CLA-2 R:C:M 956096 RFA
Port Director of Customs
300 S. Ferry Street
Terminal Island, San Pedro
Los Angeles, CA 90731
RE: Protest 2704-93-102010; Tractor Loader Backhoes; Propelling Bases; Integrated Frames; Powertrains; Front-End Shovel Loaders; Backhoes; Tractors Suitable for Agricultural Use; composite machines; Headings 8429 and 8701; Legal Note 2 to chapter 87; Legal Note 3 to section XVI; Legal Note 1(l) to section XVI; GRI 3(c); ENs 84.29 and 87.01; HQs 953136, 955502 and 957033
Dear Port Director:
The following is our decision regarding Protest 2704-93-102010, which concerns the tariff classification of tractor loader backhoes under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The subject merchandise is the Ford New Holland (FNH) tractor loader backhoes (TLBs), models 455C, 455D, 555C, 555D, 575D, 655C, 655D and 675D. All of the models, except for models 655D and 675D, can be imported either in a TLB configuration or tractor loader (TL) configuration. None of the merchandise was imported in a bare "tractor" configuration. The propelling base is a powertrain consisting of an engine block, transmission case, drive axle, front axle, and front axle support, which are clamped rigidly together with big bolts on wide heavy flanges. The engine block, transmission case, and drive axle housing are all constructed of thick-walled cast iron which is structurally reinforced with ribs. After being bolted together, these reinforced components form a structural beam that is claimed to be the main stress-bearing portion of the tractor.
The load-bearing powertrain forms the primary frame or chassis of the tractor. The powertrain is claimed to be capable of being able to accommodate a 3-point hitch and a PTO. Common features include: a fully synchronized 4-speed transmission with electric power shuttle and torque converter, with speeds being the same in forward and in reverse, static (stationary) and dynamic load ratings for both front and rear axles, a double reduction rear axle with an inboard planetary final drive, hydrostatic steering, and an open-center hydraulic system for control of the backhoe and the loader.
The merchandise was entered under subheading 8701.90.10, HTSUS, as tractors suitable for agricultural use. The entry was liquidated on March 26, 1993, under subheading 8429.51.10, HTSUS, as front-end shovel loaders. The protest was timely filed on June 24, 1993.
ISSUE:
Whether the TLBs are classifiable as earth-moving equipment under chapter 84, HTSUS, or as tractors under chapter 87, HTSUS? If the TLBs are tractors, are they suitable for agricultural use?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.
The subheadings under consideration are as follows:
8429: Self-propelled bulldozers, angledozers, graders, levelers, scrapers, mechanical shovels, excavators, shovel loaders, tamping machines and road rollers: [m]echanical shovels, excavators and shovel loaders:
8429.51.10: Front-end shovel loaders: [w]heel-type. . . .
Goods classifiable under this provision have a general, column one rate of duty of 1.6 percent ad valorem.
8429.59.10: Other: [b]ackhoes, shovels, clamshells and draglines. . . .
Goods classifiable under this provision have a general, column one rate of duty of 1.6 percent ad valorem.
8701.90: Tractors (other than tractors of heading 8709): [o]ther:
8701.90.10 Suitable for agricultural use. . . . .
Goods classifiable under this provision have a general, column one rate of duty of free.
8701.90.50 Other . . . .
Goods classifiable under this provision have a general, column one rate of duty of 1.8 percent ad valorem.
Heading 8429, HTSUS, falls within section XVI, HTSUS, and is subject to Legal Note 1(l) to section XVI, HTSUS, which states that: "This section does not cover: . . . Articles of section XVII." Section XVII, HTSUS, includes heading 8701, HTSUS. Therefore, if the subject merchandise meets the definition of the term "'tractors", then classification under heading 8429, HTSUS, would be precluded.
Legal Note 2 to chapter 87, HTSUS, states that: "For the purposes of this chapter, 'tractors' means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not they contain subsidiary provision for the transport, in connection with the main use of the tractor, of tools, seeds, fertilizers or other goods."
The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the official interpretation of the HTSUS. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 FR 35127, 35128 (August 23, 1989). EN 87.01, pages 1424-1425, states, in pertinent part, that:
The heading does not cover propelling bases specially designed, constructed or reinforced to form an integral part of a machine performing a function such as lifting, excavating, leveling, etc., even if the propelling base uses traction or propulsion for the execution of this function.
* * * * * *
On the other hand, this heading does not cover the propelling bases of machines referred to, for example, in heading 84.25, 84.26, 84.29, 84.30 and 84.32, in which the propelling base, the operating controls, the working tools and their actuating equipment are specially designed for fitting together to form an integral mechanical unit. Such is the case with loaders, bulldozers, motorized ploughs, etc.
