CLA-2 OT:RR:CTF:TCM H262289 PTM
TARIFF NO: 8708.99.8180
James MacNeill
MacNeill Consulting Services
P.O. Box 1214
Briston, CT 06011
RE: Tariff Classification of a compressed natural gas fuel tank system.
Dear Mr. MacNeill,
This is in response to your December 17, 2014 request for a binding ruling on behalf of your client, Daimler Trucks North America, from U.S. Customs and Border Protection (“CBP”) concerning the tariff classification of a compressed natural gas fuel tank system in the Harmonized Tariff Schedule of the United States (“HTSUS”). Our response follows.
FACTS:
The merchandise at issue is a compressed natural gas (“CNG”) fuel tank system (“FTS”). The fuel tank system consists of a CNG storage tank and an integrated fuel management module (“FMM”). The CNG storage tank is constructed of resin-impregnated, continuous filament, carbon fiber composite material with a plastic liner. The storage tank is a cylinder with a volume of 141.1 gallons and a CNG volume of 5049 standard cubic feet. The cylinder is fitted with a shut-valve which can be used to manually disable the flow of gas.
The FMM houses the CNG control components. The components include a quarter-turn shut-off valve, high volume and standard fill receptacles, and a high pressure gauge. The quarter turn shut-off valve shuts off the gas flowing from the FMM to the engine. The two receptacles are used when filling the tank. The high-pressure regulator reduces the gas pressure for delivery to the engine. The coolant ports allow warm coolant from the engine to be circulated through the high-pressure regulator to prevent freezing. The CNG tank is covered by a protective shroud that is custom-configured to the vehicle, and is designed to protect the components of the system. The entire fuel tank system is mounted to the side of a truck. The fuel tank system is specially designed for use with trucks with spark-ignition engines that operate using a supply of CNG. The following are images of the FTS and the FTS mounted on a truck:
ISSUE:
What is the tariff classification of the CNG Fuel Tank System?
LAW AND ANALYSIS:
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 Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS provisions at issue are as follows:
8481 Taps, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves; parts thereof:
* * *
8708 Parts and accessories of the motor vehicles of headings 8701 to 8705:
Note 2 to Section XVII, HTSUS, provides:
The expressions "parts" and "parts and accessories" do not apply to the following articles, whether or not they are identifiable as for the goods of this section:
* * *
(e) Machines or apparatus of headings 8401 to 8479, or parts thereof; articles of heading 8481 or 8482 or, provided they constitute integral parts of engines or motors, articles of heading 8483;
Note 3 to Section XVII, HTSUS, provides:
References in chapters 86 to 88 to "parts" or "accessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those chapters. A part or accessory which answers to a description in two or more of the headings of those chapters is to be classified under that heading which corresponds to the principal use of that part or accessory.
The EN to heading 84.81 provides:
This heading covers taps, cocks, valves and similar appliances, used on or in pipes, tanks, vats or the like to regulate the flow (for supply, discharge, etc.), of fluids (liquid, viscous or gaseous), or, in certain cases, of solids (e.g., sand). The heading includes such devices designed to regulate the pressure or the flow velocity of a liquid or a gas.
The appliances regulate the flow by opening or closing an aperture (e.g., gate, disc, ball, plug, needle or diaphragm). They may be operated by hand (by means of a key, wheel, press button, etc.), or by a motor, solenoid, clock movement, etc., or by an automatic device such as a spring, counterweight, float lever, thermostatic element or pressure capsule.
Taps, valves, etc., incorporating such mechanisms or devices remain classified in this heading. This applies, for example, to a valve equipped with a thermostatic element (double-leaf, capsule, bulb, etc.). The heading also covers valves, etc., connected to a thermostatic element by means of, for instance, a capillary tube.
The EN to heading 87.08 provides:
This heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfil 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:
* * *
(M) Radiators, silencers (mufflers) and exhaust pipes, fuel tanks, etc.
(emphasis added).
The FTS consists of two primary components: the CNG tank and the FMM system. The CNG storage tank holds the CNG until it is delivered to the engine via the FMM. The FMM regulates the flow of CNG to the engine by passing the CNG through the quarter turn valve when it is open. The high-pressure regulator reduces the gas pressure for delivery to the engine. The coolant ports allow warm coolant from the engine to be circulated through the high-pressure regulator to prevent freezing. Thus, the FMM is responsible for regulating the flow of CNG from the storage tank and into the engine where it is used as fuel.
