CLA-2 OT:RR:CTF:EMAIN H318061 NVF
U.S. Customs and Border Protection
Port of Norfolk-Newport News
101 E. Main Street
Norfolk, VA 23510
Attn: Tarrance Brown, Import Specialist
RE: Application for Further Review of Protest No. 1401-18-100106; Classification of Nissan S-Cargo Vans
Dear Port Director:
This letter is in response to the Application for Further Review (“AFR”) of Protest No. 1401-18-100106, timely filed by counsel on behalf of Duncan Automotive Inc. (“Duncan”) on May 14, 2018. The protest pertains to the classification and liquidation by U.S. Customs and Border Protection of three models of Nissan S-Cargo vans under heading 8704 of the Harmonized Tariff Schedule of the United States (“HTSUS”), as motor vehicles for the transport of goods.
FACTS:
The vehicles under consideration have been identified as three (3) models of Nissan S-Cargo passenger vans, which were originally produced for the Japanese domestic market. Specifically, they are the 1989 Chassis G20-002686 model, the 1989 Chassis G20-004045 model, and the 1990 Chassis G20-008508 model.
Each two-door van measures approximately 137 inches in length and features a gasoline engine with a displacement of 1480 cubic centimeters (“cc”). The three vans, as with all Nissan S-Cargos, were originally manufactured and sold in Japan. They all have second row bench seats that could sit four to five people. This second row, while being equipped with permanent anchor points, do not appear to possess any seatbelts. The 1989 models have a rear cargo area with two (2) port hole windows, which are not in alignment with the second-row seating, but is otherwise devoid of carpeting, or other passenger amenities. The 1990 model has a rear cargo area with no windows. All models of the S-Cargo at issue are devoid of carpeting and the rear cargo areas lack any passenger amenities other than the bench seating.
Duncan entered the S-Cargo under heading 8703, HTSUS as motor vehicles principally designed for the transport of persons. CBP liquidated the entry under heading 8704, HTSUS as motor vehicles for the transport of goods.
ISSUE:
Is the Nissan S-Cargo classified as a vehicle for the transport of persons under heading 8703, HTSUS, or as a vehicle for the transport of goods under heading 8704, HTSUS?
LAW AND ANALYSIS:
We observe as an initial matter that the matters protested are protestable under 19 U.S.C. § 1514(a)(2) as decisions on classification and amount of duties chargeable. The subject merchandise was entered by Duncan on July 25, 2018. On June 14, 2019, CBP liquidated the entry. On September 3, 2019, Duncan timely filed a protest and AFR, within 180 days of liquidation of the first entry. Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006). Further review of the protest is properly accorded to protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed involves questions of law and fact that have not previously been ruled upon by the Commissioner of CBP or his designee or by the Customs Courts.
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS subheadings under consideration are as follows:
8703 Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars.
8704 Motor vehicles for the transport of goods.
With regard to heading 8703, HTSUS, the Federal Circuit in Marubeni America Corp v. United States, 35 F.3d 530, 534 (Fed.Cir. 1994) states that in order to be classified in heading 8703, a vehicle’s main purpose must be to transport passengers:
By the express language of 8703, "motor vehicle principally designed for the transport of persons," it is clear that the vehicle must be designed "more" for the transport of persons than goods. Webster's Third New International Dictionary of the English Language, Unabridged (1986) defines "principally" as "in the chief place, chiefly;" and defines "designed" as "done by design or purposefully opposed to accidental or inadvertent; intended, planned." Thus, if the vehicle is equally designed for the transport of goods and persons, it would not be properly classified under 8703 HTSUS.
Furthermore, the Federal Circuit in Ford Motor Co. v. United States, 926 F.3d 741 (Fed. Cir. 2019), has stated that “heading 8703 is an eo nomine provision for which consideration of use is appropriate because HTSUS Heading 8703 inherently suggests looking to intended use.” 926 F.3d 741, 753. Therefore, pursuant to our obligations under Marubeni and Ford, a vehicle of heading 8703, HTSUS, must be designed "more" for the transport of persons than goods. If the instant vehicles are not designed more for the transport of persons than goods, even if they are equally designed for the transport of persons and goods, they will fall under heading 8704, HTSUS.
The Explanatory Notes (ENs) to the Harmonized Tariff Schedule of the United States (HTSUS), which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS. While not dispositive, the ENs offer guidance in understanding the scope of the headings.
The EN to 87.03 states in pertinent part:
The classification of certain motor vehicles in this heading is determined by certain features which indicate that the vehicles are principally designed for the transport of persons rather than for the transport of goods (heading 87.04). These features are especially helpful in determining the classification of motor vehicles which generally have a gross vehicle weight rating of less than 5 tonnes and which have a single enclosed interior space comprising an area for the driver and passengers and another area that may be used for the transport of both persons and goods. Included in this category of motor vehicles are those commonly known as "multipurpose” vehicles (e.g., van-type vehicles, sports utility vehicles, certain pick-up type vehicles). The following features are indicative of the design characteristics generally applicable to the vehicles which fall in this heading:
(a) Presence of permanent seats with safety equipment (e.g., safety seat belts or anchor points and fittings for installing safety seat belts) for each person or the presence of permanent anchor points and fittings for installing seats and safety equipment in the rear area behind the area for the driver and front passengers; such seats may be fixed, fold-away, removable from anchor points or collapsible;
(b) Presence of rear windows along the two side panels;
(c) Presence of sliding, swing-out or lift-up door or doors, with windows, on the side panels or in the rear;
(d) Absence of a permanent panel or barrier between the area for the driver and front passengers and the rear area that may be used for the transport of both persons and goods;
(e) Presence of comfort features and interior finish and fittings throughout the vehicle interior that are associated with the passenger areas of vehicles (e.g., floor carpeting, ventilation, interior lighting, ashtrays).
