CLA-2 CO:R:C:M 088579 JMH
Mr. Brian Kavanaugh
A.N. Deringer, Inc.
30 West Service Road
Champlain, NY 12919-9703
RE: Hydraulic tarp roller to be used with roll-on refuse
dumpsters; trucks; parts and accessories of motor vehicles;
motor vehicles principally used for the transport of goods;
United States-Canada Free Trade Agreement ("CFTA");
Automotive Products Trade Act ("APTA"); articles assembled
abroad in whole or in part of U.S.-origin fabricated
components; General Note 3(c)(iii); General Note 3(c)(vii);
Chapter 98, Subchapter II; Subheading 9802.00.80; 19 CFR
10.24; 19 CFR 10.16(a)
Dear Mr. Kavanaugh:
This is in response to your January 21, 1991, request for a
classification ruling regarding certain tarp rollers imported
from Canada. The tarp rollers are manufactured by C & M Atlas
of Montreal, Quebec.
FACTS:
The articles in question are hydraulic tarp rollers which
are used to cover roll-on refuse dumpsters. The tarp rollers
are manufactured in Canada. They consist of tarpaulin, a tarp
roller, tarp roller stand tubing and a hydraulic motor and hoses.
C & M Atlas has stated that all the parts contained in the
subject tarp roller are of Canadian origin. The tarp rollers are
attached to hoists pulled by a completed cab. The dumpsters
(containers for the refuse) sit on the hoists. In some instances
the completed cab with hoists attached are exported from the
United States, and in some cases the completed cab with hoists
attached are Canadian. The dumpsters are not involved in this
ruling as they are added to the trucks in the United States.
The truck cab with the hoist has a gross vehicular weight
("G.V.W.") of 62,000 pounds, which approximates to 28.18 metric
tons. The truck runs on a diesel engine and is approximately 32
feet long.
-2-
ISSUE:
Issue 1: What is the appropriate classification of the
hydraulic tarp roller when imported by itself?
Issue 2: What is the appropriate classification of the
hydraulic tarp roller when imported installed on a truck of
U.S.-origin?
Issue 3: What is the appropriate classification of the
hydraulic tarp roller when imported installed on a truck of
Canadian-origin?
LAW AND ANALYSIS:
Issue 1: What is the appropriate classification of the
hydraulic tarp roller when imported by itself?
The classification of merchandise under the Harmonized
Tariff Schedule of the United States Annotated ("HTSUSA") is
governed by the General Rules of Interpretation ("GRIs"). GRI 1,
HTSUSA, 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..."
The hydraulic tarp rollers in question are installed onto
completed truck cabs with hoists (hereafter "trucks"). The tarp
rollers are principally, if not solely, used with the trucks.
The trucks are classified as motor vehicles for the transport of
goods. Motor vehicles for the transport of goods are classified
under heading 8704, HTSUSA. Heading 8708, HTSUSA, provides for
"Parts and accessories of the motor vehicles of headings 8701 to
8705..." Section XVI, Note 3, HTSUSA, requires that references
to "'parts' or 'accessories'" in chapters 86 to 88 refers to
articles which are solely or principally used with the articles
of those chapters. A part is generally an article which is an
integral, constituent or component part, without which the
article to which it is joined could not function. An accessory
is generally a nonessential but useful item that has a
supplementary function to that of the larger article to which the
accessory is attached. The trucks to which the tarp rollers
will be attached are able to function without the tarp roller.
The tarp roller merely supplements the functions of the truck.
Thus, the tarp roller is an accessory and not a part. Since the
tarp rollers are solely or principally used with dumpsters, the
tarp rollers are accessories of motor vehicles which are
classified in heading 8704. When imported separately, the
appropriate classification for the tarp rollers is in subheading
8708.99.50, HTSUSA, as "...Other parts and accessories...Other...
Other..."