We first examine whether the FTS may be classified in heading 8481 by application of GRI 1. Heading 8481 provides eo nomine for “Taps, cocks, valves for…tanks… including pressure-reducing valves and thermostatically controlled valves.”
Furthermore, the EN to heading 84.81 covers valves that regulate the flow of fluids (liquid, viscous or gaseous) by opening or closing an aperture. The FMM on its own is properly described as a valve within the meaning of heading 8481 as it regulates the flow of CNG from the storage tank into the engine. However, the CNG storage tank serves an integral function for the FTS by storing the CNG until it is delivered to the engine. The function of the CNG storage tank is not described by heading 8481. Because the FTS incorporates both the FMM and the CNG storage tank, the FTS may not be classified under heading 8481 by application of GRI 1.
Heading 8708 covers “[p]arts and accessories of the motor vehicles of headings 8701 to 8705.” Trucks and semi-tractors are classified in chapter 87. See, e.g. New York Ruling (“NY”) 880737, dated December 9, 1992, (classifying a road tractor and semi-trailer in heading 8701 HTSUS). Thus, it is necessary to determine whether the FTS is a “part” of the motor vehicles. U.S. courts have considered the nature of "parts" under the HTSUS and two distinct though not inconsistent tests have resulted. In Bauerhin Technologies Limited Partnership, & John V. Carr & Son, Inc. v. United States, 110 F.3d 774, 779 (Fed. Cir. 1997) (citing United States v. Willoughby Camera Stores, Inc., 21 C.C.P.A. 322 (1933) and United States v. Pompeo, 43 C.C.P.A. 9 (1955)), the court explained:
As set forth in Willoughby Camera, “an integral, constituent, or component part, without which the article to which it is to be joined could not function as such article” is surely a part for classification purposes. 221 C.C.P.A. at 324. However that test is not exclusive. Willoughby Camera does not address the situation where an imported item is dedicated solely for use with the article. Pompeo addresses that scenario and states that such an item can also be classified as a part.
Reconciling Willoughby Camera with Pompeo, we conclude that where, as here, an imported item is dedicated solely for use with another article and is not a separate and distinct commercial entity, Pompeo is a closer precedent and Willoughby Camera does not apply […] Under Pompeo, an imported item dedicated solely for use with another article is a “part” of that article within the meaning of the HTSUS.
The FTS is an integral component of a truck as it stores and delivers the CNG to the truck engine, and the truck would be incapable of operation without the fuel stored and delivered by the FTS. Therefore, the FTS meets the definition of a “part” for classification purposes. Moreover, because the FTS as a complete functional unit is not described by heading 8481, it is not precluded from classification as a part by Note 2(e) to Section XVII, HTSUS. The FTS is solely and principally designed for use with motor vehicles of chapter 87 and is thus not excluded by Note 3 to Section XVII. Moreover, the EN to heading 87.08 provides that parts and accessories in that heading include fuel tanks. Because the FTS acts as a fuel tank for CNG for spark ignition engines, it is covered by heading 87.08.
Prior CBP rulings have classified fuel delivery systems in heading 8708 HTSUS. In NY I83759, dated June 28, 2002, CBP classified a fuel tank of a motor vehicle with hardware (assorted straps, clamps, pipes, tubes, and similar articles) for mounting the fuel tank to the chassis in heading 8708 HTSUS. In NY N250428, CBP classified five component parts (including a pressure-limiting valve) to a vehicle fueling system under heading 8708 HTSUS. Based on the foregoing, we find that the FTS is properly classified under heading 8708 HTSUS.
HOLDING:
By application of GRI 1, the CNG Fuel Tank System is classified under heading 8708 HTSUS, and more specifically under subheading 8708.99.8180, which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Other: Other Other.” The column one, general rate of duty is 2.5% 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 online at www.usitc.gov/tata/hts/.
Sincerely,
Ieva K. O’Rourke, Chief
Tariff Classification and Marking Branch