constitute
parts for tariff purposes, it is important to note that the ENs
are instructive only, and not dispositive.
The real issue is whether a halfbody shell, as described, is
an unfinished railway or tramway coach of heading 8603. As
stated in HQ 084845, dated November 24, 1989, which you cite,
determining an article's essential character will depend 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
merchandise. EN 3(b)(VIII), p.4.
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. HQ 084845, at
p. 3. - 4 -
Applying this criteria here, we find that each halfbody
shell is essentially a bare frame, i.e., two sides, a roof,
underframe, two open ends, plus incomplete electrical and heating
apparatus. It has no means of propulsion, no seats or other
passenger amenities except wall, ceiling and floor paneling. We
are unable to conclude that a bare halfbody shell is the very
essence of a completed LRV. As imported, a halfbody shell lacks
the aggregate of distinctive component parts which identify it as
a wheeled rail vehicle and in particular as one designed to carry
passengers. That the cost or value of each halfbody shell is
only 21 percent of the cost or value of a completed LRV further
supports this conclusion. These halfbody shells, therefore, lack
the essential character of a complete or finished railway or
tramway coach.
HQ 089208, dated December 26, 1991, the second case you
cite, dealt with railway carbodies similar to the carbody shells
here. The decision employed essentially the same analysis as in
HQ 084845, but held that the carbodies were unfinished railway
passenger cars of heading 8605.00.00. This is because the
carbodies in HQ 089208 were substantially more complete than the
ones in HQ 084845, or the ones in issue here, with their cost or
value representing nearly 74 percent of the cost or value of a
completed railcar. HQ 950118, dated December 10, 1991, is in
accord.
HOLDING:
Under the authority of GRI 1, the imported carbody shells,
as described, are provided for as parts of railway or tramway
rolling stock. They are classifiable as other parts, in
subheading 8607.99.50, HTSUS.
Sincerely,
John Durant, Director
Commercial Rulings Division