CLA-2-98:OT:RR:NC:N1:106
Ralph Garcia, Customs Manager
Volvo Cars US Operations, Inc.
315 Sigma Drive
Summerville, SC 29486-7790
RE: The tariff classification of vehicle parts from various countries as prototypes under subheading 9817.85.01, HTSUS.
Dear Mr. Garcia,
In your letter dated November 22, 2016, you requested a classification ruling on the applicability of the prototype provision under subheading 9817.85.01, Harmonized Tariff Schedule of the United States (HTSUS).
You state in your request that Volvo is planning on building a four door passenger vehicle, classifiable in heading 8703, in the United States. Before the mass production begins, Volvo will be conducting several test cycles of its production line. During the test cycles, Volvo plans to build about seventy (70) prototype vehicles, all of which will be destroyed after the evaluation process.
The items under consideration have been identified as various motor vehicle parts and components such as engines, transmissions, body stampings, bumpers, brake components, and alike, classifiable in multiple chapters of the HTSUS, which will be used in those prototype vehicles. A comprehensive list of the components was submitted with your letter.
Note 7 in Subchapter XVII of Chapter 98 defines prototypes for the purposes of HTSUS subheading 9817.85.01 and sets forth certain conditions and limitations governing classification in the subheading. This Note provides: For purposes of this subchapter, including heading 9817.85.01, the term "prototypes" means originals or models of articles that – are either in the pre-production, production, or postproduction stage and are to be used exclusively for development, testing, product evaluation, or quality control purposes; and in the case of originals or models of articles that are either in the production or postproduction stage, are associated with a design change from current production (including a refinement, advancement, improvement, development, or quality control in either the product itself or the means for producing the product). You state that all the listed components will be utilized in the prototype test cycle and destroyed with the vehicles at the conclusion of the evaluation process. You have also stated that in accordance with subparagraph (b)(ii) of Note 7 that any material that will not be used in production of the test vehicles will be destroyed, rendered as unusable and disposed of in an any environmentally responsible manner.
In addition, eligibility for prototype treatment also requires that the item not be subject to any of the restrictions in subparagraph (c) of Note 7, i.e. quantitative restrictions, antidumping or countervailing duty orders. Based on the information provided, we find that the importation of the parts and components for seventy prototype vehicles qualifies for duty free treatment as a prototype under subheading 9817.85.01, provided that all the conditions delineated in U.S. Note 7, Chapter 98, Subchapter XVII, Harmonized Tariff Schedule of the United States, (HTSUS) are satisfied. Pursuant to Section XXII, Subchapter XVII, U.S. Note 7(a), (b) and (c), the applicable subheading for the subject merchandise will be 9817.85.01, HTSUS, which provides for "Prototypes to be used exclusively for development, testing, product evaluation, or quality control purposes." The rate of duty will be free.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division