CLA-2 OT:RR:CTF:TCM HQ H263904 NCD
Port Director
Service Port Chicago
U.S. Customs and Border Protection
5600 Pearl Street
Rosemont, IL 60018
Attn: Shawn Nugent, Import Specialist
Re: Protest and Application for Further Review No: 3901-14-100971; Classification of railcar mover spindles
Dear Port Director:
The following is our decision as to Protest and Application for Further Review No. 3901-14-100971, timely filed on December 8, 2014 on behalf of AxleTech International LLC (“AxleTech” or “Protestant”), concerning classification of railcar mover spindles under the Harmonized Tariff Schedule of the United States (HTSUS). The merchandise at issue was entered with and liquidated by U.S. Customs and Border Protection (CBP) at the Port of Chicago (“the Port”). Protestant asserts that CBP’s classification of the subject merchandise at liquidation is incorrect.
FACTS:
According to the instant protest, the subject spindles are to be integrated into axle assemblies that will in turn be incorporated into Shuttlewagon® railcar movers, which are vehicles used to reposition railroad cars within a railroad siding or yard. Product literature pertaining to Shuttlewagon® railcar movers indicates that the vehicles are equipped with both rail wheels and road wheels, effectively enabling propulsion both on and off rail tracks. In telephonic discussions with CBP following the filing of the instant protest, a representative of AxleTech stated in that Shuttlewagon® railcar movers are predominantly operated on rails, but are driven off rails when repositioning railroad cars or traveling to and from their storage locations.
Appended to the protest are several documents displaying orders of the subject spindles by Shuttlewagon® railcar movers. On January 6, 2016, a representative of AxleTech submitted to CBP a letter from Nordco, Inc. (“Nordco”), the proprietor of the Shuttlewagon® brand, stating that the AxleTech axles purchased by Nordco are used with Shuttlewagon® railcar movers.
The spindles covered by this protest were entered on August 2, 2013 in subheading 8607.19.06, HTSUS, which provides for “Parts of railway or tramway locomotive or rolling stock: Truck assemblies, axles and wheels, and parts thereof: Other, including parts: Axles and parts thereof: Parts of axles.” CBP liquidated the spindles on June 13, 2014 in subheading 8708.50.91, HTSUS, which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Drive-axles with differential, whether or not provided with other transmission components, and non-driving axles; parts thereof: Parts: For other vehicles: Parts of non-driving axles.” Protestant now claims classification as entered.
ISSUE:
Whether the subject spindles are properly classified in heading 8607, HTSUS, as parts of axles for rolling stock or in heading 8708, HTSUS, as parts of non-driving axles for motor vehicles of heading 8705.
LAW AND ANALYSIS:
Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a) (2) as a decision on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)). Further Review of Protest No. 2704-12-102956 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because Protestant alleges that the decision against which the protest was filed involves questions of law or fact upon which CBP and the courts have not ruled.
Merchandise imported into the United States is classified under the HTSUSA. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first 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 heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
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, 35128 (August 23, 1989).
The HTSUS provisions under consideration in the instant case are as follows:
8607 Parts of railway or tramway locomotives or rolling stock:
Truck assemblies, axles and wheels:
8607.19 Other, including parts:
8607.19.06 Parts of axles
8708 Parts and accessories of the motor vehicles of headings 8701 to 8705:
8708.50 Drive-axles with differential, whether or not provided with other transmission components, and non-driving axles; parts thereof:
Parts
For other vehicles:
8708.50.91 Parts of non-driving axles
Axletech contends that the subject spindles are properly classified in heading 8607, HTSUS, which provides, inter alia, for parts of railway locomotives or rolling stock. Both this heading and heading 8708, HTSUS, are governed by notes 3 and 4(a) to Section XVII, which state, in relevant part, as follows:
References in chapters 86 to 88 to "parts" or "accessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those chapters. A part or accessory which answers to a description in two or more of the headings of those chapters is to be classified under that heading which corresponds to the principal use of that part or accessory.
For the purposes of this section:
Vehicles specially constructed to travel on both road and rail are classified under the appropriate heading of chapter 87…
The collective effect of these notes is that parts of vehicles which are specially constructed to travel on both road and rail, like the vehicles themselves, must be classified in a heading of Chapter 87 and cannot be classified in a heading of Chapter 86 or elsewhere. The spindles are therefore classifiable in heading 8607 only if (1) they can be described as parts of Shuttlewagon® railcar movers suitable for use solely or principally with such; (2) the Shuttlewagon® railcar movers are not specially constructed to travel on both road and rail; and (3) the Shuttlewagon® railcar movers can be described as railway or tramway locomotives or rolling stock. As to the first of these conditions, the tariff term of art “part” has been defined in a line of court decisions that have produced two distinct, yet fully reconcilable, tests for determining whether a particular item qualifies as such. Bauerhin Techs. Ltd. Pshp. v. United States, 110 F.3d 774, 779 (Fed. Cir. 1997). Under the test initially promulgated in United States v. Willoughby Camera Stores, Inc. (“Willoughby”), 21 C.C.P.A. 322, 324 (1933), an imported item is a part for classification purposes only if it can be described as an “integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article.” Bauerhin, 110 F.3d at 779. Under the test set forth in United States v. Pompeo, 43 C.C.P.A. 9, 14 (1955), a good is a “part” if it is “dedicated solely for use” with a particular article.” Bauerhin, 110 F.3d at 779 (citing Pompeo, 43 C.C.P.A. at 14).
