CLA-2 OT:RR:CTF:TCM H034673 HkP
Port Director
Port of Charleston
U. S. Customs and Border Protection
200 East Bay Street Charleston, SC 29401
RE: Internal Advice 08/014; Classification of unfinished transit buses
Dear Port Director:
This is in response to your memorandum, dated June 19, 2008, forwarding a request for Internal Advice, submitted on behalf of North American Bus Industries, Inc. (NABI). At issue is the classification of unfinished transit buses (CompoBuses) imported from Hungary. The importer believes that the proper classification is under heading 8702, Harmonized Tariff Schedule of the United States (HTSUS), as motor vehicles for the transport of 10 or more persons, including the driver. The Port is of the opinion that the correct classification is under heading 8707, HTSUS, which provides for bodies for the motor vehicles of heading 8702, HTSUS, among other headings.
FACTS:
According to the submitted information, a CompoBus is made in Hungary using composite technology based on a molding process involving the lamination of nylon fiber infused with resin. Because of how the buses are made, they do not incorporate a traditional chassis. See definition of “chassis” infra p. 5.
The production stages in Hungary include: Lower and upper body molding and conditioning; cutting and trimming large body parts; attaching the body parts to front, rear and mid floor pieces, the front and rear quarter panels, and to the hat sections; assembling and gluing steel brackets to the composite body or shell; adding on component parts such as the flooring and window openings; joining steel parts including the engine cradle, suspension, brackets, steering system (including the steering wheel and column linkage), Compressed Natural Gas (CNG) brackets and holders, and permanent shock absorbers; attaching doors and flaps for the CNG tank, auxiliary batteries, the attic door (with noise insulation), driver’s barrier, wheel wells, floor covering, engine compartment, dashboard and the passenger doors. Axles and tires are also attached to the unfinished buses, but they are only used during shipping and to transport the buses to the importer’s factory in the United States and are not the ones sold with the finished buses. The buses are also painted.
When imported into the United States, therefore, an unfinished bus has the following: (1) A shell incorporating the functionality of a traditional chassis assembled together with flooring, window openings, an engine cradle, brackets for various uses, doors (passenger, attic, and gas), wheel wells, and driver’s barrier; and, (2) Operational features: suspension/shock absorbers, wheels, axles, and a steering system (including steering wheel and steering column linkage).
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
Motor vehicles for the transport of ten or more persons, including the
driver:
8707 Bodies (including cabs), for the motor vehicles of headings 8701 to 8705:
Legal Note 3 to Chapter 87, HTSUS, provides:
Motor chassis fitted with cabs fall in headings 8702 to 8704, and not in heading 8706.
GRI 2(a) provides:
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, 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 Fed. Reg. 35127 (Aug. 23, 1989).
RULE 2 (a)
(Incomplete or unfinished articles)
(I) The first part of Rule 2 (a) extends the scope of any heading which refers to a particular article to cover not only the complete article but also that article incomplete or unfinished, provided that, as presented, it has the essential character of the complete or finished article.
…..
(IV) Several cases covered by the Rule are cited in the General Explanatory Notes to Sections or Chapters (e.g., Section XVI, and Chapters 61, 62, 86, 87 and 90).
The General EN to Chapter 87 provides, in relevant part:
An incomplete or unfinished vehicle is classified as the corresponding complete or finished vehicle provided it has the essential character of the latter (see Interpretative Rule 2 (a)), as for example:
A motor vehicle, not yet fitted with the wheels or tyres and
battery.
(B) A motor vehicle not equipped with its engine or with its interior fittings.
EN 87.07 provides, in pertinent part:
This heading covers bodies (including cabs) for the motor vehicles of headings 87.01 to 87.05.
It covers not only bodies designed to be mounted on a chassis, but also bodies for vehicles without chassis …; it further includes unit construction bodies in which certain elements of the chassis are incorporated into the body.
….
They may be completely equipped (e.g., with all their fittings and accessories such as dashboards, boots (trunks), seats and cushions, mats, luggage racks and electrical fittings).
The importer believes that the correct classification for the unfinished buses is under heading 8702, HTSUS, by application of GRI 2(a). Counsel argues that they have been so far processed towards their ultimate completed form as to be dedicated to the making of buses. Further, they are not capable of being used for other purposes in their imported condition and, thus, have the essential character of buses. In making this argument, counsel directs our attention to Headquarters Ruling Letter (HQ) 962065 (Nov. 20, 1998), in which CBP concluded that the incomplete buses described in that ruling (based on a traditional chassis construction) should be classified under heading 8702, HTSUS, by application of GR1 2(a) because they had the essential character of motor vehicles. This position was consistent with New York Ruling Letter (NY) 882788 (Feb. 24, 1993), concerning the classification of shells incorporating “the chassis (base structure, axles, suspension, wheels and rims), the body and significant amounts of trim.”
In addition, counsel argues that the unfinished buses should be classified in their imported condition and that we should not take into consideration the fact that the axles and wheels with which they are imported are temporary. Further, he argues that there is no requirement that an article imported unfinished should have all its components or that if the components are installed, that they should work.
The Port’s position is that the unfinished CompoBuses do not contain enough components to be classified as motor vehicles under heading 8702, HTSUS. Instead, the Port believes that they should be classified under heading 8707, HTSUS, as bodies for the motor vehicles of heading 8702, HTSUS.
It is a well established principle that goods must be classified in their condition as imported. Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994). Consequently, we agree with counsel that the temporary nature of the wheels and axles should not be taken into consideration when classifying this merchandise. We also agree with the contention that under GRI 2(a) there is no requirement that unfinished articles should have all their components.
