CLA-2:CO:R:C:M 956551 JAS
Mr. Patrick Pascarella
Viking Sea Freight Inc.
One World Trade Center, Suite 2409
New York, NY 10048
RE: Front End Wheel-Type Loaders, Shovel Loaders; Wheel Loader
Chassis; Unfinished, Unassembled Shovel Loaders, Essential
Character, GRI 2(a); HQ 086555
Dear Mr. Pascarella:
Your letter to the Area Director of Customs, New York
Seaport, dated May 18, 1994, on behalf of Kawasaki Loaders
Manufacturing Corp., U.S.A., has been referred to this office for
reply. Descriptive literature was submitted.
FACTS:
The merchandise to be imported from Japan will be the
propelling base/chassis for seven (7) models of Kawasaki's front-
end shovel loader, models 60Z3, 65Z3, 70Z3, 80Z3, 90Z3, 95Z3 and
115Z3. Each importation will include chassis, tires and for two
models the wheels necessary to assemble five (5) front-end
loaders of each model. The principal imported component, the
chassis, consists of a front and rear portion, and will include
the frame, engine housing, boom cylinders, fuel tank, oil tank,
transmission, hydraulics, radiator, steering cylinders,
propeller, front and rear axles, driveshaft, hoist arm mounted
with levers, bucket rods and pins, fenders and bucket cylinders,
together with assorted valves, connecting pins and piping. The
engines for each model and wheels for 5 of the seven models will
either be sourced domestically or will be imported separately.
Upon importation, these components will be assembled with
the following components of U.S. origin into complete front-end
wheel-type loaders: engine, tires and wheels, battery,
counterweight, boom, bucket, levers, cabin and seat. Submitted
documents indicate the imported components will constitute
between 73.8 to 80 percent of the cost or value of each loader. - 2 -
The post-importation assembly operation is a 5-step process that
represents less than 5 percent of the final cost or value of each
machine.
The provisions under consideration are as follows:
8429 Self-propelled bulldozers, angledozers,
graders, levelers, scrapers, mechanical
shovels, excavators, shovel loaders,
tamping machines and road rollers:
Mechanical shovels, excavators and shovel
loaders:
8429.51 Front-end shovel loaders:
8429.51.10 Wheel-type...2 percent
ISSUE:
Whether a propelling base/chassis plus tires and, in some
cases wheels, impart the essential character to a front-end
wheel-type shovel loader.
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
require otherwise, according to GRIs 2 through 6. GRI 2(a)
states, in part, that an unfinished article, whether entered
assembled or unassembled, is to be classified as if it were
complete or finished, provided that, as entered, it 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. 54 Fed. Reg. 35127, 35128 (Aug. 23,
1989).
- 3 -
Relevant ENs, at pp. 1201 and 2, state that heading 84.29
covers a number of earth digging, excavating or compacting
machines listed in the text of the heading and which have in
common the fact that they are all self-propelled. Self-propelled
shovel loaders are explicitly listed within this group. These
are described as wheeled or crawler machines with a front-mounted
bucket 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. Complete or finished front-end shovel
loaders conform to this description.
The factor or factors which determines essential character
will vary with the goods. The nature of the imported components,
their value when compared to the cost or value of the completed
article, or their relationship to the completed or finished
article are among the factors that have previously been
considered relevant in similar circumstances.
In this case, the importation consists of the basic
structural element, the chassis, to include the frame which
supports the cab, the engine, and all the working parts, and
which imparts the structural integrity to the machine. HQ
086555, dated April 16, 1990. Added to this are other structural
components such as fenders, radiator, fuel tank and tires, which
enhance the visual appearance of a front-end loader, plus much of
the propelling machinery such as transmission, hydraulics, axles
and driveshaft. In our opinion, the imported components, though
unassembled, comprise the aggregate of distinctive component
parts that are identifiable as what they will be when completed,
a front-end shovel loader. The overwhelming cost or value of the
imported components when compared to that of the completed
machine, together with what appears to be a relatively
unsophisticated 5-step post-importation assembly process
representing between 2.7 to 4.5 percent of the value of the
completed loader, supports this conclusion.
HOLDING:
Under the authority of GRI 2(a), the propelling
base/chassis, tires and, in some cases wheels, sufficient to
assemble 5 machines for each of the 7 Kawasaki models in issue,
have the essential character of shovel loaders of heading 8429.
They are classifiable in subheading 8429.51.10.
Sincerely,
John Durant, Director
Commercial Rulings Division