Here, as demonstrated by the confirmations of sale appended to AxleTech’s protest and Nordco’s January 6, 2016 letter, the instant spindles purchased by Nordco are incorporated into the axle assemblies of the Shuttlewagon® railcar movers. Once incorporated, they enable the spinning of the railcar movers’ wheels, and consequently cannot be removed without complete inhibition of the railcar movers’ propulsion capabilities. As such, they can be described as an “integral” constituent or component of the railcar movers. Moreover, a patent describing the railcar movers indicates that the spindles are abnormally long and customized for oblique placement at fixed angles along the axle assembly of the railcar movers. See U.S. Patent No. 6,763,767 (issued July 20, 2004). Inasmuch as they must conform to the railcar movers’ unique dimensional requirements, the AxleTech spindles are dedicated and suitable for use solely with the railcar movers. Accordingly, they are parts of the Shuttlewagon® railcar movers suitable for use with such within the meaning of Note 3 to Section XVII.
As to whether the railcar movers of which the spindles are parts are “specially constructed to travel on both road and rail,” it is well-established that an article is described as “specially constructed” for a given purpose if this description is supported by an “examination of the article itself, its capabilities, as well as its actual use or uses.” Western States Import Co., Inc. v. United States, 932 F. Supp. 1483, 1486 (Ct. Int’l Trade 1996) (citing Sports Indus. v. United States, 65 Cust. Ct. 470, 473 (1970)); see also HQ 965510, dated July 9, 2002 (citing Pac. Trail Sportswear v. United States, 5 C.I.T. 206 (1983)). By any of these measures, the Shuttlewagon® railcar movers are specially constructed to travel on both rail tracks and roadways. Descriptions and visual depictions of the railcar movers found in product literature and an applicable patent indicate that they are capable of propulsion both on tracks and on roads. See U.S. Patent No. 6,763,767 (describing Shuttlewagon® railcar movers as “dual use roadway or railroad travel vehicle…designed for alternate roadway or rail travel”). These materials further indicate, and AxleTech has conceded, that the railcar movers are regularly operated on and off rails. In effect, the Shuttlewagon® railcar movers, as vehicles specially constructed to travel on both road and rail, may only be classified in a heading of Chapter 87 in accordance with Note 4(a) to Section XVII. By extension, the spindles, as parts of the Shuttlewagon® railcar movers suitable for use solely or principally with such, are excluded from heading 8607. Discussion of whether the spindles can be described as parts of tramway or railway locomotives or rolling stock is consequently rendered moot.
Having excluded the subject spindles from heading 8607, HTSUS, we next consider whether they are classifiable in heading 8708, HTSUS, which provides, inter alia, for parts of motor vehicles described in headings 8701 to 8705. Consistent with Note 3 to Section XVII, EN 87.08 states as follows:
This heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfil both the following conditions:
They must be identifiable as being suitable for use solely or principally with the above mentioned vehicles; and
They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note).
In turn, heading 8705, HTSUS, provides for “special purpose motor vehicles, other than those principally designed for the transport of persons or goods.” The EN to heading 8705 states, in relevant part, as follows:
This heading covers a range of motor vehicles, specially constructed or adapted, equipped with various devices that enable them to perform certain non-transport functions, i.e., the primary purpose of a vehicle of this heading is not the transport of persons or goods.
In view of these EN excerpts, and pursuant to the above-cited notes to Section XVII, the spindles are classifiable in heading 8708 if (1) the spindles can be described as parts of Shuttlewagon® railcar movers suitable for use solely or principally with such; (2) the Shuttlewagon® railcar movers are specially constructed to travel on both road and rail; and (3) Shuttlewagon® railcar movers can be described as vehicles principally designed for non-transport functions. As discussed above, the first two of these three conditions are satisfied. As to the third condition, whether an article is “principally designed” for a given use is ascertained by examination of both the structural and auxiliary features of the article. See Western States Import, F. Supp. At 1486 (citing Marubeni America Corp. v. United States, 35 F.3d 530, 535 (Fed. Cir. 1994). In Marubeni America Corp., for example, the U.S. Court of Appeals for the Federal Circuit held that sports utility vehicles could be described as “motor vehicles principally designed for the transport of persons,” despite their apparent cargo-carrying capacities. 35 F.3d at 537. The court reached this conclusion upon finding that the vehicles’ structural designs and various auxiliary features, such as seat arrangement, stereo placement, and rear window operability, promoted passenger accommodation and comfort at the expense of cargo space. Id. at 535-37.
Here, unlike in Marubeni, there is no indication that the Shuttlewagon® railcar movers are even capable of, let alone designed for, any function other than the repositioning of rolling stock. According to diagrams and photos contained in the above-mentioned product literature and patent, the bodies of the railcar movers consist of front or rear cabs with only two operating seats. The cabs boast features, such as 360-degree visibility and console displays showing rail and hydraulic pressure, that facilitate the railcar movers’ safe and effective deployment in pushing and pulling cars. The remaining portions of the bodies are occupied by large engines, fuel tanks, and air reservoirs, leaving no space for cargo or passengers. The Shuttlewagon® railcar movers are therefore described as vehicles principally designed for a purpose other than the transport of persons or goods within the meaning of heading 8705, HTSUS. As parts of such, the subject spindles are described by heading 8708, HTSUS.
In conclusion, the subject spindles are properly classified in heading 8708, HTSUS. This conclusion is consistent with CBP’s previous treatment of railcar mover parts. See New York Ruling Letter N040217, dated October 20, 2008 (classifying wheel rims for railcar movers in heading 8708).
HOLDING:
By application of GRI 1, the subject spindles are classified in heading 8708, HTSUS (Annotated), specifically in 8708.50.9110, HTSUS, which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Drive-axles with differential, whether or not provided with other transmission components, and non-driving axles; parts thereof: Parts: For other vehicles: Parts of non-driving axles: Spindles.” The general column one rate of duty is 2.5% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/.
You are instructed to DENY the Protest.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website 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