United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1995 HQ Rulings > HQ 955379 - HQ 955525 > HQ 955417

Previous Ruling Next Ruling
HQ 955417




FEBRUARY 23 1994

CLA-2:CO:R:C:M 955417 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8607.99.50

Mr. Ned Marshak, Esq.
Sharretts, Paley Carter & Blauvelt
67 Broad Street
New York, NY 10004

RE: Halfbody Shells for Light Rail Vehicles, Self-Propelled Railway or Tramway Passenger Coaches, Unfinished, Heading 8603, Essential Character, GRI 2(a); Parts of Railway or Tramway Rolling Stock, Heading 8607; HQ 084845, HQ 089208, HQ 950118

Dear Mr. Marshak:

In a letter to the Area Director of Customs, New York Seaport, dated November 9, 1993, on behalf of Breda Costruzioni Ferroviarie S.p.a., you inquire as to the tariff classification of certain light rail vehicle (LRV) halfbody shells from Italy. Your letter, together with drawings and other materials were forwarded to this office for reply.

FACTS:

As imported, each halfbody shell, designated either A section or B section, will consist of two sides, windows and doors, a roof and underframe. Both ends of each shell are open. Each will have wall, ceiling and floor panels, heaters and cab partitions, as well as incomplete lighting and electrical equipment that will not be operational until completed after importation. After importation, a halfbody shell will be combined with a second previously imported halfbody shell, either A or B, together with trucks and other subassemblies and components into a LRV for use in a municipal subway system. Each importation will consist entirely or either A halfbody shells or B halfbody shells but no combination of the two.

You state that each completed LRV will consist of two halfbodies (outfitted from one A shell and one B shell) joined by an articulated section, with a powered motor truck at each end and an unpowered trailer truck at the center of the articulation. The following components or subassemblies, either of U.S. or - 2 -
separately imported foreign origin, will be added after importation: propulsion system, two motor trucks per vehicle, trailer truck, braking system, step system, wheel and axle assemblies, air conditioning and heating systems, seats, articulation, control system, internal windscreens and handrails, batteries and bearings, and electrical current collector or pantograph. Neither halfbody A nor B will ever be capable of independent use as it is necessary to assemble separate components or subassemblies onto each to make an LRV. Each completed LRV will be 75 ft. long and 9 ft. wide with 60 seats. There will be four doors on one side and four on the other, each equipped with movable steps to accommodate high platform and street level boarding. The approximate cost of each of the two halfbody shells represents 21 percent of the cost of a completed LRV.

Based on the rationale of two Headquarters rulings on the issue of incomplete or unfinished railcars of chapter 86, you conclude that the halfbody shells in issue here are not self- propelled railway or tramway coaches of heading 8603; rather, they are parts of railway or tramway locomotives or rolling stock of heading 8607.

The provisions under consideration are as follows:

8603 Self-propelled railway or tramway coaches, vans and trucks, other than those of heading 8604:

8603.10.00 Powered from an external source of electricity ...6.3 percent

8603.90.00 Other...6.3 percent

8607.99.50 Parts of railway or tramway locomotives or rolling stock: Other: Other...3.9 percent

ISSUE:

Whether a halfbody shell, as described, is an unfinished railway or tramway coach of heading 8603.

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 - 3 -
require otherwise, according to GRIs 2 through 6. GRI 2(a) provides that any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article, whether imported unassembled or not, 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.

The Chapter 86 ENs indicate at p. 1414 that incomplete or unfinished vehicles are classified with the corresponding complete or finished vehicles, provided they have the essential character thereof; such vehicles may include passenger coaches not fitted with seats. On the same page, however, the ENs continue by stating that bodies of motorized railway or tramway coaches are classified as parts of heading 86.07. While these notes suggest that the merchandise in issue here may constitute parts for tariff purposes, it is important to note that the ENs are instructive only, and not dispositive.

The real issue is whether a halfbody shell, as described, is an unfinished railway or tramway coach of heading 8603. As stated in HQ 084845, dated November 24, 1989, which you cite, determining an article's essential character will depend on the merchandise. As the merchandise changes, so, too, may the factor or factors which determine its essential character. Factors found to be relevant in other contexts are the significance of the imported components or their role in relation to the use or overall functioning of the completed article and, to the extent that it validates that comparison, the cost or value of the completed article versus the cost or value of the imported merchandise. EN 3(b)(VIII), p.4.

A railway or tramway passenger coach, whether self-propelled or not, is a wheeled rail vehicle designed to carry passengers primarily for day travel. As designed, a complete coach would ordinarily comprise the structural shell outfitted with seats and other customary furnishings relative to passenger comfort, an underframe and trucks to support the shell, wheels, axles and brakes, pneumatic and electric subassemblies plus, in the case of self-propelled vehicles, the mode of propulsion. HQ 084845, at

Applying this criteria here, we find that each halfbody shell is essentially a bare frame, i.e., two sides, a roof, underframe, two open ends, plus incomplete electrical and heating apparatus. It has no means of propulsion, no seats or other passenger amenities except wall, ceiling and floor paneling. We are unable to conclude that a bare halfbody shell is the very essence of a completed LRV. As imported, a halfbody shell lacks the aggregate of distinctive component parts which identify it as a wheeled rail vehicle and in particular as one designed to carry passengers. That the cost or value of each halfbody shell is only 21 percent of the cost or value of a completed LRV further supports this conclusion. These halfbody shells, therefore, lack the essential character of a complete or finished railway or tramway coach.

HQ 089208, dated December 26, 1991, the second case you cite, dealt with railway carbodies similar to the carbody shells here. The decision employed essentially the same analysis as in HQ 084845, but held that the carbodies were unfinished railway passenger cars of heading 8605.00.00. This is because the carbodies in HQ 089208 were substantially more complete than the ones in HQ 084845, or the ones in issue here, with their cost or value representing nearly 74 percent of the cost or value of a completed railcar. HQ 950118, dated December 10, 1991, is in accord.

HOLDING:

Under the authority of GRI 1, the imported carbody shells, as described, are provided for as parts of railway or tramway rolling stock. They are classifiable as other parts, in subheading 8607.99.50, HTSUS.

Sincerely,

John Durant, Director
Commercial Rulings Division


Previous Ruling Next Ruling

See also: