CLA-2-86:S:N:N1:106-853719
Mr. George C. Steuart
Miller & Steuart
400 International Square
1825 I Street, N.W.
Washington, D.C. 20006
RE: The tariff classification of carbody shells from Japan
Dear Steuart:
In your letter dated May 17, 1990, on behalf of Kawasaki Rail Car,
Inc., Yonkers, NY, you requested a tariff classification ruling. Your
client manufactures double decker passenger rail cars for use by the
Massachusetts Bay Transportation Authority in the United States. The
rail cars are manu- factured and assembled in the United States.
However, parts and components will be sourced in Japan and the United
States. It is your contention that the imported products are not
classifiable in subheadings 8603, Harmonized Tariff Schedule of the
United States (HTS), which is the provision for self-propelled railway
coaches, or 8605, HTS, which is the provision for not self-propelled
railway coaches. You believe the merchandise is classifiable in
subheading 8607.99.10, Harmonized Tariff Schedule of the United States
(HTS), which is the provision for parts of not self- propelled railway
passenger coaches.
You state that there are two types of non self-propelled coaches
that will be imported. Control Trailer Coaches (CTCs) which are
equipped with cab and control equipment, and Blind Trailer Coaches
(BTCs) which do not have any control equipment. The total contract
price of each finished rail car delivered to the customer in the United
States is $1,476,000 for each CTC and $1,341,600 for each BTC. Each of
these amounts include $52,000 for truck parts to be shipped separately
from the carshells. U.S. costs of manu-facturing combined with other
U.S. costs not directly associated with manufacturing totals $958,400
for each CTC and $863,700 for each BTC.
The carbodies will be imported in shell form with stairways,
insulation, some interior panels, windows and doors, wiring, piping and
duct work as part of the shell. All other major components will be
obtained separately and assembled in the United States at the point of
manufacture. Specif- ically, the imported car bodies will not include
electrical equipment, lighting fixtures, seats, HVAC, trucks, coupling
equipment, braking equipment, interior finishings, floor coverings,
baggage racks or control equipment. The total value of the imported
components of the railway car is 37 percent or less of the total value
of the finished rail car.
General Rule of Interpretation (GRI) 1, HTS, provides that for
legal purposes, classification shall be determined according to the
terms of the headings and any relative section or chapter notes and,
provided such headings or notes do not otherwise require, according to
Rules 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.
Is the imported merchandise classifiable as unfinished railway
coaches, or as parts of railway rolling stock? In letter 084845 dated
November 24, 1989, U.S. Customs Headquarters stated, "Determining an
articles's essential character will depend, of course, on the
merchandise.... Factors found to be relevant in other contexts are the
significance of the imported components or their role in relation to
the use or overall functioning of the completed article and, to the
extent that it validates that comparison, the cost or value of the
completed article versus the cost or value of the imported
components." The subject carbody shells are imported without a number
of significant components and lack the essential character of a
completed railway passenger coach. In addition, the total value of the
imported carbody shells is purported to be 37 percent or less of the
value of the total value of the finished rail car. Therefore, the
described carbody shells are not classifiable as unfinished railway
coaches.
The applicable subheading for the imported car body shells will be
8607.99.1000, Harmonized Tariff Schedule of the United States (HTS),
which provides for parts of not self-propelled railway passenger
coaches. The rate of duty will be 5.5 percent ad valorem.
This ruling is being issued under the provisions of Section 177 of
the Customs Regulations (19 C.F.R. 177).
A copy of this ruling letter should be attached to the entry
documents filed at the time this merchandise is imported. If the
documents have been filed without a copy, this ruling should be brought
to the attention of the Customs officer handling the transaction.
Sincerely,
Jean F. Maguire
Area Director
New York Seaport