Before we can consider classification by applying the principle of GRI 2(a), however, we first have to consider whether classification is possible using GRI 1, that is, according to the terms of the headings and any applicable legal notes. See GRI 1.
Heading 8702, HTSUS, is one of several headings in chapter 87 that provides for “motor vehicles”, a term which is not defined in the HTSUS. The Oxford English Dictionary defines a “motor vehicle” as “a road vehicle powered by an engine (usually an internal-combustion engine).” www.oed.com. In turn, a “vehicle” is defined as, “a means of conveyance provided with wheels or runners and used for the carriage of persons or goods; a carriage, cart, wagon, sledge, or similar contrivance.” Id. Likewise, the McGraw-Hill Dictionary of Scientific and Technical Terms defines an “automotive [motor] vehicle” as “[a] self-propelled vehicle or machine for land transportation of people or commodities or for moving materials, such as a passenger car, bus, truck, motorcycle, tractor, airplane, motorboat, or earthmover.” Based on these definitions, we understand a motor vehicle to be a self-powered machine for conveying people or goods. Motor vehicles of heading 8702, HTSUS, must transport 10 or more persons, including the driver.
Note 3 to Chapter 87, HTSUS, allows motor chassis fitted with cabs, but without engines, to be classified as motor vehicles of chapter 8702, HTSUS. See Note 3, Ch. 87. See also General EN to Chapter 87 (“An incomplete or unfinished vehicle is classified as the corresponding complete or finished vehicle provided it has the essential character of the latter … as for example: … (B) A motor vehicle not equipped with its engine or with its interior fittings.”).
According to The American Heritage® Dictionary of the English Language, Fourth Edition (2004), a “chassis” is, “the rectangular, usually steel frame, supported on springs and attached to the axles, that holds the body and motor of an automotive vehicle.” See also http://www.answers.com/topic/chassis, last accessed Apr. 5, 2010. This definition is supported by automotive industry websites. For example, Automotive-online.com describes the chassis as “a skeletal frame on which various mechanical parts like engine, tires, axle assemblies, brakes, steering etc. are bolted.” Further, under the provisions of heading 8706, which provides for chassis “for the motor vehicles of headings 87.01 to 87.05”, a chassis can be either a “chassis-frame or the combined chassis-body framework (unibody or monocoque construction).” See EN 87.06. That is, with regard to the chassis-body framework for motor vehicles of heading 8702, HTSUS, the chassis and body may be incorporated into one assembly.
The “cab” of a motor vehicle is generally regarded as the section of a motor vehicle from which the driver controls the vehicle. For example, The Merriam-Websters Dictionary states that a “cab 3. (short for cabin)” is “a: the part of the locomotive that houses the engineer and operating controls b : a comparable shelter (as on a truck) housing operating controls.” www.merriam-webster.com. The Oxford English Dictionary defines a cab as “[a] small erection, somewhat like the head of a cabriolet, serving as a shelter to the drivers of locomotive engines, lorries, or cranes.” http://dictionary.oed.com. See also 1971 SAE Handbook at p. 1202, discussing the Society of Automotive Engineers Recommended Practice for Operator Enclosures (Cabs) – Human Factor Design Considerations – SAE J154.
The buses at issue are imported with a driver’s barrier, which separates the driver from the passengers. The driver’s barrier designates the area in which the operating controls of the bus will be housed. We consider this designated driver’s area to be the “cab” of the bus. In addition, given our understanding of the term “chassis” that is based on both dictionary definitions and the ENs, we conclude that the unfinished buses’ unibody construction meets the requirements of that term.
Based on Note 3 to Chapter 87, HTSUS, which allows a chassis and cab without an engine to be classified as a complete motor vehicle, we conclude that the imports at issue can be classified in heading 8702, HTSUS, by application of GRI 1. There is no need to resort to GRI 2(a), which has the same effect as Note 3 in that it allows an incomplete motor vehicle to be classified as if it were complete. We note that the ENs, which specifically reference GRI 2(a) when discussing incomplete or unfinished vehicles, are merely persuasive but not legally binding on CBP, unlike the HTSUS. See T.D. 89-80. Because there is no need to discuss essential character under GRI 2(a), there is also no need to address the cases and rulings relied upon by counsel.
Heading 8707, HTSUS, covers unit construction bodies for motor vehicles into which certain elements of the chassis have been incorporated. See EN 87.07. Further, the bodies may be completely equipped with fittings and accessories. Id. The imports at issue have been manufactured in such a way that they do not have a traditional chassis. Instead, the support elements of a chassis are incorporated into their frame. However, the unfinished buses at
issue are not described by heading 8707, HTSUS, because they have cabs in addition to chassis-body frames. Note 3 directs, in pertinent part, that chassis with cabs are to be classified in heading 8702, HTSUS. Because the unfinished buses are not fitted with engines or seats upon entry, their engine type and seating capacity is unknown for classification purposes and they are classified in subheading 8702.90.60, HTSUS.
HOLDING:
By application of GRI 1 (Note 3 to Chapter 87, HTSUS), the unfinished transit buses, which are not fitted with engines or seats at the time of importation, are classified in heading 8702, HTSUS. They are specifically provided for in subheading 8702.90.60, HTSUS, which provides for: “Motor vehicles for the transport of ten or more persons, including the driver: Other: Other.” The 2010 column one, general rate of duty is 2% ad valorem.
You are to mail this decision to the Internal Advice requester no later than 60 days from the date of the decision. At that time, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel and to the public on the CBP website located at www.cbp.gov by means of the Freedom of Information Act and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division