CLA-2:CO:R:C:M 956604 JAS
Mr. Walt Koppelaar
Curtainsider, Inc.
1318 Rymal Road East
Hamilton, Ontario L8W3N1
RE: Tautliner; Tarpaulin System for Trailers and Semi-Trailers;
Tarpaulin-Over-Frame Permanently Attached to Trailer Bed;
Trailers, Semi-Trailers, Parts, Beacon Cycle & Supply Co.,
Inc. v. United States, C.D. 4764; Heading 8716; Goods
Imported Unassembled, GRI 2(a); Chapter 87, Additional U.S.
Note 1; North American Free Trade Agreement (NAFTA), General
Note 12(b)(ii), Note (f), de minimis
Dear Mr. Koppelaar:
Your letter to the Area Director of Customs, New York
Seaport, dated May 16, 1994, has been referred to this office for
reply. Your inquiry concerns the tariff classification of
tarpaulin systems for trailers and semi-trailers assembled in
Canada with components of U.S., Canadian, and UK origin.
Our Special Classification and Marking Branch will issue a
separate ruling on any partial duty exemption allowable on the
Canadian assembly operation.
FACTS:
The tarpaulin system in issue, the Tautliner, is a
tarpaulin-over-frame enclosure designed to convert a flat-bed
trailer or semi-trailer into a van. It is fabricated in Canada
with steel plate, sheet and rolled sections, aluminum coil and
extrusions, plywood, hinges, locks and other door hardware, and
extruded plastic curtain seal, all of U.S. or Canadian origin,
together with plastic curtain material and a mechanical
tensioning device, both of UK origin. The U.S. and Canadian
components represent 90.46 percent of the total cost or value of
each tarpaulin system. The plastic curtain and tensioning
device, both of UK origin, represent 8.90 and 0.62 percent,
respectively, of the total cost or value. - 2 -
In a recent telephone conversation you provided this office
with the following additional information: each tarpaulin system
is custom designed and will be fabricated to the exact dimensions
of a particular trailer or semi-trailer as specified by the
customer; the tarpaulins are designed to be permanently attached
to a trailer by a combination of bolts and welding; and, the
tarpaulin systems will either be fully fabricated, then knocked
down and imported unassembled, or will be incorporated in Canada
onto the bed of a U.S. or Canadian-origin trailer or semi-trailer
provided by the customer or purchased by Curtainsider for the
customer. It will then be driven across the U.S.-Canadian border
by a U.S. or Canadian-origin truck tractor.
The provisions under consideration are as follows:
8716 Trailers and semi-trailers; other vehicles,
not mechanically propelled; and parts
thereof:
Other trailers and semi-trailers for the
transport of goods:
8716.39.00 Other...3.1 percent; 1.2 percent under NAFTA
8716.90 Parts:
8716.90.50 Other...3.1 percent; 1.2 percent under NAFTA
ISSUE:
Whether the tarpaulin systems in issue are parts for tariff
purposes; whether imported separately or permanently attached to
a trailer or semi-trailer they are originating goods for NAFTA
purposes.
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)
provides in part that any reference in a heading shall include a
reference to that article entered unassembled or disassembled.
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 - 3 -
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).
As to Tautliner tarpaulin systems imported permanently
mounted onto trailers and semi-trailers of either U.S. or
Canadian origin, relevant ENs state, at p. 1439, that trailers
and semi-trailers of heading 8716 are non-mechanically propelled
vehicles for the transport of persons or goods that are designed
to be coupled to and towed by other vehicles such as tractors or
trucks. Trailers usually have two or more sets of wheels and a
coupling system mounted on the swivelling front wheels which
steer the vehicles. Semi-trailers are fitted with rear wheels
only, the forward end resting on and coupled to the platform of
the towing vehicle. We conclude, therefore, that trailers and
semi-trailers to which the tarpaulin systems in issue are
permanently mounted are encompassed by heading 8716. Upon their
return to the United States, road tractors, trailers and semi-
trailers remain separately classified in headings 8701 and 8716,
respectively, even when entered together. Chapter 87, Additional
U.S. Note 1, HTSUS.
As to Tautliner tarpaulin systems imported separately,
articles that are integral, constituent and component parts
necessary to the completion and proper functioning of the article
with which they are used have been held to be parts for tariff
purposes. Likewise, articles have been held to be parts if they
serve a useful function in relation to the main article so that
in some way they contribute to the safe and efficient operation
of that article. Beacon Cycle & Supply Co., v. United States, 81
Cust. Ct. 46, C.D. 4764 (1978). In our opinion, the Tautliner
system serves to protect the load from adverse weather conditions
and, of equal importance, it serves to stabilize the load during
transit. This maximizes the safety of both the load and the
driver. The custom design of each Tautliner system is evidence
that they are principally, if not solely used with trailers and
semi-trailers of heading 8716. The Tautliner systems, therefore,
are parts provided for in heading 8716.
The tarpaulin systems, imported separately, qualify as
originating goods for NAFTA purposes if each of the non-
originating materials used in their production undergoes a
required change in tariff classification. General Note
12(b)(ii)(A), HTSUS. The required change in this case is to
subheading 8716.90 from any other heading. General Note 12(t)
Ch. 87 (46), HTSUS. The plastic curtain classified upon
importation into Canada in subheading 3926.90.90 satisfies this
requirement, but the tensioning device classified upon
importation into Canada in subheading 8716.90.90 does not.
However, originating status is conferred on the system because - 4 -
the value of the tensioning device - 0.62 percent of the total
cost or value - is considered de minimis, that is, it is not more
than 7 percent of the transaction value of the tarpaulin system
under section 402(b) of the Tariff Act of 1930, as amended,
adjusted to an F.O.B. basis, or if transaction value is
unacceptable, the value of the tensioning device is not more than
7 percent of the total cost of the tarpaulin system. General
Note 12(f)(i), HTSUS. The tarpaulin systems, therefore, qualify
as originating goods for NAFTA purposes.
Trailers or semi-trailers, either of U.S. or Canadian
origin, with tarpaulin systems incorporated onto their beds,
likewise qualify as originating goods because the value of the
non-originating tensioning device is de minimis under General
Note 12(f)(i), HTSUS.
HOLDING:
Under the authority of GRI 2(a), Tautliner tarpaulin systems
imported separately and unassembled are provided for in heading
8716. They are classifiable in subheading 8716.90.50, HTSUS and
qualify as originating goods for NAFTA purposes.
Under the authority of GRI 1, trailers and semi-trailers
with Tautliner tarpaulin systems permanently installed onto their
beds are provided for in heading 8716. They are classifiable in
subheading 8716.39.00, HTSUS and qualify as originating goods for
NAFTA purposes.
Sincerely,
John Durant, Director
Commercial Rulings Division