• HQ H320060
• Apr 08, 2022

• Type : Classification • HTSUS : 8431.20.00; 9903.88.01
•  Related:   J81427; E80859; H296917; N239500   

CLA-2 OT:RR:CTF:EMAIN H320060 PF

TARIFF NOS.: 8431.20.00; 9903.88.01

Port Director
Port of NorfolkU.S. Customs and Border Protection101 E. Main StreetNorfolk, VA 23510

Attn: Waiyin Lee, Import Specialist

Re: Protest and Application for Further Review No: 1401-21-106089; Classification and applicability of Section 301 trade remedies of rubber tracks from China

Dear Port Director:

The following is our decision as to Protest and Application for Further Review No. 1401-21-106089, which was filed on July 12, 2021, on behalf of Wilson-Finley Company (“protestant” or “WFC”). The protest pertains the classification of rubber tracks and CBP’s determination on the applicability of the exclusion annotated under Chapter 99 U.S. Note 20(i)(17) under the Harmonized Tariff Schedule of the United States (“HTSUS”). Our decision is set forth below.

The subject merchandise was entered by protestant on January 19, 2021. On June 11, 2021, CBP at the Port of Norfolk liquidated the entry under subheading 8431.20.0000, Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”). On July 12, 2021, protestant filed a protest and AFR alleging that the subject merchandise is properly classified under subheading 8431.49.9095, HTSUSA. WFC further protests the liquidation of the entry under subheading 9903.88.01, HTSUS, and the 25 percent duty assessment under the Section 301 Trade Remedy. WFC claims that the subject rubber tracks should be liquidated under subheading 9903.88.06, HTSUS, citing the exclusion annotated under Chapter 99 U.S. Note 20(i)(17) for “Vulcanized rubber tracks, each incorporating cords and cleats of steel, designed for use on construction equipment (described in statistical reporting number 8431.49.9095).” FACTS: The merchandise at issue in this protest are rubber tracks for compact track loaders. Compact track loaders have lifting, loading, pushing force, grading and excavating capabilities. In addition, compact track loaders are small compact machines with lift arms designed to work in compact areas. A wide variety of tools can be attached to these arms such as angle brooms, augers, backhoes, buckets, pallet forks, landscape rakes, trenchers, snowblades, and landplanes. Depending on the attachment used, a compact track loader can be used in pushing material from one location to another, carrying material in a bucket, or loading material into a truck or trailer.

A compact track loader has the same lift-arm design as a skid steer loader, but uses a different undercarriage, and by extension, a different method of propulsion. The undercarriage of a compact track loader uses a track design instead of wheeled tires on a skid steer loader. Both a compact track loader and as skid steer loader are designed to be compact, easily maneuverable, versatile, and perform similar functions. The use of rubber tracks allows a compact track loader to drive over more challenging types of terrain, but its bucket attachment performs the same function as a skid steer loader.

The rubber tracks in the instant case are designed to fit most models of compact track loaders and are alleged to be composed of a synthetic and natural blend of vulcanized rubber on the outside and incorporate a metal core with steel cords on the interior. According to the protestant, the rubber tracks are fitted on compact track loaders made by companies such as Caterpillar and Bobcat. Moreover, the types of compact track loaders that use the rubber tracks include Caterpillar Compact Track Loaders 259D3, 279D3, 289D3, and Bobcat Compact Track Loader T450, T595, T62, and T64.

The Caterpillar Compact Track Loader models 259D3 and 289D3 are described as having a “vertical lift design, [that] delivers extended reach and lift height for quick and easy truck loading.” The Caterpillar Compact Track Loader model 279D3 is described as having a “radial lift design, [that] delivers impressive mid-lift reach and excellent digger performance with outstanding drawbar power.” All three Caterpillar Compact Track Loaders, specifically models 259D3, 279D3, and 289D3 are described as having a “standard, suspended undercarriage system [that] provides superior traction, flotation, stability and speed to work in a wide range of applications and underfoot conditions.”

