CLA-2-87:OT:RR:NC:N2:201

Adam Odden
BCB International Inc
1010 Niagara St
Buffalo, NY 14213

RE: The tariff classification of a road marking truck from Canada

Dear Mr. Odden:

In your letter dated May 21, 2025, you requested a tariff classification ruling on behalf of your client, Core Equipment Inc., located in St Catherines, Ontario, Canada.

The subject of this ruling request is the prospective importation of a finished road-marking truck and the applicability of 9802.00.5060.

Core Equipment Inc. (the “Importer”) is a non-resident importer of record located in Ontario, Canada. You state that the Importer in this instance is also the producer. The transaction begins with the provision of specific requirements and specifications to the Importer by the U.S. customer. As part of the transaction, the Importer selects, purchases, and imports into Canada from the United States a complete Peterbilt Model 520 cab and chassis truck, or similar, for the purpose of transforming and altering the truck into a finished road-marking truck. You provided the specifications of the cab and chassis prior to alteration and provided photographs of the vehicle pre and post alteration.

Once the truck arrives at the Importer’s facility, the Importer continues with the remaining six (6) production phases outlined below.

Phase 1 – Overall understanding of the truck specifications and requirements. (Specifications, Drawings, Schematics, B.O.M., Chassis) Phase 2 – Fabrication of major components done inhouse or outsourced. (Platform, Cab, Carriage) Phase 3 – Mounting of the major components. (Cab, Platform, Paint Tanks, Bead Tanks, Compressor, Carriage) Phase 4 – Assembly of components for all systems. (Heat, Pneumatic, Hydraulic, Heat, Paint, Bead, Flush, Fuel, Electrical) Phase 5 – Connection & Preliminary Testing – Ensure all systems are closed and secured accordingly Phase 6 – Final Inspection and Testing – undergo intensive testing to ensure all systems are working properly

It is your position the finished road-marking truck qualifies for classification under 9802.00.5060 and thereby qualifies for duty free treatment pursuant to the USMCA, as the alteration takes place in Canada. You claim that the applicable Harmonized Schedule Tariff Schedule of the United States (HTSUS) code for the finished road-marking truck is undisputedly 8705.90.0080, HTSUS, which provides for, “Special purpose motor vehicles, other than those principally designed for the transport of persons or goods (for example, wreckers, mobile cranes, fire fighting vehicles, concrete mixers, road sweepers, spraying vehicles, mobile workshops, mobile radiological units): Other: Other.” We agree.

You state that pursuant to 19 CFR §182.112:

Goods returned after having been repaired or altered in Canada or Mexico, regardless of whether the repair or alteration could be performed in the United States or has increased the value of the good and regardless of their origin, are eligible for duty-free treatment, provided that the requirements of this section are met. For purposes of this section, “repairs or alterations” means restoration, addition, renovation, re-dyeing, cleaning, re-sterilizing, or other treatment that does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported from the United States.

You claim, unsuccessfully, that the essential characteristics of the complete cab and chassis as exported from the United States is not destroyed by the alterations performed in Canada by the Importer. In this we disagree.

In Pleasure-Way Indus. v. United States, 2016 Ct. Intl. Trade LEXIS 100 (2016), (“Pleasure-Way I”) affirmed by Pleasure-Way Indus. v. United States, 878 F.3d 1348 (Fed. Cir. 2018) (“Pleasure-Way II”)), 144 Daimler-Chrysler AG “Sprinter” cargo vans were exported from the United States to Canada. In Canada, the vans were converted into the Plateau TS and Ascent TS model motorhomes. The conversion included “installation of interior features such as fully plumbed kitchen and bathroom fixtures with freshwater and sewage tanks, water heaters, sleeping quarters, counter-tops with propane burners, microwave ovens, wall-mounted televisions, and refrigerators.” Both courts agreed that the motorhomes were commercially different from the Sprinter vans, and denied 9802.00.50, HTSUS.

The cab and chassis is a new, and fully operational cab chassis at the time of export to Canada, classifiable in, assuming that we suppose that the chassis was always meant to be used for a Road Marking Truck, in Subheading 8706.00.2500 HTSUS, which provides for, “Chassis fitted with engines, for the motor vehicles of headings 8701 to 8705: For vehicles of heading 8705.” The addition of the components to the cab chassis to create the finished vehicle absolutely destroys the “essential character” of the original vehicle and creates a “new and commercially different good,” a vehicle classified in heading 8705.

The applicable subheading for the road marking vehicle will be 8705.90.0080, HTSUS, which provides for, “Special purpose motor vehicles, other than those principally designed for the transport of persons or goods (for example, wreckers, mobile cranes, fire fighting vehicles, concrete mixers, road sweepers, spraying vehicles, mobile workshops, mobile radiological units): Other: Other.” The general rate of duty will be Free.

In regard to any claim for USMCA consideration you state “the origin of the cab and chassis pre-production would be irrelevant to the USMCA determination for the purposes of 9802.00.50.” Since we have denied your claim for 9802 preferences, we will look at a possible USMCA claim.

The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note ("GN") 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:

For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if –

i. the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;

ii. the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;

iii. the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o));

The cab chassis and subsequent additions may be originating materials, but you did not provide enough information to determine whether every component used would meet the USMCA rules; thus, it cannot be considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). Therefore, we must next determine whether the non-originating materials undergo the tariff shift and other requirements provided for in GN 11(b)(iii) and GN 11(o).

The finished road marking vehicle is classified under subheading 8705.90.00, HTSUS. The applicable rule of origin for merchandise classified under subheading 8705.90.00, HTSUS, is in GN 11(o)/87.05, which provides, in relevant part:

13. A change to heading 8705 from any other heading, provided there is a regional value content of not less than 60 percent under the net cost method.

Based on the facts provided, you did not provide enough evidence to show that the above vehicle would, at this time, qualify for USMCA preferential tariff treatment. If you wish to provide the missing information, you can send it to [email protected] for USMCA consideration.

Products of Canada as provided by heading 9903.01.10 in Section XXII, Chapter 99, Subchapter III, U.S. Note 2(j), HTSUS, other than products classifiable under headings 9903.01.11, 9903.01.12, 9903.01.13, 9903.01.14, and 9903.01.15, HTSUS, will be subject to an additional 25 percent ad valorem rate of duty. At the time of entry, you must report the applicable Chapter 99 heading, i.e. 9903.01.10, in addition to subheading 8705.90.0080, HTSUS, listed above. Articles that are entered free of duty under the terms of general note 11 to the HTSUS (U.S.-Mexico-Canada Agreement (USMCA)), including any treatment set forth in subchapter XXIII of Chapter 98 and subchapter XXII of chapter 99 of the HTSUS, will not be subject to the additional ad valorem duties provided for in heading 9903.01.10. If your product is entered duty free as originating under the USMCA, you must report heading 9903.01.14, HTSUS, in addition to subheading 8705.90.0080, HTSUS.

The tariffs and additional duties cited above are current as of this ruling’s issuance. 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 at https://hts.usitc.gov/.

The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.

This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, please contact National Import Specialist Matthew Sullivan at [email protected].
Sincerely,

(for)
Steven A. Mack
Director
National Commodity Specialist Division