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HQ 957777




MAY 30, 1995

CLA-2 R:C:M 957777 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8607.99.10

Mr. James S. O'Kelly, Esq.
Banes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016

RE: Incomplete, Unfinished Railway or Tramway Passenger Coach, Not Self-Propelled; Partially Outfitted Railway Carbody Imported Without Underframe and Truck or Bogie; Essential Character, GRI 2(a); Heading 8605.00.00; Parts of Railway or Tramway Rolling Stock; HQ 089208 and HQ 952234 Revoked

Dear Mr. O'Kelly:

Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation of HQ 089208 and HQ 952234 was published on April 26, 1995, in the Customs Bulletin, Volume 29, Number 17.

In HQ 089208, dated December 26, 1991 (I.A. 20/91) and HQ 952234, dated July 23, 1992 (I.A. 44/92), to the Area Director of Customs, New York Seaport, we responded to requests for internal advice you initiated as counsel for Mitsui & Co. (U.S.A.) Inc.

In these decisions we held that certain railway carbodies imported under contract with the Long Island Railroad were incomplete or unfinished railway or tramway passenger coaches not self-propelled, classifiable in heading 8605.00.00, Harmonized Tariff Schedule of the United States (HTSUS). We have reviewed the matter and are now of the opinion that these rulings are incorrect. Accordingly, they are revoked by this ruling.

FACTS:

The importations consist of partially outfitted carbodies which, after importation, are combined with truck assemblies or bogies, coupling devices, and other separately imported components into complete railcars, not self-propelled. The components for coaches designated 1 and 2 each consist of two sides, two ends, and roof, of aluminum and/or steel construction. - 2 -

Also included are the windows and doors, toilets, wall cabinet, ceiling and flooring materials, radio with antenna and power supply unit, air conditioning unit with electrical supply, electric coupler with battery and cables, brake hoses and valves, passenger and saloon area luggage racks, exterior indicator light, plus one, two and three-passenger seat frames with cushions, door access panels, stairway and exterior handles. The carbody shells, outfitted with their components, as described, form more or less complete railway carbodies. You advised us that because of their unique design and construction these cars do not require underframes. You state that the value of the imported components represents approximately 74 percent of the value of each completed passenger coach.

The components for coaches 3 through 10 each consist of two sides, two ends and a roof, of aluminum and/or steel construction, a low voltage power supply unit, air conditioning unit, passenger area luggage rack, frames for seats, coat hooks, windows, doors, toilets, wall cabinets, and ceiling and flooring materials. These components represent approximately 48.7 percent of the cost or value of a completed passenger coach.

After importation, the described components were assembled with trucks or bogies and coupling devices to form 10 complete railway or tramway passenger coaches. When completed, these cars are intended to be used as an A and B "married" pair; however, each car will be complete and capable of independent use as a railway passenger car.

The provisions under consideration are as follows:

8605.00.00 Railway or tramway passenger coaches, not self-propelled; luggage vans, post office coaches and other special purpose railway or tramway coaches, not self-propelled (excluding those of heading 8604)...17.6 percent

8607 Parts of railway or tramway locomotives or rolling stock:

Other:

8607.99 Other:

8607.99.10 For vehicles of heading 8605 or 8606, except brake regulators...5 percent

ISSUE:

Whether the imported carbodies, as described, are incomplete or unfinished railway or tramway passenger coaches for tariff 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 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, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989)

We noted in HQ 089208 and HQ 952234 that a railway or tramway passenger coach is a wheeled rail vehicle designed to carry passengers, primarily for day travel. As designed, a complete or finished coach would ordinarily comprise the structural shell outfitted with seats and other customary furnishings relative to passenger comfort, sometimes supported by an underframe, and trucks consisting of the wheels, axles and brakes, plus pneumatic and electric subassemblies. We concluded in the cited decisions that the imported components were the aggregate of distinctive component parts which identified the importations as wheeled rail vehicles designed to carry passengers, and that, as imported, the components were clearly dedicated to making completed passenger railcars.

We have reconsidered this matter and are now of the opinion that in the cited decisions undue reliance may have been placed on legal principles developed under the HTSUS predecessor tariff code, the Tariff Schedules of the United States. While we recognize that on a case-by-case basis administrative and judicial decisions under a prior nomenclature can be instructive - 4 -
in interpreting provisions of the HTSUS this is not the case here. We also believe that the characterization of a railway passenger coach first and foremost as a vehicle capable of a transport function must be more fully considered. In this latter regard, the General Explanatory Notes (EN) to Chapter 86 state, at p. 1414, that incomplete or unfinished vehicles are classified with the corresponding complete or finished vehicles, provided they have the essential character thereof. The note then lists examples of vehicles that would be considered incomplete or unfinished for tariff purposes. However, the EN then continues by stating that bodies of motorized railway or tramway coaches, of vans, wagons or trucks, or of tenders, not mounted on underframes, are classified as parts of railway or tramway locomotives or rolling stock (heading 86.07). For these reasons, it is now our position that the railway carbodies in HQ 089208 and HQ 952234 do not have the essential character of complete or finished railway passenger coaches not self-propelled.

HOLDING:

Under the authority of GRI 1, the railway carbodies are provided for in heading 8607. They are classifiable in subheading 8607.99.10, HTSUS.

EFFECT ON OTHER RULINGS:

HQ 089208, dated December 26, 1991, and HQ 952234, dated July 23, 1992, are revoked. In accordance with 19 U.S.C. 1625(c)(1), this ruling will become effective 60 days after its publication in the Customs Bulletin. Publication of rulings or decisions pursuant to 19 U.S.C. 1625(c)(1) does not constitute a change of practice or position in accordance with section 177.10(c)(1), Customs Regulations (19 CFR 177.10(c)(1)).

Sincerely,

John Durant, Director
Commercial Rulings Division


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