HQ 084845

NOV 24, 1989

CLA‑2:CO:R:C:G 084845 JAS

CATEGORY: Classification

TARIFF NO.: 8607.99.5000

Allan H. Kamnitz, Esq.

Sharretts, Paley, Carter & Blauvelt, P.C.

67 Broad Street

New York, N.Y. 10004

RE: Carbodies for Railway Passenger Coaches

Dear Mr. Kamnitz:

In your submission of June 15, 1989, on behalf of your client, C. Itoh
Company (America) Inc., you inquire as to the tariff classification of
merchandise described as carbodies or shells for self‑propelled and
non‑self propelled railway coaches or passenger vehicles, from Japan.
Our ruling follows.

FACTS:

Both the self‑propelled and non‑self propelled railway coaches will be
imported in one of three component packages, with components to be added
in the U.S. dependent on what

component package is imported. We will discuss the three component
packages with respect to both vehicle types.

Non‑self propelled railway coaches may be imported in one of three ways.
In situation one, the importation will consist of the carbody shell and
certain of its component parts. The

shell will consist of two sides, two ends, and roof, all on a frame, of
aluminum and/or steel construction. The shell will be outfitted with
component parts identified as thermal and

acoustic wall and ceiling insulation, flooring panels, wiring and
piping, and glass side windows. The remaining component parts of the
shell consist of interior wall panels, lighting

fixtures and air diffusers, toilets, doors, hardware, couplers, seats,
and miscellaneous parts will be installed in the U.S. Complete
electrical and pneumatic subsassemblies, truck (the

assembly of parts comprising the structure which supports a car

‑ 2 ‑

body at each end and which provides for attachment of the wheels and
axles) and the brakes, wheels and axles will also be added in the U.S.
The estimated cost of the imported components is \$299,000, while the
estimated cost of the components added domestically is \$451,950.

In situation two, the importation will consist of the carbody shell, as
described above, a portion of the flooring panels with acoustic
insulation, all the wiring and piping, glass side windows, and
miscellaneous parts. Ceiling and wall thermal insulation, a portion of
the acoustic insulation, interior wall panels, lighting fixtures and air
diffusers, toilets, doors, hardware, couplers, seats, and some
miscellaneous parts are added in the U.S. Complete electrical

and pneumatic equipment, truck, and the brakes, wheels and axles will
also be added in the U.S. The estimated cost of the imported components
is \$233,950, while the estimated cost of

the components added domestically is \$517,300.

In situation three, the importation will consist only of the described
carbody shell, the estimated cost of which is \$160,700. The remainder
of the components will be added in the

U.S. The estimated cost of these components is \$590,550.

Self‑propelled railway coaches may be imported in one of three ways. In
situation one, the importation will consist of the carbody shell, as
previously described, and carbody parts

consisting of flooring panels, ceiling and wall thermal insulation, all
wiring and piping, glass side windows, interior wall panels, doors, and
some miscellaneous parts. Also imported will be a portion of the
electrical and pneumatic equipment consisting primarily of communication
equipment, console and switch panels for the cab. The estimated cost of
these components is \$445,000. Added in the U.S. will be the light
fixtures and air diffusers, seats, miscellaneous parts, and that portion
of the electrical and pneumatic equipment described as the air
conditioner and pantograph. Also added in the U.S. will be the complete
propulsion and underframe

equipment, as well as truck subassembly, traction motor, brakes and
hardware. The estimated cost of these components is \$827,000.

In situation two, the importation will consist of the carbody shell,
wiring and piping, glass for the windows, doors, and miscellaneous
parts. The estimated cost of these

components is \$265,000. Added in the U.S. will be the flooring, thermal
insulation, side windows minus glass, interior wall panels, lighting
fixtures and air diffusers, seats, miscellaneous parts, all electrical,
pneumatic, propulsion and underframe equipment, as well as the trucks.
The estimated cost of these components is \$1,007,000.

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In situation three, the importation will consist only of the carbody
shell, the estimated cost of which is \$139,000. The remainder of the
components, as described in situations one

and two, will be added in the U.S. The estimated cost of these
components is \$1,133,000.

ISSUE:

Are the component packages for the non‑self propelled and self‑propelled
railway coaches, or any of the packages, classifiable as unfinished
railway or tramway coaches, either

in heading 8603 or heading 8605, or as parts of railway rolling stock,
in heading 8607?

LAW AND ANALYSIS:

General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of
the United States Annotated (HTSUSA), 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.

Determining an article\'s essential character will depend, of course, on
the merchandise. As the merchandise changes, so, too, may the factor or
factors which determine its essential

character. 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.

A railway or tramway passenger coach, whether self‑ propelled or not, is
a wheeled rail vehicle designed to carry passengers primarily for day
travel. As designed, a complete

coach would ordinarily comprise the structural shell outfitted with
seats and other customary furnishings relative to passenger comfort, an
underframe and trucks to support the

shell, wheels, axles and brakes, pneumatic and electric subassemblies
plus, in the case of self‑propelled vehicles, the mode of propulsion.

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We have compared each of the six component packages to a complete
railway passenger coach both self‑propelled and non‑self propelled.
These packages do not contain seats and other

accoutrements of passenger comfort, nor do they contain complete
electrical and pneumatic assemblies. Moreover, these packages do not
contain trucks, the structure which supports

the carbody, or the rolling gear. None of the packages of self‑propelled
rail cars contains the means of propulsion. In our opinion, none of
these packages, ranging in complexity from

carbody shell and frame (without seats) for a self‑propelled vehicle,
outfitted with wall and ceiling insulation, floor panels, wiring and
piping, and glass side windows, interior

wall panels and doors, to the bare carbody shell for both self‑propelled
and non‑self propelled vehicles, possess the aggregate of distinctive
component parts which identify the components in general as a wheeled
rail vehicle and in particular as one designed to carry passengers. None
of these component packages, therefore, have the essential character of
a complete railway passenger coach. That the cost or value of each
importation of non‑self propelled rail coach components represents
between 21 and 38 percent of the cost or value of the completed coach,
and each importation of self‑propelled rail coach components represents
between 10 and 34 percent of the cost or value of the completed coach
further supports this conclusion. Therefore, the described component
packages are not classifiable as unfinished railway coaches, either in

heading 8603 or heading 8605.

HOLDING:

Components for railway passenger coaches, both self‑ propelled and
non‑self propelled, in each of the six described component packages, are
classifiable under the provision for

other parts of railway or tramway locomotives or rolling stock, in
subheading 8607.99.5000, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), dutiable at the rate of 3.9 percent ad valorem.

Sincerely,

John Durant, Director

Commercial Rulings Division