CLA-2 OT:RR:CTF:TCM H191698 LWF
Ms. Laurie Peach, Manager-Customs
American Honda Motor Co., Inc.
1919 Torrance Blvd.
Torrance, CA 90501-2722
RE: Revocation of New York Ruling Letters (NY) N009213, N009215, N186430, and N186432; Classification of certain parts of front-differential and rear-differential assemblies for motor vehicles
Dear Ms. Peach:
This letter is in reference to four ruling letters issued by U.S. Customs and Border Protection (CBP) to American Honda Motor Co., Inc. (Honda), concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of certain parts of front-differential and rear-differential assemblies for motor vehicles. Specifically, in New York Ruling Letters (NY) N009213, dated April 10, 2007, and N009215, dated April 12, 2007, CBP classified certain parts of front-differential and rear-differential assemblies (“differential assembly parts”) in subheading 8708.99.68, HTSUS, which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Other parts and accessories: Other: Other: Other: Other: Other parts for power trains.” We have reviewed ruling letters NY N009213 and N009215 and have determined that they are incorrect and should be revoked.
In parallel with the revocation of ruling letters NY N009213 and N009215, CBP believes that it can best meet its obligations regarding the sound administration of the HTSUS and other customs and related laws by also revoking ruling letters NY N186430 and N186432, issued to Honda on September 30, 2011. See 19 C.F.R. § 177.7(a). In ruling letters NY N186430 and N186432, CBP reclassified Honda’s differential assembly parts under subheading 8708.50.89, HTSUS. However, although CBP stated in ruling letters NY N186430 and N186432 that the ruling letters were being issued “to correct” previous ruling letters N009213 and N009215, CBP did not initiate a notice and comment procedure pursuant to 19 U.S.C. § 1625(c) to propose to revoke the prior ruling letters.
Accordingly, pursuant to 19 U.S.C. § 1625(c), CBP is revoking ruling letters NY N009213, N009215, N186430, and N186432. 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, notice of the proposed action was published in the Customs Bulletin, Vol. 50, No. 2 & 3, on January 20, 2016. No comments were received in response to the notice.
FACTS:
The articles classified in ruling letter NY N009213 consist of two component parts of a front-differential assembly for motor vehicles, which allow the tires of a vehicle to spin at different speeds when making turns. Specifically, CBP considered the Honda “Differential” (Part #41100-RCCL-J05) and “Final Driven Gear” (Part #41233-RCL-010) and provided the following illustration to identify the merchandise at issue:
Honda “Differential” (Part #41100-RCCL-J05) and
“Final Driven Gear” (Part #41233-RCL-010). See NY N009213, dated April 10, 2007.
* * * * *
Similarly, the articles classified in ruling letter NY N009215 consist of various component parts of a rear-differential unit for rear-wheel drive motor vehicles. Specifically, CBP considered the Honda “Differential Carrier Assembly” (Part #41120-PCZ-003 and Part #41120-PCZ-023), “Differential Case Assembly (Part #41170-PCZ-003), “Differential Assembly” (Part #41100-PCZ-003), “Final Gear Set” (Part #41220-PCZ-003), and “Output Shaft Assembly” (Part #40443-PCZ-003) and provided the following illustrations to identify the merchandise at issue:
Honda “Differential Carrier Assembly” (Part #41120-PCZ-003 and Part #41120-PCZ-023), “Differential Case Assembly (Part #41170-PCZ-003), “Differential Assembly” (Part #41100-PCZ-003).
Honda “Final Gear Set” (Part #41220-PCZ-003).
Honda “Output Shaft Assembly” (Part #40443-PCZ-003). See NY N009215, dated April 12, 2007.
* * * * *
ISSUE:
Whether the parts of front-differential and rear-differential assemblies for motor vehicles are classified in heading 8708, HTSUS, specifically under subheading 8708.50, HTSUS, as parts of drive-axels with differential, whether or not provided with other transmission components, or under subheading 8708.99, HTSUS, as other parts.
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principals set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context with requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determine first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order.