EN 87.04 states in pertinent part:
This heading covers in particular: Ordinary lorries (trucks) and vans (flat, tarpaulin-covered, closed, etc.); delivery trucks and vans of all kinds, removal vans.
The classification of certain motor vehicles in this heading is determined by certain features which indicate that the vehicles are designed for the transport of goods rather than for the transport of persons (heading 87.03). These features are especially helpful in determining the classification of motor vehicles, generally vehicles having a gross vehicle weight rating of less than 5 tonnes, which have either a separate closed rear area or an open rear platform normally used for the transport of goods, but may have rear bench-type seats that are without safety seat belts, anchor points or passenger amenities and that fold flat against the sides to permit full use of the rear platform for the transport of goods. Included in this category of motor vehicles are those commonly known as “multipurpose” vehicles (e.g., van-type vehicles, pick-up type vehicles and certain sports utility vehicles). The following features are indicative of the design characteristics generally applicable to the vehicles which fall in this heading :
(a) Presence of bench-type seats without safety equipment (e.g., safety seat belts or anchor points and fittings for installing safety seat belts) or passenger amenities in the rear area behind the area for the driver and front passengers. Such seats are normally fold-away or collapsible to allow full use of the rear floor (van-type vehicles) or a separate platform (pick-up vehicles) for the transport of goods;
(b) Presence of a separate cabin for the driver and passengers and a separate open platform with side panels and a drop-down tailgate (pick-up vehicles);
(c) Absence of rear windows along the two side panels; presence of sliding, swing-out or lift-up door or doors, without windows, on the side panels or in the rear for loading and unloading goods (van-type vehicles);
(d) Presence of a permanent panel or barrier between the area for the driver and front passengers and the rear area;
(e) Absence of comfort features and interior finish and fittings in the cargo bed area which are associated with the passenger areas of vehicles (e.g., floor carpeting, ventilation, interior lighting, ashtrays).
The determination whether a vehicle is primarily for the transport of goods or persons is a fact-intensive issue that relies heavily on the presence or absence of certain features in a vehicle. This analysis has been consistently applied in prior CBP rulings spanning a wide range of vehicles. HQ H268649 (Aug. 14, 2016) (Muck-Truck Pedestrian Dumper); NY N304428 (May 29, 2019) (1994 Land Rover Defender); NY N287720 (June 30, 2017) (electric trucks); NY N285120 (April 11, 2017) (EV2plus+ Mini Car, and an EV4plus+ Mini Car); NY L85735 (June 29, 2005) (golf-cart style "dumper" vehicle). Additionally, we are mindful that the courts have instructed us that if a vehicle is equally designed for transport of both passengers and goods, it cannot be classified under heading 8703, HTSUS. Marubeni, 35 F.3d at 534. Finally, we also consider intended use of the vehicle when determining whether it should be classified in heading 8703, HTSUS.
It is clear from the facts that the Nissan S-Cargo is designed for the transportation of goods, not passengers, as evidenced through many of its physical characteristics and its name. Many of the S-Cargo’s characteristics are enumerated in EN 87.04. The rear bench seating does not have any seatbelts, can be folded down, and the interior of the van is not carpeted. This indicates that passengers are not the primary concern. Additionally, the rear bench seating appears to only be approximately ¾ the height of the front seats, indicating that while they are usable, they were not designed for the same type of comfort as the front seats, or for that matter, second row seating found in vehicles designed to carry passengers. While two models of the S-Cargo have windows, the windows are porthole windows that are not in line with the rear bench, which indicates that the windows are not there for the benefit of and to provide ventilation to any passengers that may be sitting in the rear. The doors of the S-Cargo also indicate that it is designed to transport goods instead of passengers. While the rear bench can hold up to four passengers, the S-Cargo only has one door on each side, which makes it more difficult to load passengers into the rear. By contrast, the rear of the S-Cargo is comprised of one large door which swings up and out of the way, providing access to the ample rear cargo area of the van. Notably, the rear bench seating is not accessible from the rear door.
The physical characteristics and the name of the S-Cargo all indicate that the van is used for the transport of goods. While the S-Cargo lacks a dividing barrier and some models have windows, this is not sufficient to overcome Marubeni. Indeed, the facts in the instant case do not indicate that the S-Cargo is designed equally for the transport of goods and passengers. Rather, we find that the S-Cargo is used primarily for the transport of goods. Thus, under Marubeni and Ford, the S-Cargo must be classified under heading 8704, HTSUS as a motor vehicle for the transport of goods.
Duncan argues that HQ 083628 (June 6, 1989) applies and that the Nissan S-Cargo is more like the Volkswagon Vanagon classified in HQ 083628. We disagree. The Volkswagon Vanagon is a camper van with multiple characteristics that indicate it is designed for the leisurely transport of passengers and to be used in recreational camping. In HQ 083628, we highlighted the “abundance of passenger amenities rearward of the driver’s seat,” the chassis suspension elements that are shared with passenger vehicles, and the cargo to passenger volume. Therefore HQ 083628 does not apply.
In light of the foregoing, we find that the Nissan S-Cargo is classified under heading 8704 as a motor vehicle for the transport of goods.
HOLDING:
The protest is DENIED.
By application of GRIs 1 and 6, the Nissan S-Cargo is classified under heading 8704, HTSUS, specifically subheading 8704.31.00, HTSUS which provides for “Motor vehicles for the transport of goods: Other, with spark-ignition internal combustion piston engine: G.V.W. not exceeding 5 metric tons.” The column one, general rate of duty is 25% ad valorem.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts/.
You are instructed to notify the protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division