-3-
The United States-Canada Free Trade Agreement
Since the tarp rollers are made of Canadian parts and
imported from Canada, the issue of eligibility under the United
States-Canada Free Trade Agreement ("CFTA") arises. The CFTA
provides tariff preferences to certain goods. To be eligible for
tariff preferences under the CFTA, goods must be "originating
goods" within the rule of origin in General Note 3(c)(vii)(B),
HTSUSA. There are two primary means in General Note 3(c)(vii)(B)
by which articles imported into the United States may be "goods
originating in the territory of Canada." The first method is if
the goods are "wholly obtained or produced in the territory of
Canada and/or the United States." General Note 3(c)(vii)(B)(1).
The second method is if the goods are "transformed in the
territory of Canada and/or the United States." General Note
3(c)(vii)(B)(2).
A product which is "wholly obtained or produced in the
territory of Canada and/or United States" is one which is grown,
mined, harvested, born and raised in Canada and/or the United
States, or otherwise intimately connected to the two countries
and their land, air and sea territories as defined in General
Note 3(c)(vii)(L), HTSUSA. The hydraulic tarp roller does not
meet the definitions found within General Note 3(c)(vii)(L) and
is not "wholly obtained or produced in the territory of Canada
and/or the United States."
The second method to become an originating good for CFTA
purposes is for an article to be transformed in Canada and/or the
United States in accordance with General Note 3(c)(vii)(B)(2). A
transformation is evident when a change in tariff classification
occurs that is authorized by General Note 3(c)(vii)(R), HTSUSA.
None of the components which form the hydraulic tarp rollers are
classified in chapter 87, HTSUSA. Chapter 87 covers vehicles,
other than railway or tramway rolling stock, and the parts and
accessories of such vehicles. When the parts are assembled into
the hydraulic tarp roller, they become an article classified in
chapter 87. This transformation is authorized under General
Note 3(c)(vii)(R)(17)(aa). Thus, the tarp rollers are
originating goods from Canada and are eligible for tariff
preferences under the CFTA.
The Automotive Products Trade Act
The fact that the tarp rollers are products to be used with
motor vehicles and that they are being imported from Canada
raises the applicability of the Automotive Products Trade Act of
1965 ("APTA"), 19 U.S.C. 2001 (1989), Act of October 21, 1965,
Pub. L. 89-283, tit. III, sec. 102, 79 Stat 101. APTA allows
certain motor vehicle equipment imported from Canada to enter
duty free. The APTA provisions, effective as of January 1, 1989,
-4-
are found within General Note 3(c)(iii), HTSUSA (19 U.S.C.
1202). Omnibus Trade and Competitiveness Act of 1988, Pub. L.
100-418, Sec. 1204, codified at 19 U.S.C. 3007 (enacted August
23, 1988). General Note 3(c)(iii), HTSUSA, states in part the
following:
Automotive Products and Motor Vehicles Eligible for
Special Tariff Treatment. Articles entered under the
Automotive Products Trade Act are subject to the
following provisions:
(A) Motor vehicles and original motor-vehicle
equipment which are Canadian articles and which fall in
provisions for which the rate of duty "Free (B)"
appears in the "Special" subcolumn may be entered free
of duty. As used in this note--
(1) The term "Canadian article" means an article
which originates in Canada, as defined in
subdivision (c)(vii) of this note.
(2) The term "original motor-vehicle equipment",
as used with reference to a Canadian article
(as defined above), means such a Canadian
article which has been obtained from a
supplier in Canada under or pursuant to a
written order, contract or letter of intent
of a bona fide motor vehicle manufacturer in
the United States, and which is a fabricated
component originating in Canada, as defined
in subdivision (c)(vii) of this note, and
intended for use as original equipment in
the manufacture in the United States of a
motor vehicle, but the term does not include
trailers or articles to be used in their
manufacture.
(3) The term "motor vehicle", as used in this
note, means a motor vehicle of a kind
described in headings 8702, 8703 and 8704 of
chapter 87 (excluding an electric trolley bus
and a three-wheeled vehicle) or an automobile
truck tractor principally designed for the
transport of persons or goods.
