OT:RR:CTF:EMAIN H329725 MFT
Center Director
Automotive and Aerospace Center of Excellence and Expertise
U.S. Customs and Border Protection
2810B West Fort Street, Suite #123
Detroit, MI 48216
ATTN: Quoc Tran, Supervisory Import Specialist; Andrew Minnick, Import Specialist
RE: Internal Advice Request; Classification of a BYD Coach and Bus Class 8 Battery-Electric Terminal Tractor
Dear Center Director:
This letter is in response to a request for internal advice concerning the proper classification under the Harmonized Tariff Schedule of the United States (HTSUS) of a certain Class 8 battery-electric terminal tractor. The request was filed by counsel on behalf of BYD Coach and Bus, LLC (requestor). In reaching the following determination, U.S. Customs and Border Protection (CBP) considered information the requestor provided in response to CBP's inquiries and supplemental information provided during the conference between counsel for the requestor and CBP on August 23, 2023, and counsel's supplemental submission, dated August 25, 2023.
FACTS:
The subject merchandise is a Class 8 battery-electric terminal tractor from China, with model number Q1M.[1] According to product literature provided by the requestor, the terminal tractor is "the world's first commercially available all-electric[,] class 8 yard tractor that can easily work a 24/7 shift schedule with opportunity charging." The requestor states that the terminal tractor "is principally designed and adapted to be used within the confines of warehouses, dock areas, and other locations listed in HTSUS heading 8709," and that generally "these types of tractors 'are mostly used at sea ports for material handling, such as loading and unloading of materials.'"
The subject terminal tractor features an offset enclosed cab design with room for one operator, a crash bar (or "headache rack") to protect the driver from falling containers, and a solid-mounted rear axle for achieving lower clearance at a port. The terminal tractor also incorporates an elevating fifth wheel that can couple to a semi-trailer. The requestor's submitted photos and videos depict the fifth wheel being fitted behind the enclosed cab of the terminal tractor. The requestor states, "The fifth wheel only moves up and down so that it can attach to the item being pulled." According to the operator's manual provided by the requestor, when the terminal tractor is in neutral gear, the driver can use a lifting lever inside the enclosed cab to control the fifth wheel's elevation and lift the semi-trailer. The driver would then tow the semi-trailer to a certain location and use the same lifting lever to lower the fifth wheel's elevation and bring the semi-trailer's support legs to the ground. The requestor notes that "the lifting capability of the articles at issue is very limited[] and is analogous to the mechanisms that can lift items for the short-distance transportation of goods."
The terminal tractor has a battery capacity of 217 kWh, which powers a 180-kW motor, and its top speed is 32 mph with a recommended top speed of approximately 14.91 mph when laden. It has a minimum turning radius of about 22.97 feet, and its curb weight is 19,800 lbs. An operator's manual submitted by the requestor provides instructions for coupling the fifth wheel to a semi-trailer and maneuvering the terminal tractor laden with a semi-trailer.
ISSUE:
Whether the subject terminal tractor is properly classified in heading 8701, HTSUS, which provides for, "Tractors (other than tractors of heading 8709)," or in heading 8709, HTSUS, which provides for, "Works trucks, self-propelled, not fitted with lifting or handling equipment, of the type used in factories, warehouses, dock areas or airports for short distance transport of goods; tractors of the type used on railway station platforms; parts of the foregoing vehicles."
LAW AND ANALYSIS:
Classification under the HTSUS is in accordance with the GRIs. GRI 1 provides that the classification of goods will 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 will then be applied in order.
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS.[2]
The HTSUS provisions under consideration in this case are as follows:
8701 Tractors (other than tractors of heading 8709):
* * * * *
8709 Works trucks, self-propelled, not fitted with lifting or handling equipment, of the type used in factories, warehouses, dock areas or airports for short distance transport of goods; tractors of the type used on railway station platforms; parts of the foregoing vehicles:
Note 2 to Chapter 87 of the HTSUS defines the term "tractor":
"For the purposes of this chapter, 'tractors' means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not they contain subsidiary provision for the transport, in connection with the main use of the tractor, of tools, seeds, fertilizers or other goods."
The EN to heading 8701, HTSUS, provides as follows:
"For the purposes of this heading, tractors means wheeled or track-laying vehicles constructed essentially for hauling or pushing another vehicle, appliance or load.
[. . .]
The heading covers tractors (other than tractors of the type used on railway station platforms, falling in heading 87.09) of various types (tractors for agricultural or forestry work, road tractors, heavy duty tractors for constructional engineering work, winch tractors, etc.), whatever their mode of propulsion (internal combustion piston engine, electric motor, etc.). It also includes tractors which can be used both on rails and on road, but not those which are designed exclusively for use on rails.
The tractors of this heading may be fitted with coachwork (a body) or may have seats for the crew or a driving cab. They may be equipped with a tool box, with provision for raising and lowering agricultural implements, with a coupling device for trailers or semi-trailers (e.g., on mechanical horses and similar tractive units), or with a power take-off for driving machines such as threshers and circular saws.
[. . .]
Subheadings 8701.91 to 8701.95
These subheadings include vehicles used to haul semi-trailers over short distances. These types of vehicles are known by various names (e.g., 'terminal tractors', 'port tractors', etc.) and they are intended to position or shuttle trailers within a defined area. They are not suitable for long-haul road use for which road tractors of subheadings 8701.21 to 8701.29 are designed. They are distinguishable from road tractors in that they are usually equipped with diesel engines with a maximum speed normally not exceeding 50 km/h and are generally equipped with a small, single-seat enclosed cab for the driver only."