The Bobcat Compact Track Loader model T450 is described as having a “radius lift path [that] excels at jobs with mid-range working heights such as dumping over walls, backfilling or unloading flatbed trucks.” Moreover, the Bobcat Compact Track Loader model T450 is noted to be “found on extremely confined congested jobsites. The M3-Series T450 compact track loader delivers the maneuverability your work requires with all the power you need to haul, lift, dig, and operate attachments – and quickly move across the worksite.” The Bobcat Compact Track Loader model T62 is described as a “radius-lift-path compact track loader – also referred to as a skid-steer with tracks – is engineered to get the big jobs done. Boasting an increased lifting capability, the 68-hp T62 delivers powerful digging and grading performance and generous reach at mid range heights.” On the Caterpillar website, the “radius lift path” for the compact track loaders is described as ideal for “dumping over a wall, backfilling or unloading flatbed trucks.” The Bobcat Compact Track Loader model T64 is described as “offer[ing] increased lift capacity and lift height, an inline engine and direct-drive system, excellent visibility and unmatched comfort. This vertical-lift-path compact track loader – also referred to as a skid-steer with tracks – pushes through where other equipment can’t, even in soft, sandy or muddy conditions.”

ISSUES:

Whether a compact track loader is a works truck of heading 8427, HTSUS, or a shovel loader of heading 8429, HTSUS.

Whether the rubber tracks are described by statistical reporting number 8431.20.0000, HTSUSA, or statistical reporting number 8431.49.9095, HTSUSA.

Whether the rubber tracks satisfy an exclusion provision pertaining to products described by statistical reporting number 8431.49.9095, HTSUSA and are eligible to claim the secondary tariff number of subheading 9903.88.06, HTSUS. LAW AND ANALYSIS:

Initially, we note that the matters protested are protestable under 19 U.S.C. §1514(a) (2) as decisions 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. 1401-21-106089 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise. Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI”). 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 may then be applied. GRI 6 provides as follows:

For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.

The 2021 HTSUS headings under consideration are as follows:

8427 Fork-lift trucks; other works trucks fitted with lifting or handling equipment

8429 Self-propelled bulldozers, angledozers, graders, levelers, scrapers, mechanical shovels, excavators, shovel loaders, tamping machines and road rollers

8431 Parts suitable for use solely or principally with the machinery of headings 8425 to 8430

8431.20 Of machinery of heading 8427

8431.49 Of machinery of heading 8426, 8429 or 8430

Note 2 to Section XVI (Chapters 84-85) states, in pertinent part, that:

Subject to note 1 to this section, note 1 to chapter 84 and note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:

Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;

Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517 …

The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HS and are thus useful in ascertaining the proper classification of merchandise. See T.D. 89-90, 54 Fed. Reg. 35127 (August 23, 1989).

EN 84.27 states in pertinent part:

[T]his heading covers works trucks fitted with lifting or handling equipment. Works trucks of this description include, for example:

  FORKLIFT AND OTHER ELEVATING OR STACKING TRUCKS

* * *    The lifting device of the above trucks is normally powered by the motive power unit of the vehicle, and is usually designed to be fitted with various special attachments (forks, jibs, buckets, grabs, etc.) according to the type of load to be handled.   * * *    (B) OTHER WORKS TRUCKS FITTED WITH LIFTING OR HANDLING EQUIPMENT   This group includes:

* * * 

(2)   Other trucks fitted with lifting or handling equipment including those specialised for use in particular industries (e.g., in the textile or ceramic industries, in dairies, etc.). PARTS   Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the trucks of this heading are classified in heading 84.31.

EN 84.29 provides in relevant part:

The heading covers a number of earth digging, excavating or compacting machines which are explicitly cited in the heading and which have in common the fact that they are all selfpropelled.