(4) The term "bona fide motor-vehicle
manufacturer" means a person, who, upon
application to the Secretary of Commerce, is
determined by the Secretary to have produced
no fewer than 15 complete motor vehicles in
the United States during the previous 12
-5-
months, and to have installed capacity in the
United States to produce 10 or more complete
motor vehicles per 40-hour week. The
Secretary of Commerce shall maintain, and
publish from time to time in the Federal
Register, a list of the names and addresses
of bona fide motor-vehicle manufacturers.
As previously stated, the tarp rollers in question are
accessories to motor vehicles. Therefore, the tarp rollers may
be "original motor vehicle equipment" under APTA. The definition
of "original motor-vehicle equipment" contains four sections
which must be met. The definition is written in the conjunctive,
therefore each aspect must be satisfied. The following is a list
of these sections:
1. a Canadian article (originating in Canada under
General Note 3(c)(vii), the CFTA rule)
2. the article is obtained from a supplier in Canada under
or pursuant to a written order, contract or letter of
intent of a bona fide motor vehicle manufacturer in
the United States, and
3. the article is a fabricated component originating
in Canada (under CFTA rule), and
4. the article is intended for use as original
equipment in the manufacture in the United States
of a motor vehicle, but the article is not a
trailer nor is it to be used in the manufacture of
a trailer.
APTA uses the originating goods test of the CFTA to
determine if goods are "Canadian articles." Since the tarp
rollers were established in the above discussion to be
originating goods in Canada under General Note 3(c)(vii), the
tarp rollers are Canadian articles for purposes of APTA. The
tarp rollers are obtained from a supplier in Canada.
Additionally, the tarp rollers are fabricated components, and
they are not trailers nor are they used in the manufacture of
trailers. However, it is not stated if the rollers are supplied
pursuant to a contract with a bona fide motor vehicle
manufacturer in the United States. Nor is it established that
the tarp rollers are for use as original equipment in the
manufacture in the United States of a motor vehicle.
As stated in General Note 3(iii)(A)(4), a list of bona fide
motor-vehicle manufacturers is kept with the Department of
Commerce. One of these registered entities must be the party who
has contracted for or ordered in writing the tarp rollers. This
manufacturer must then use the tarp rollers in the manufacture of
the vehicle. Original motor vehicle equipment is that equipment
-6-
which is incorporated into the vehicle at the time the vehicle
is made, not at a later date by a retailer or owner of the
vehicle. This manufacture must occur in the United States.
General Motors Corp. v. United States, 10 CIT 569 (1986),
involves the importation of radios from Canada. The radios were
installed at the retail level, not during the manufacture of the
motor vehicles. The court in this case, after reviewing the
legislative history, stated "[t]he legislative history of the
APTA makes clear that the phrase 'intended for use as original
equipment in the manufacture in the United States of a motor
vehicle' was meant by Congress to exclude from duty-free status
those items which were not used in the manufacture of
automobiles." (original emphasis) Id. at 576, citing S. Rep.
No. 782, 89th Cong., 1st Sess. 10, reprinted in 1965 U.S. Code
Cong. & Ad. New 3670, 3687-88.
The accessories in question, the tarp rollers, in order to
be "original motor vehicle equipment" for APTA purposes must be
used the in the manufacture of the motor vehicles to which they
will be attached. To obtain duty-free entry under APTA the tarp
rollers cannot be attached after the motor vehicles are built.
They must be included in the manufacturing process. Only if the
tarp rollers are purchased by a bona fide motor vehicle
manufacturer in the United States and used in the manufacture of
the motor vehicles will the tarp rollers be entitled to duty free
entry under APTA.
Issue 2: What is the appropriate classification of the
hydraulic tarp roller when imported installed on a truck of
U.S.-origin?
When a hydraulic tarp roller is installed onto a truck, the
tarp roller becomes a part of the truck and is "absorbed" into
the classification of the truck. The truck has a diesel engine
and a G.V.W. of approximately 28.18 metric tons. The
classification of the truck which incorporates the tarp roller is
subheading 8704.23.00, HTSUSA, as "Motor vehicles for the
transport of goods...Other, with compression-ignition internal
combustion piston engine (diesel or semi-diesel)..G.V.W.
exceeding 20 metric tons..."
