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HQ 950714


May 12, 1992

CLA-2 CO:R:C:M 950714 LTO

CATEGORY: CLASSIFICATION

TARIFF NO.: 8703.23.00

Mr. Bruce Aitken
Mr. Munford Page Hall II
Dorsey & Whitney
1330 Connecticut Avenue, N.W.
Suite 200
Washington, D.C. 20036

RE: Motor Vehicles; 19 CFR 177.2(b)(7); 8704; HQ 083081

Dear Mr. Aitken and Mr. Hall:

This is in response to your letter of October 24, 1991, requesting the classification for motor vehicles under the Harmonized Tariff Schedule of the United States (HTSUS). In accordance with section 177.2(b)(7) of the Customs Regulations [19 CFR 177.2(b)(7)], you have requested that certain information pertaining to this ruling be kept confidential. After careful review of your numerous submissions on this issue alone, this request has been granted. [Specifically, the following items from your letter of March 25, 1992, will be treated as confidential: 1, 5, 19, 24, 25, 26, 27, 31, 32 and 33].

FACTS:

The vehicles in question have two seats and an enclosed trunk. You stated that they are dedicated for the transport of one or two persons and their occasional effects, with the majority of the interior space occupied by passenger seats and amenities designed for passenger comfort. Further, that while the vehicle has off-road capability, it is not designed for rugged mountain or trail use.

The vehicles have sashless doors and a T-top design with removable roof panels. You stated that they do not have a flat cargo floor or tailgate and that the trunk will be the same as that of a small, two-seater passenger car. The limited cargo volume is as follows: (1) the total enclosed volume of the vehicle is approximately 1,650 liters (56.6 cu.ft.); (2) the
passenger volume of the vehicle is approximately 1,380 liters (47.2 cu.ft.); (3) the cargo volume behind the seats is approximately 90 liters (3.1 cu.ft.); and (4) the cargo volume of the separate enclosed trunk is approximately 180 liters (6.2 cu.ft.). You also stated that only about 16% of the total volume (270 liters out of 1650 liters) can be used for carrying cargo.

While the basic body shape design will be that of a two- seater passenger car, you stated that the structural design feature will share some design elements of both a passenger car and sport/utility vehicle. In addition to two seats, the interior will be occupied by both a console box designed to house a sophisticated audio system and another console box designed to hold passenger personal effects. The vehicle also includes interior carpeting, cloth-type door trim, a full display panel, full cloth seats, cosmetic trim, a carpeted trunk and a temporary-size spare tire. Also, the tires, wheels and suspension will be optimized for passenger comfort rather than cargo payload.

ISSUE:

Whether the motor vehicles are covered by Heading 8703, HTSUS, which describes motor vehicles principally designed for the transport of persons, or under Heading 8704, HTSUS, which describes motor vehicles for the transport of goods.

LAW AND ANALYSIS:

The General Rules of Interpretation (GRI's) to the HTSUS govern the classification of goods in the tariff schedule. GRI 1 states in pertinent part that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes . . . ."

The two competing headings are Heading 8703, HTSUS, and Heading 8704, HTSUS. Heading 8703, HTSUS, provides for "[m]otor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars." Heading 8704, HTSUS, provides for "[m]otor vehicles for the transport of goods."

By the express language of Heading 8703, HTSUS, a vehicle which is equally designed for the transport of persons and goods cannot be classified in Heading 8703, HTSUS, because it fails the requirement that it be "principally designed" for the transport of persons. See HQ 083081, dated January 4, 1989. The vehicle in question is neither a truck nor a sport-utility vehicle.

Further, the vehicle is not designed to carry significant cargo. In both absolute volume (270 liters) and percentage of total volume (16%), the cargo carrying capability of the vehicle is limited. Moreover, it does not have flat cargo floors, and has a standard, separately enclosed, automobile trunk. Thus, the vehicle is one "principally designed for the transport of persons," and is, therefore, classifiable under Heading 8703, HTSUS.

HOLDING:

The vehicle in question is classifiable under subheading 8703.23.00, HTSUS, which provides for "[m]otor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702) . . . [o]ther vehicles, with spark-ignition internal combustion reciprocating piston engine . . . [o]f a cylinder capacity exceeding 1,500 cc but not exceeding 3,000 cc." The corresponding rate of duty for articles of this subheading is 2.5% ad valorem.

Sincerely,

John Durant, Director

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