The HTSUS provisions under consideration provide, in relevant part, as follows:
8708 Parts and accessories of the motor vehicles of headings 8701 to 8705:
8708.50 Drive-axels with differentials, whether or not provided with other transmission components, and non-driving axels; parts thereof:
Parts:
For vehicles of heading 8703:
Other:
Other:
808.50.89 Other
…
Other parts and accessories:
8708.99 Other:
Other:
Other:
8708.99.68 Other parts for power trains
* * * * *
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HS and are thus useful in ascertaining the proper classification of merchandise. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 87.08, HS, states, in pertinent part, as follows:
This heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfill both the following conditions:
They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and
They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note).
Parts and accessories of this heading include:
…
(E) Drive-axels, with differential; non-driving axles (front or rear); casings for differentials; sun and planet gear pinions; hubs, stub-axels (axle journals), stub-axle brackets.
* * * * *
As an initial matter, CBP notes that there is no dispute that the instant parts of front-differential and rear-differential assemblies for motor vehicles are properly classified under heading 8708, HTSUS. In accord with the Notes to Section XVII, HTSUS, the articles are suitable for use solely or principally with the motor vehicles of headings 87.01 to 87.05, HS, and are not excluded by the provisions of Note 2 to Section XVII. Accordingly, because the merchandise is prima facie classifiable in heading 8708, HTSUS, this matter concerns the proper classification of the merchandise at the 6-digit, subheading level of heading 8708.
Prior to the adoption of the 2007 amendments to the HS Nomenclature, subheading 8708.50, HTSUS, did not provide for parts of drive-axels with differentials, and it was the practice of CBP to classify such merchandise under subheading 8708.99, HTSUS, which provided for “other parts and accessories” of the motor vehicles of heading 8701 to 8705. See, e.g., NY R03507, dated March 30, 2006 (classifying cast iron automotive carrier assemblies under subheading 8708.99, HTSUS); and HQ 965369, dated May 9, 2002 (classifying differential carriers under subheading 8708.99, HTSUS).
However, as result of amendments to the subheadings of heading 87.08, HS, adopted by the World Customs Organization (WCO) in the 2007 edition of the HS Nomenclature, the U.S. International Trade Commission (ITC) amended subheading 8708.50, HTSUS, with respect to the classification of parts of drive-axels with differentials and non-driving axels. Accordingly, the current version of subheading 8708.50, HTSUS, provides, in pertinent part, for “drive-axels with differentials, whether or not provided with other transmission components, and non-driving axels; parts thereof” (emphasis added).
The Honda “Differential” (Part #41100-RCCL-J05), “Final Driven Gear” (Part #41233-RCL-010), “Differential Carrier Assembly” (Part #41120-PCZ-003 and Part #41120-PCZ-023), “Differential Case Assembly (Part #41170-PCZ-003), “Differential Assembly” (Part #41100-PCZ-003), “Final Gear Set” (Part #41220-PCZ-003), and “Output Shaft Assembly” (Part #40443-PCZ-003) are component parts of differential assemblies for motor vehicles. Insomuch as they are suitable for use solely or principally with the motor vehicles of headings 87.01 to 87.05, HS, they are prima facie described by the terms of subheading 8708.50, HTSUS, as parts of drive-axels with differentials, whether or not provided with other transmission components. See EN 87.08(E), HS. Specifically, they are classified in subheading 8708.50.89, HTSUS, by application of GRI 1.
HOLDING:
By application of GRI 1, the Honda “Differential” (Part #41100-RCCL-J05), “Final Driven Gear” (Part #41233-RCL-010), “Differential Carrier Assembly” (Part #41120-PCZ-003 and Part #41120-PCZ-023), “Differential Case Assembly (Part #41170-PCZ-003), “Differential Assembly” (Part #41100-PCZ-003), “Final Gear Set” (Part #41220-PCZ-003), and “Output Shaft Assembly” (Part #40443-PCZ-003) are classified in heading 8708, HTSUS, specifically in subheading 8708.50.89, HTSUS, which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Drive-axels with differentials, whether or not provided with other transmission components, and non-driving axels; parts thereof: Parts: For vehicles of heading 8703: Other: Other: Other.” The 2015 column one, general rate of duty is 2.5% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the Internet at http://hts.usitc.gov.
EFFECT ON OTHER RULINGS:
Ruling letters NY N009213, dated April 10, 2007; NY N009215, dated April 12, 2007; NY N186430, dated September 30, 2011; and NY N186432, dated September 30, 2011, are hereby REVOKED in accordance with the above analysis.
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial & Trade Facilitation Division