United States-Canada Free Trade Agreement
If it can be shown that the United States truck which is
sent to Canada is an originating good when it arrives in Canada
under General Note 3(c)(vii)(B) as previously detailed, then the
truck with the attached tarp roller would also be an originating
good. As discussed above, the tarp roller is considered an
originating good under the CFTA. Articles which are considered
"goods originating in the territory of Canada" under General Note
-7-
3(c)(vii) are those which are "obtained or produced" or
"transformed" in "Canada and/or the United States" (emphasis
added). Thus, goods made of originating components from both
the United States and Canada are considered to be "goods
originating in the territory of Canada" for purposes of General
Note 3(c)(vii). The United States truck with the Canadian tarp
roller would be eligible for duty preferences under the CFTA.
However, if the truck is not an originating good under the
CFTA when it arrives in Canada, then the truck with the attached
tarp roller is not an originating good. The truck would be a
third country product and the Canadian tarp roller would be
absorbed into the third country truck. Thus, if the truck is not
an originating good when it is exported to Canada, it will not be
an originating good when it is imported with the tarp roller.
The truck with the tarp roller would not be eligible for duty
preferences under the CFTA in such a scenario.
Automobile Products Trade Agreement
APTA grants duty-free status to motor vehicles imported from
Canada. The motor vehicle must be a Canadian article. Secondly,
the motor vehicle must be classified in heading 8702, 8703, 8704
or be an automobile truck tractor principally designed for the
transport of persons or goods. Finally, there must be a rate of
duty "Free (B)" in the "Special" subcolumn that corresponds to
the classification.
The trucks in question, which consist of a cab, a hoist, and
a tarp roller, are classified in subheading 8704.23.00. This
classification is under heading 8704. A "B" is present in the
"Special" subcolumn which corresponds to the classification.
Therefore, providing that the trucks are Canadian articles within
the meaning of General Note 3(c)(vii)(B), the trucks are motor
vehicles under APTA. A U.S.-origin truck is a "Canadian article"
for purposes of General Note 3(c)(vii) and 3(c)(iii). If the
trucks are Canadian articles, the trucks are eligible for duty
free status under APTA.
U.S. Goods Returned
Chapter 98, Subchapter II, HTSUSA, incorporates provisions
that apply to articles which are exported and then returned to
the United States. Subheading 9802.00.80, HTSUSA, provides a
partial duty exemption for:
[a]rticles assembled abroad in whole or in part of
fabricated components, the product of the United
States, which (a) were exported in condition ready for
assembly without further fabrication, (b) have not lost
their physical identity in such articles by change in
-8-
form, shape, or otherwise, and (c) have not been advanced in
value or improved in condition abroad except by being assembled
and except by operations incidental to the assembly process, such
as cleaning, lubricating, and painting.
All three requirements of subheading 9802.00.80, HTSUSA, must be
satisfied before a component may receive a duty allowance. An
article entered under this tariff provision is subject to duty
upon the full cost or value of the imported assembled article,
less the cost or value of the U.S. components assembled therein,
upon compliance with the documentary requirements of section
10.24 Customs Regulations (19 CFR 10.24).
Section 10.16(a) Customs Regulations (19 CFR 10.16(a)),
provides that the assembly operation performed abroad may consist
of any method used to join or fit together solid components, such
as welding, soldering, riveting, bolting, force fitting, gluing,
laminating, sewing, or the use of fasteners.
From the information provided, it appears that the
operations performed in Canada, such as welding and bolting,
result in the secure joining of the Canadian components
(tarpaulin, tarp roller, tarp roller stand tubing, hydraulic
motor and hoses) to the U.S.-origin truck. Therefore, we are of
the opinion that the operations performed in Canada are
acceptable assembly operations pursuant to 19 CFR 10.16(a).
Issue 3: What is the appropriate classification of the
hydraulic tarp roller when imported installed on a truck of
Canadian-origin?
