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HQ 956551


SEPTEMBER 13, 1994

CLA-2:CO:R:C:M 956551 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8429.51.10

Mr. Patrick Pascarella
Viking Sea Freight Inc.
One World Trade Center, Suite 2409
New York, NY 10048

RE: Front End Wheel-Type Loaders, Shovel Loaders; Wheel Loader Chassis; Unfinished, Unassembled Shovel Loaders, Essential Character, GRI 2(a); HQ 086555

Dear Mr. Pascarella:

Your letter to the Area Director of Customs, New York Seaport, dated May 18, 1994, on behalf of Kawasaki Loaders Manufacturing Corp., U.S.A., has been referred to this office for reply. Descriptive literature was submitted.

FACTS:

The merchandise to be imported from Japan will be the propelling base/chassis for seven (7) models of Kawasaki's front- end shovel loader, models 60Z3, 65Z3, 70Z3, 80Z3, 90Z3, 95Z3 and 115Z3. Each importation will include chassis, tires and for two models the wheels necessary to assemble five (5) front-end loaders of each model. The principal imported component, the chassis, consists of a front and rear portion, and will include the frame, engine housing, boom cylinders, fuel tank, oil tank, transmission, hydraulics, radiator, steering cylinders, propeller, front and rear axles, driveshaft, hoist arm mounted with levers, bucket rods and pins, fenders and bucket cylinders, together with assorted valves, connecting pins and piping. The engines for each model and wheels for 5 of the seven models will either be sourced domestically or will be imported separately.

Upon importation, these components will be assembled with the following components of U.S. origin into complete front-end wheel-type loaders: engine, tires and wheels, battery, counterweight, boom, bucket, levers, cabin and seat. Submitted documents indicate the imported components will constitute between 73.8 to 80 percent of the cost or value of each loader. - 2 -

The post-importation assembly operation is a 5-step process that represents less than 5 percent of the final cost or value of each machine.

The provisions under consideration are as follows:

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

Mechanical shovels, excavators and shovel loaders:

8429.51 Front-end shovel loaders:

8429.51.10 Wheel-type...2 percent

ISSUE:

Whether a propelling base/chassis plus tires and, in some cases wheels, impart the essential character to a front-end wheel-type shovel loader.

LAW AND ANALYSIS:

Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6. GRI 2(a) states, in part, that an unfinished article, whether entered assembled or unassembled, is to be classified as if it were complete or finished, provided that, as entered, it has the essential character of the complete or finished article.

The Harmonized Commodity Description And Coding System Explanatory Notes (ENs) constitute the Customs Cooperation Council's official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. Customs believes the notes should always be consulted. See T.D. 89-80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Relevant ENs, at pp. 1201 and 2, state that heading 84.29 covers a number of earth digging, excavating or compacting machines listed in the text of the heading and which have in common the fact that they are all self-propelled. Self-propelled shovel loaders are explicitly listed within this group. These are described as wheeled or crawler machines with a front- mounted bucket which pick up material through motion of the machine, transport and discharge it. Some shovel-loaders are able to dig into the soil. This is achieved as the bucket, when in the horizontal position,is capable of being lowered below the level of the wheels or tracks. Complete or finished front-end shovel loaders conform to this description.

The factor or factors which determines essential character will vary with the goods. The nature of the imported components, their value when compared to the cost or value of the completed article, or their relationship to the completed or finished article are among the factors that have previously been considered relevant in similar circumstances.

In this case, the importation consists of the basic structural element, the chassis, to include the frame which supports the cab, the engine, and all the working parts, and which imparts the structural integrity to the machine. HQ 086555, dated April 16, 1990. Added to this are other structural components such as fenders, radiator, fuel tank and tires, which enhance the visual appearance of a front-end loader, plus much of the propelling machinery such as transmission, hydraulics, axles and driveshaft. In our opinion, the imported components, though unassembled, comprise the aggregate of distinctive component parts that are identifiable as what they will be when completed, a front-end shovel loader. The overwhelming cost or value of the imported components when compared to that of the completed machine, together with what appears to be a relatively unsophisticated 5-step post-importation assembly process representing between 2.7 to 4.5 percent of the value of the completed loader, supports this conclusion.

HOLDING:

Under the authority of GRI 2(a), the propelling base/chassis, tires and, in some cases wheels, sufficient to assemble 5 machines for each of the 7 Kawasaki models in issue, have the essential character of shovel loaders of heading 8429. They are classifiable in subheading 8429.51.10.

Sincerely,

John Durant, Director
Commercial Rulings Division


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