As a general rule, propelling bases forming an integral part of a machine designed for handling, excavating, etc., can be distinguished from the tractors of this heading by their special constructional features (shape, chassis, means of locomotion, etc.). For propelling bases of the tractor type, various technical features relating essentially to the structure of the complete unit and to equipment specially designed for functions other than hauling or pushing should be taken into consideration. For instance, the propelling bases not covered by this heading incorporate robust elements (such as supporting blocks, plates or beams, platforms for swivelling cranes) forming a part of or fixed, generally by welding, to the chassis-body framework to carry the actuating equipment for the working tools. In addition, such propelling bases may comprise several of the following typical parts: powerful equipment with built-in hydraulic system for operating the working tools; special gear boxes, in which, for example, the top speed in reverse gear is not less than the top speed in forward gear hydraulic clutch and torque converter; balancing counterweight; longer tracks to increase stability of the base; special frame for rear mounted engine, etc.
According to EN 87.01, if a propelling base is specially designed, constructed or reinforced to form an integral part of a machine performing a function such as lifting, excavating, leveling, etc., even if the propelling base uses traction or propulsion for the execution of this function, it cannot be classified as a "tractor". In HQ 955502, dated March 31, 1994, Customs determined that certain tractor backhoe-loaders did not meet the criteria of "tractors" of heading 8701, HTSUS, because the bucket loader and the rear mounted backhoe were standard equipment, incorporated into a fully welded, one-piece integrated frame. The one-piece frame was designed to absorb vertical stresses and minimize shock loads. In HQ 957033, dated March 20, 1995, Customs stated that certain machinery which can accommodate an optional PTO, can be classifiable as tractors. We further note that while the presence of PTOs are an indication of a tractor being suitable for agricultural use, the absence of the PTO does not preclude classification of the merchandise as tractors.
The protestant states that unlike the tractors found to have an integrated frame in HQ 955502, the propelling base of the subject merchandise is a powertrain consisting of an engine block, transmission case, drive axle, front axle, and front axle support, which are clamped rigidly together with big bolts on wide heavy flanges. In particular, the engine block, transmission case, and drive axle housing are all constructed of thick-walled cast iron which is structurally reinforced with ribs. Protestant asserts that, after being bolted together, these reinforced components form a structural beam that is the main stress-bearing portion of the tractor. This design feature is claimed to give the powertrain the strength to withstand the stresses associated with pushing and pulling a load. Protestant also states that the backhoe and the loader are not an integral part of the propelling base, but are bolted on to the propelling base. The powertrain is also designed and built to accommodate both a 3-point hitch and a PTO, in lieu of a front loader or backhoe.
Based upon all the evidence about the design features of the powertrain, we find that the subject merchandise does not meet the definition of a "tractor" because they are not constructed essentially for hauling or pushing another vehicle, appliance or load. According to the sales literature, the subject merchandise: is capable of moving at the same speeds in forward and reverse; has stabilizers to support the vehicle while digging or excavating; lists detailed information about the static and dynamic load ratings for both the front and rear axles; and contains numerous information about the performance capabilities of the loader and the backhoe tools. We further note that the working tools (i.e., the backhoe and the loader) are operated by a built-in hydraulic system. All of these factors, especially that of the high load ratings for the axles while the backhoe and front-end loader are working, indicate that the vehicles are designed more to withstand vertical stresses associated with digging and lifting, rather than the horizontal or tractive stresses associated with pushing or pulling. The described characteristics, read in conjunction with the cited ENs to heading 8701, HTSUS, that exclude from that heading propelling bases with powerful equipment with built-in hydraulic system for operating the working tools, stabilizers or supporting blocks, speeds the same in forward or reverse, compel a finding that the FNH vehicles in issue are not "tractors" as that term is defined in the HTSUS. This precludes the application of heading 8701.
Relevant ENs state that heading 8429, HTSUS, covers a number of earth digging, excavating or compacting machines which are explicitly cited in the heading and which have in common the fact that they are self-propelled. Among those listed in EN 84.29(F), page 1202, are self-propelled shovel loaders, wheeled or crawler machines with front-mounted buckets which pick up material through motion of the machine, transport and discharge it. Some shovel-loaders are able to dig into the soil. This is achieved as the bucket, when in the horizontal position, is capable of being lowered below the level of the wheels or tracks. These ENs describe the machines in issue.
Because these vehicles perform functions appropriate to shovel loaders and to backhoes, they are composite machines. Section XVI, Legal Note 3, HTSUS. Such machines are to be classified as if consisting of that component or as being that machine which performs the principal function. In this instance, the evidence of record does not establish a principal function because both the front-end loader and the backhoe perform digging functions, neither function predominating the other. In such cases, classification shall be in the provision which occurs last in numerical order among those which equally merit consideration by application of GRI 3(c). See General EN VI to section XVI, HTSUS, page 1133. Both functions are provided for in the same heading. When comparing competing subheadings for classification of goods, GRI 6 provides that the classification principles enunciated in GRIs 1 thorough 5 apply to the subheadings of heading 8429, HTSUS. Applying GRI 3(c) at the subheading level, we find that the FNH vehicles in issue are provided for in subheading 8429.59.10, HTSUS. See HQ 953136, dated February 5, 1993.
HOLDING:
The TLBs, models 455C, 455D, 555C, 555D, 575D, 655C, 655D and 675D, are classifiable under subheading 8429.59.10, HTSUS, as other backhoes.
The protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed by your office 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 date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.
Sincerely,
John Durant, Director
Tariff Classification Appeals Division