As discussed previously, when the tarp roller is placed onto
a truck the tarp roller is "absorbed" for classification
purposes into the truck's classification. The truck with the
attached tarp roller is a motor vehicle designed for the
transport of goods, with a diesel engine and a G.V.W. of 28.18
metric tons. The truck is classified in subheading 8704.23.00,
as "Motor vehicles for the transport of goods...Other, with
compression-ignition internal combustion piston engine (diesel or
semi-diesel)..G.V.W. exceeding 20 metric tons..."
United States-Canada Free Trade Agreement
The CFTA gives duty preferences to goods which originate in
Canada and/or the United States as defined by General Note
3(c)(vii). Should the Canadian truck be an originating good
within General Note 3(c)(vii)(B), then the truck would be
eligible for tariff preferences under the CFTA. This office does
not have adequate information to make this determination.
-9-
Automobile Products Trade Agreement
APTA grants duty-free status to motor vehicles imported from
Canada. The motor vehicle must be a Canadian article. Secondly,
the motor vehicle must be classified in heading 8702, 8703, 8704
or be an automobile truck tractor principally designed for the
transport of persons or goods. Finally, there must be a rate of
duty "Free (B)" in the "Special" subcolumn that corresponds to
the classification.
The trucks in question, which consist of a cab, a hoist, and
a tarp roller, are classified in subheading 8704.23.00. This
classification is under heading 8704. A "B" is present in the
"Special" subcolumn which corresponds to the classification.
Therefore, providing that the trucks are Canadian articles within
the meaning of General Note 3(c)(vii)(B), the trucks are motor
vehicles under APTA. If the trucks are Canadian articles, the
trucks are eligible for duty free status under APTA. As stated
above, the information required to determine whether the trucks
are Canadian articles has not been presented.
HOLDING:
The tarp roller, when imported by itself, is classified in
subheading 8708.99.50, HTSUSA, as "...Other parts and
accessories...Other...Other..." The tarp rollers are an
originating good under General Note 3(c)(vii), and thus, the
tarp rollers are entitled to duty preferences under the CFTA,
providing the exporter has a valid exporter's certificate of
origin. The tarp rollers may be eligible for duty-free entry
under APTA if the tarp rollers are imported by a bona fide motor
vehicle manufacturer pursuant to a written contract or order, and
are used in the manufacture of automobiles in the United States.
When the tarp rollers are imported with a United States
truck the correct classification is subheading 8704.23.00,
HTSUSA, as "Motor vehicles for the transport of goods...Other,
with compression-ignition internal combustion piston engine
(diesel or semi-diesel)..G.V.W. exceeding 20 metric tons..."
If the United States truck is an originating good under General
Note 3(c)(vii) then the truck with the tarp roller would also be
an originating good, and the entire truck is eligible for tariff
preferences under the CFTA. The truck may be eligible for duty-
free entry under APTA if the truck is an originating good under
General Note 3(c)(vii). Securely joining the hydraulic tarp
roller components with the U.S.-origin truck is considered an
acceptable assembly operation. Therefore, the returned truck
with the tarp roller attached may be classified under subheading
9802.00.80 with an allowance in duty for the cost or the value of
the U.S.-origin truck. This allowance in duty is dependent upon
compliance with the documentary requirements 19 CFR 10.24. The
-10-
duty should reflect the tarp rollers eligibility for tariff
preferences under the CFTA.
When the tarp rollers are imported on Canadian trucks, once
again the correct classification is subheading 8704.23.00,
HTSUSA, as "Motor vehicles for the transport of goods...Other,
with compression-ignition internal combustion piston engine
(diesel or semi-diesel)..G.V.W. exceeding 20 metric tons..." The
Canadian trucks with the attached tarp rollers may be eligible
for tariff preferences under the CFTA if the trucks are
originating goods as defined by General Note 3(c)(vii). No
information was submitted upon which this determination may be
made. Additionally, the classification of the trucks has a "B"
in the corresponding "Special" subcolumn, thus, this
classification is eligible for APTA consideration. If the
Canadian trucks are originating goods under General Note
3(c)(vii), the trucks would be eligible for duty-free entry under
APTA.
Sincerely,
John Durant, Director
Commercial Rulings Division