CLA-2 R:C:M 957777 JAS
Mr. James S. O'Kelly, Esq.
Banes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016
RE: Incomplete, Unfinished Railway or Tramway Passenger Coach,
Not Self-Propelled; Partially Outfitted Railway Carbody
Imported Without Underframe and Truck or Bogie; Essential
Character, GRI 2(a); Heading 8605.00.00; Parts of Railway or
Tramway Rolling Stock; HQ 089208 and HQ 952234 Revoked
Dear Mr. O'Kelly:
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C.
1625(c)(1), as amended by section 623 of Title VI (Customs
Modernization) of the North American Free Trade Agreement
Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993),
notice of the proposed revocation of HQ 089208 and HQ 952234 was
published on April 26, 1995, in the Customs Bulletin, Volume 29,
Number 17.
In HQ 089208, dated December 26, 1991 (I.A. 20/91) and HQ
952234, dated July 23, 1992 (I.A. 44/92), to the Area Director of
Customs, New York Seaport, we responded to requests for internal
advice you initiated as counsel for Mitsui & Co. (U.S.A.) Inc.
In these decisions we held that certain railway carbodies
imported under contract with the Long Island Railroad were
incomplete or unfinished railway or tramway passenger coaches not
self-propelled, classifiable in heading 8605.00.00, Harmonized
Tariff Schedule of the United States (HTSUS). We have reviewed
the matter and are now of the opinion that these rulings are
incorrect. Accordingly, they are revoked by this ruling.
FACTS:
The importations consist of partially outfitted carbodies
which, after importation, are combined with truck assemblies or
bogies, coupling devices, and other separately imported
components into complete railcars, not self-propelled. The
components for coaches designated 1 and 2 each consist of two
sides, two ends, and roof, of aluminum and/or steel construction. - 2 -
Also included are the windows and doors, toilets, wall cabinet,
ceiling and flooring materials, radio with antenna and power
supply unit, air conditioning unit with electrical supply,
electric coupler with battery and cables, brake hoses and valves,
passenger and saloon area luggage racks, exterior indicator
light, plus one, two and three-passenger seat frames with
cushions, door access panels, stairway and exterior handles. The
carbody shells, outfitted with their components, as described,
form more or less complete railway carbodies. You advised us
that because of their unique design and construction these cars
do not require underframes. You state that the value of the
imported components represents approximately 74 percent of the
value of each completed passenger coach.
The components for coaches 3 through 10 each consist of two
sides, two ends and a roof, of aluminum and/or steel
construction, a low voltage power supply unit, air conditioning
unit, passenger area luggage rack, frames for seats, coat hooks,
windows, doors, toilets, wall cabinets, and ceiling and flooring
materials. These components represent approximately 48.7 percent
of the cost or value of a completed passenger coach.
After importation, the described components were assembled
with trucks or bogies and coupling devices to form 10 complete
railway or tramway passenger coaches. When completed, these cars
are intended to be used as an A and B "married" pair; however,
each car will be complete and capable of independent use as a
railway passenger car.
The provisions under consideration are as follows:
8605.00.00 Railway or tramway passenger coaches, not
self-propelled; luggage vans, post office
coaches and other special purpose railway or
tramway coaches, not self-propelled (excluding
those of heading 8604)...17.6 percent
* * * *
8607 Parts of railway or tramway locomotives or
rolling stock:
Other:
8607.99 Other:
8607.99.10 For vehicles of heading 8605
or 8606, except brake
regulators...5 percent
- 3 -
ISSUE:
Whether the imported carbodies, as described, are incomplete
or unfinished railway or tramway passenger coaches for tariff
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 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, 54 Fed. Reg. 35127, 35128 (Aug. 23,
1989)
We noted in HQ 089208 and HQ 952234 that 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. We concluded
in the cited decisions that the imported components were the
aggregate of distinctive component parts which identified the
importations as wheeled rail vehicles designed to carry
passengers, and that, as imported, the components were clearly
dedicated to making completed passenger railcars.
We have reconsidered this matter and are now of the opinion
that in the cited decisions undue reliance may have been placed
on legal principles developed under the HTSUS predecessor tariff
code, the Tariff Schedules of the United States. While we
recognize that on a case-by-case basis administrative and
judicial decisions under a prior nomenclature can be instructive - 4 -
in interpreting provisions of the HTSUS this is not the case
here. We also believe that the characterization of a railway
passenger coach first and foremost as a vehicle capable of a
transport function must be more fully considered. In this latter
regard, the General Explanatory Notes (EN) to Chapter 86 state,
at p. 1414, that incomplete or unfinished vehicles are classified
with the corresponding complete or finished vehicles, provided
they have the essential character thereof. The note then lists
examples of vehicles that would be considered incomplete or
unfinished for tariff purposes. However, the EN then continues
by stating that bodies of motorized 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). For these reasons,
it is now our position that the railway carbodies in HQ 089208
and HQ 952234 do not have the essential character of complete or
finished railway passenger coaches not self-propelled.
HOLDING:
Under the authority of GRI 1, the railway carbodies are
provided for in heading 8607. They are classifiable in
subheading 8607.99.10, HTSUS.
EFFECT ON OTHER RULINGS:
HQ 089208, dated December 26, 1991, and HQ 952234, dated
July 23, 1992, are revoked. In accordance with 19 U.S.C.
1625(c)(1), this ruling will become effective 60 days after its
publication in the Customs Bulletin. Publication of rulings or
decisions pursuant to 19 U.S.C. 1625(c)(1) does not constitute a
change of practice or position in accordance with section
177.10(c)(1), Customs Regulations (19 CFR 177.10(c)(1)).
Sincerely,
John Durant, Director
Commercial Rulings Division