HQ 956604 - Tautliner; Tarpaulin System for Trailers and Semi-Trailers; Tarpaulin-Over-Frame Permanently Attached to Trailer Bed; Trailers, Semi-Trailers, Parts, Beacon Cycle & Supply Co., Inc. v. United States, C.D. 4764; Heading 8716; Goods Imported Unassembled, GRI 2(a); Chapter 87, Additional U.S. Note 1; North American Free Trade Agreement (NAFTA), General Note 12(b)(ii), Note (f), de minimis - United States International Trade Commision Rulings

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HQ 956604

SEPTEMBER 26, 1994

CLA-2:CO:R:C:M 956604 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8716.39.00, 8716.90.50

Mr. Walt Koppelaar
Curtainsider, Inc.
1318 Rymal Road East
Hamilton, Ontario L8W3N1

RE: Tautliner; Tarpaulin System for Trailers and Semi-Trailers; Tarpaulin-Over-Frame Permanently Attached to Trailer Bed; Trailers, Semi-Trailers, Parts, Beacon Cycle & Supply Co., Inc. v. United States, C.D. 4764; Heading 8716; Goods Imported Unassembled, GRI 2(a); Chapter 87, Additional U.S. Note 1; North American Free Trade Agreement (NAFTA), General Note 12(b)(ii), Note (f), de minimis

Dear Mr. Koppelaar:

Your letter to the Area Director of Customs, New York Seaport, dated May 16, 1994, has been referred to this office for reply. Your inquiry concerns the tariff classification of tarpaulin systems for trailers and semi-trailers assembled in Canada with components of U.S., Canadian, and UK origin.

Our Special Classification and Marking Branch will issue a separate ruling on any partial duty exemption allowable on the Canadian assembly operation.

FACTS:

The tarpaulin system in issue, the Tautliner, is a tarpaulin-over-frame enclosure designed to convert a flat-bed trailer or semi-trailer into a van. It is fabricated in Canada with steel plate, sheet and rolled sections, aluminum coil and extrusions, plywood, hinges, locks and other door hardware, and extruded plastic curtain seal, all of U.S. or Canadian origin, together with plastic curtain material and a mechanical tensioning device, both of UK origin. The U.S. and Canadian components represent 90.46 percent of the total cost or value of each tarpaulin system. The plastic curtain and tensioning device, both of UK origin, represent 8.90 and 0.62 percent, respectively, of the total cost or value. - 2 -

In a recent telephone conversation you provided this office with the following additional information: each tarpaulin system is custom designed and will be fabricated to the exact dimensions of a particular trailer or semi-trailer as specified by the customer; the tarpaulins are designed to be permanently attached to a trailer by a combination of bolts and welding; and, the tarpaulin systems will either be fully fabricated, then knocked down and imported unassembled, or will be incorporated in Canada onto the bed of a U.S. or Canadian-origin trailer or semi-trailer provided by the customer or purchased by Curtainsider for the customer. It will then be driven across the U.S.-Canadian border by a U.S. or Canadian-origin truck tractor.

The provisions under consideration are as follows:

8716 Trailers and semi-trailers; other vehicles, not mechanically propelled; and parts thereof:

Other trailers and semi-trailers for the transport of goods:

8716.39.00 Other...3.1 percent; 1.2 percent under NAFTA

8716.90 Parts:

8716.90.50 Other...3.1 percent; 1.2 percent under NAFTA

ISSUE:

Whether the tarpaulin systems in issue are parts for tariff purposes; whether imported separately or permanently attached to a trailer or semi-trailer they are originating goods for NAFTA purposes.

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) provides in part that any reference in a heading shall include a reference to that article entered unassembled or disassembled.

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 - 3 -
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).

As to Tautliner tarpaulin systems imported permanently mounted onto trailers and semi-trailers of either U.S. or Canadian origin, relevant ENs state, at p. 1439, that trailers and semi-trailers of heading 8716 are non-mechanically propelled vehicles for the transport of persons or goods that are designed to be coupled to and towed by other vehicles such as tractors or trucks. Trailers usually have two or more sets of wheels and a coupling system mounted on the swivelling front wheels which steer the vehicles. Semi-trailers are fitted with rear wheels only, the forward end resting on and coupled to the platform of the towing vehicle. We conclude, therefore, that trailers and semi-trailers to which the tarpaulin systems in issue are permanently mounted are encompassed by heading 8716. Upon their return to the United States, road tractors, trailers and semi- trailers remain separately classified in headings 8701 and 8716, respectively, even when entered together. Chapter 87, Additional U.S. Note 1, HTSUS.

As to Tautliner tarpaulin systems imported separately, articles that are integral, constituent and component parts necessary to the completion and proper functioning of the article with which they are used have been held to be parts for tariff purposes. Likewise, articles have been held to be parts if they serve a useful function in relation to the main article so that in some way they contribute to the safe and efficient operation of that article. Beacon Cycle & Supply Co., v. United States, 81 Cust. Ct. 46, C.D. 4764 (1978). In our opinion, the Tautliner system serves to protect the load from adverse weather conditions and, of equal importance, it serves to stabilize the load during transit. This maximizes the safety of both the load and the driver. The custom design of each Tautliner system is evidence that they are principally, if not solely used with trailers and semi-trailers of heading 8716. The Tautliner systems, therefore, are parts provided for in heading 8716.

The tarpaulin systems, imported separately, qualify as originating goods for NAFTA purposes if each of the non- originating materials used in their production undergoes a required change in tariff classification. General Note 12(b)(ii)(A), HTSUS. The required change in this case is to subheading 8716.90 from any other heading. General Note 12(t) Ch. 87 (46), HTSUS. The plastic curtain classified upon importation into Canada in subheading 3926.90.90 satisfies this requirement, but the tensioning device classified upon importation into Canada in subheading 8716.90.90 does not. However, originating status is conferred on the system because - 4 -
the value of the tensioning device - 0.62 percent of the total cost or value - is considered de minimis, that is, it is not more than 7 percent of the transaction value of the tarpaulin system under section 402(b) of the Tariff Act of 1930, as amended, adjusted to an F.O.B. basis, or if transaction value is unacceptable, the value of the tensioning device is not more than 7 percent of the total cost of the tarpaulin system. General Note 12(f)(i), HTSUS. The tarpaulin systems, therefore, qualify as originating goods for NAFTA purposes.

Trailers or semi-trailers, either of U.S. or Canadian origin, with tarpaulin systems incorporated onto their beds, likewise qualify as originating goods because the value of the non-originating tensioning device is de minimis under General Note 12(f)(i), HTSUS.

HOLDING:

Under the authority of GRI 2(a), Tautliner tarpaulin systems imported separately and unassembled are provided for in heading 8716. They are classifiable in subheading 8716.90.50, HTSUS and qualify as originating goods for NAFTA purposes.

Under the authority of GRI 1, trailers and semi-trailers with Tautliner tarpaulin systems permanently installed onto their beds are provided for in heading 8716. They are classifiable in subheading 8716.39.00, HTSUS and qualify as originating goods for NAFTA purposes.

Sincerely,

John Durant, Director
Commercial Rulings Division

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