There is no dispute that the subject rubber tracks are a part of a compact track loader and therefore properly classified under heading 8431, HTSUS. However, the issues in this case, which implicate GRI 6, are: (1) whether a compact track loader, the machine in which the rubber tracks are fitted, is a works truck of heading 8427, HTSUS, or a shovel loader of heading 8429, HTSUS; (2) whether the rubber tracks are described by statistical reporting number 8431.20.0000, HTSUSA, as a part of a machine of heading 8427, HTSUS, or by statistical reporting number, 8431.49.9095, HTSUSA, as a part of a machine of heading 8429, HTSUS; (3) whether the rubber tracks satisfy an exclusion provision pertaining to products described by statistical reporting number 8431.49.9095, HTSUSA.

The compact track loaders that are fitted with the rubber tracks at issue are described as having lifting, pushing, pulling and handling capabilities that are consistent with the term “works truck” of heading 8427, HTSUS. For example, the Caterpillar Compact Track Loaders models 259D3 and 289D3 are described as having a “vertical lift design, [that] deliver extended reach and lift height for quick and easy truck loading.” All three Caterpillar Compact Track Loaders, specifically models 259D3, 279D3, and 289D3 are described as having a “standard, suspended undercarriage system [that] provides superior traction, flotation, stability and speed to work in a wide range of applications and underfoot conditions.” The Bobcat Compact Track Loader models T450, T62 are described as having a “radius lift path [that] excels at jobs with mid-range working heights such as dumping over walls, backfilling or unloading flatbed trucks.” The Bobcat Compact Track Loader model T62 is described as a “radius-lift-path compact track loader – also referred to as a skid-steer with tracks – is engineered to get the big jobs done. On its website, Caterpillar describes the “radius lift path” of its compact track loaders, including compact track loader model T450, as ideal for “dumping over a wall, backfilling or unloading flatbed trucks.” The Bobcat Compact Track Loader model T64 is described as “offer[ing] increased lift capacity and lift height, an inline engine and direct-drive system, excellent visibility and unmatched comfort. This vertical-lift-path compact track loader – also referred to as a skid-steer with tracks – pushes through where other equipment can’t, even in soft, sandy or muddy conditions.”

As discussed, the Caterpillar and Bobcat Compact Track Loaders, where the rubber tracks will be incorporated, have lift arms and a wide variety of attachments can be added to these arms, including pallet forks, augers, buckets, backhoes, snowblowers, landscape rakes, landplanes that can be used for lifting, pushing, and pulling. EN 84.27, HTSUS, also supports the classification of a compact track loader in heading 8427, HTSUS, because it is a works truck “designed to be fitted with various special attachments (forks, jibs, buckets, grabs, etc.) according to the type of load to be handled.” See EN 84.27(A)(1). CBP has also classified similar articles in New York Rulings Letter (NY) J81427, dated March 7, 2003. In NY J81427, an all-surface loader that was designed for working in compact areas and used attachments such as buckets, pallet forks, power augers, snow blowers, among other attachments, was classified in heading 8427, HTSUS. As noted, the compact track loaders in this case are noted to work in compact areas and are fitted with lifting and handling equipment, including buckets, pallet forks, augers, snow blowers, designed to lift, dump, push, pull and unload in various terrains.

In Headquarters Ruling (“HQ”) H296917, dated August 27, 2018, CBP held that Michelin Tweel tires, which were parts of skid steer loaders, were classified under the parts provision for machines of heading 8427, HTSUS. In HQ H296917, CBP discussed the Court of International Trade (“CIT”) decision Thomas Equipment Limited v. United States, where the CIT determined that skid steer loaders were works trucks fitted with lifting and handling equipment of heading 8427, HTSUS. See 881 F. Supp. 611, Slip Op. 95-29 (Ct. Int’l Trade 1995). The CIT rejected the classification of skid steer loaders in heading 8429, HTSUS, and noted that heading 8429, HTSUS, covered more specialized kinds of machines that manipulated the earth. The CIT noted that [s]ubheading 8427.20.00 of the HTSUS . . . refers to works trucks fitted with lifting or handling equipment, without limitation.” The CIT determined that skid steer loaders remained classified in heading 8427, HTSUS, based on a finding of a uniform and established classification practice. Similarly, in this case, a compact track loader is also fitted with lifting or handling equipment to perform various tasks such as lifting, pulling, and pushing, and like a skid steer loader, is classified in heading 8427, HTSUS.

A compact track loader has the same lift-arm design as a skid steer loader, but uses a different undercarriage, and by extension, a different method of propulsion. The undercarriage of a compact track loader uses a track design instead of wheeled tires on a skid steer loader. Both a compact track loader and as skid steer loader are designed to be compact, easily maneuverable, versatile, and perform similar functions. The use of rubber tracks allows a compact track loader to drive over more challenging types of terrain, but its bucket attachment performs the same function as a skid steer loader. The difference in propulsion between a compact track loader versus a skid steer loader does not exclude a compact track loader from consideration as a “works truck” because they perform the same functions, such as pushing by moving forward, pulling by moving backward, lifting and lowering with its arms. They can perform various tasks due to various attachments that are designed for various purposes. As such, we are persuaded that a compact track loader is a “works truck” and described by the terms of heading 8427, HTSUS.

WFC asserts that a compact track loader is akin to a shovel loader of heading 8429, HTSUS. However, self-propelled shovel loaders are heavy-duty machines designed for use on larger construction sites. They are bigger and more powerful than a compact track loader or skid steer loader and used when a compact track loader is too small. The ENs to heading 8429 describe shovel loaders as “wheeled or crawler machines with a front-mounted bucket which pick up material through motion of the machine, transport and discharge it.” Furthermore, the ENs to heading 8429 provide examples of machines which fall under the heading including bulldozers, angledozers, graders, scrapers, mechanical shovels, excavators, and front-end shovel loaders. These machines demonstrate heading 8429 is intended to include highly specialized machines that are solely used in construction, whereas a compact track loader or skid steer loader is more akin to a “works truck” and suitable for smaller projects such as landscaping, agricultural, and other smaller construction projects. As such, we disagree with protestant’s assertion that a compact track loader is classified in heading 8429, HTSUS.

Protestant relies on several CBP rulings including NY E80859, dated April 23, 1999 and NY N239500, dated March 26, 2013 in support of its contention that the instant rubber tracks are classified in subheading 8431.49.90, HTSUS. The rubber tracks in NY E80859 were used in bulldozers, loaders, and excavators, which are classified in heading 8429, HTSUS. In the instant case, the rubber tracks are used in compact track loaders, which are classified in heading 8427, HTSUS. Moreover, the merchandise at issue in NY N239500 concerned engine mufflers, which are not substantially similar to the products in this case. As a result, NY E80859 and NY N239500 are not applicable.

Therefore, because a compact track loader is classified in heading 8427, HTSUS, the rubber tracks, which are a part of the compact track loader, are classified in subheading 8431.20, HTSUS. The protestant also alleges that the rubber tracks fall under the scope of the exclusion set forth in Chapter 99, Subchapter III U.S. Note 20(i)(17) for “Vulcanized rubber tracks, each incorporating cords and cleats of steel, designed for use on construction equipment (described in statistical reporting number 8431.49.9095).” However, the rubber tracks fall outside the scope of the aforementioned exclusion because they are not described by statistical reporting number 8431.49.9095, HTSUSA. Consequently, they are not afforded the exclusion under subheading 9903.88.06, HTSUS, and they are properly classified under subheading 9903.88.01, HTSUS.

HOLDING:

By application of GRIs 1 (Note 2(b) to Section XVI) and 6, the rubber tracks are classified in subheading 8431.20.00, HTSUS, which provides for “Parts suitable for use solely or principally with the machinery of headings 8425 to 8430: Of machinery of heading 8427.” The 2021 general column one, rate of duty is Free.

Products of China classified under subheading 8431.20.00, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8431.20, HTSUS, listed above. See U.S. Note 20 to Subchapter III, Chapter 99, HTSUS.

The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the Section 301 trade remedy, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively.

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 of 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,

Craig T. Clark, Director
Commercial and Trade Facilitation Division