We find that the subject terminal tractor is classifiable under heading 8701, HTSUS. Here, the terms of heading 8701, HTSUS, include "tractors," and the subject terminal tractor plainly meets the definition of a "tractor" under Note 2 to Chapter 87 of the HTSUS. The terminal tractor's design and ability to tow semi-trailers demonstrate that the tractor is essentially constructed for hauling loads. For example, the operator's manual submitted by the requestor indicates that the terminal tractor's elevating fifth wheel couples and decouples with a semi-trailer (i.e., a "load"). The operator's manual also gives several instructions for coupling to a semi-trailer and maneuvering the terminal tractor when it is laden with a semi-trailer, including:
"When performing this operation [i.e., coupling the fifth wheel] for the vehicle on road, be sure to activate the fifth wheel lever safety device and keep the fifth wheel in a low position."
"When driving the tractor that is coupled with a semi-trailer, never lift or lower the fifth wheel."
"With a semi-trailer coupled, do not drive the vehicle at a speed exceeding 24 kph; otherwise, you may lose control of the vehicle. When cornering, keep a low vehicle speed; driving the vehicle at a high speed when corn[er]ing may cause the vehicle to roll over. Most rollover accidents are caused by driving at a high speed when corn[er]ing. Always slow down the vehicle when cornering."
"If the fifth wheel and semi-trailer are lifted too high, the center of gravity of the semi-trailer will be raised, increasing the probability of [] semi-trailer rollover."
Lastly, images and videos provided by the requestor depict the subject terminal tractor hauling loads (i.e., semi-trailers) around container yards at ports. Given the design, specifications, and demonstrated uses of the subject merchandise, the terminal tractor meets the definition of a "tractor" under Note 2 to Chapter 87 of the HTSUS as a vehicle constructed essentially for hauling another load. There is no indication (or claim by the requestor) that the subject merchandise is a "tractor of the type used on railway station platforms" under heading 8709, HTSUS. As such, the subject terminal tractor is classifiable as a "tractor" of heading 8701, HTSUS.
Although the EN to heading 8701, HTSUS, in no way constrains this analysis, we note that the subject terminal tractor comports with the EN's terms. Subject to certain exclusions, the EN suggests that heading 8701, HTSUS, "covers tractors [. . .] of various types [. . .], whatever their mode of propulsion (internal combustion engine, electric motor, etc.)," and that such tractors "may be fitted [. . .] seats for the crew or a driving cab" as well as "a coupling device for trailers or semi-trailers." The features found on the subject terminal tractor track with this language. In particular, the terminal tractor is propelled by a 180-kW electric motor; it is fitted with an enclosed driving cab; and it includes a coupling device, namely a fifth wheel, for hauling semi-trailers. Taking these features into consideration, the EN for heading 8701, HTSUS, provides support for classification under that heading.[3]
The requestor argues that the subject merchandise is properly classified under heading 8709, HTSUS, as a "works trucks, self-propelled, not fitted with lifting or handling equipment, of the type used in factories, warehouses, dock areas or airports for short distance transport of goods." In particular, the requestor claims that the terminal tractor's fifth wheel does not disqualify it from being classified under heading 8709, HTSUS, given that "[t]he fifth wheel only moves up and down so that it can attach to the item being pulled" and has "very limited" lifting capability. We disagree.
The terms of heading 8709, HTSUS, unequivocally exclude works trucks that are fitted with lifting or handling equipment. There is no language specifying "how much" lifting or handling is permissible, nor does the text give any permissible purposes for lifting or handling equipment. Therefore, even if in arguendo the subject terminal tractor satisfies all the other relevant criteria for heading 8709, HTSUS, if the terminal tractor is fitted with lifting or handling equipment, then it is completely disqualified from heading 8709, HTSUS.
The subject terminal tractor is disqualified from heading 8709, HTSUS, because it is fitted with an elevating fifth wheel. The requestor's photos and videos illustrate how the fifth wheel is fitted to the terminal tractor. As the requestor states, the fifth wheel "moves up and down so it can attach to the item being pulled," and the operator's manual shows how the fifth wheel is used to couple with a semi-trailer, raise itself, and lift the semi-trailer for transport. This lifting action demonstrates that the fifth wheel constitutes lifting equipment. Whether this lifting capability is "very limited" or not is irrelevant: "not fitted with lifting or handling equipment" is a bright-line prohibition under heading 8709, HTSUS.
We hold that the subject terminal tractor is properly classified under heading 8701, HTSUS, as a "tractor."
HOLDING:
By application of GRIs 1 and 6, the subject terminal tractor is classified under heading 8701, HTSUS, specifically under subheading 8701.95.50, HTSUS which provides for: "Tractors (other than tractors of heading 8709): Other, of an engine power: Exceeding 130 kW: Other." The column one, general rate of duty is free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8701.95.50, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.02, in addition to subheading 8701.95.50, HTSUS, listed above.
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 trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, including information on exclusions and their effective dates, 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/.
Sixty days from the date of this decision, the Office of International Trade, Regulations and Rulings, will make this decision available for CBP personnel, and to the public on the CBP Home Page at http://www.cbp.gov by means of the Freedom of Information Act, and other methods of publication.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
-----------------------
[1] The requestor notes that model number Q1M and an internal model number, "8Y", refer to the same vehicle and can be used interchangeably.
[2] See Treasury Decision (T.D.) 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
[3] We note (and the requestor recognizes) that the Subheading EN for heading 8701, HTSUS (specifically Subheadings 8701.91 to 8701.95), expressly mentions "terminal tractors" as being classifiable under that heading. But since the crux of this matter occurs at the four-digit heading level, it is not necessary to analyze classification issues beyond that level.