Classification of All Terrain Style Bicycles

HQ 082745 AS 826910 April 21, 1989 CLA2 CO:R:C:G 082745 AS CATEGORY: Classification TARIFF NO.: 732.18 732.24 Glad & Ferguson Attorneys at Law 625 Market Street Thirteenth Floor San Francisco, California 94105 Re: Classification of All Terrain Style Bicycles Gentlemen: Your letter of September 10, 1987, addressed to the Regional Commissioner of Customs at New York on behalf of your client Specialized Bicycle Components, Inc., requesting the tariff classification of all terrain style bicycles has been referred to Headquarters for a reply. FACTS: The specific models which are the subject of your request are the Street Stomper, Hard Rock, Rock Hopper and Stump Jumper. These bicycles have wheels which are over 25 inches in diameter when measured to the outer circumference of the tire mounted thereon, weigh less than 36 pounds complete without accessories and are valued over $16.66 2/3 each. They are equipped with tires having a crosssectional diameter which does not exceed 1.625 inches. ISSUE: The issue presented is whether the bicycles are not designed for use with tires having a crosssectional diameter exceeding 1.625 inches. If they are not so designed they are classifiable under item 732.18, Tariff Schedules of the United States (TSUS), with duty at the rate of 5.5 percent ad valorem. Otherwise they are classifiable under item 732.24 with duty at the rate of 11 percent ad valorem.   2  There is general agreement that if a bicycle is designed for true off road or cross country riding (referred to as ATB or mountain or offroad) it is most likely designed for use with 2.0 inch or larger tires which are crucial for offroad riding. Thus, even if a bicycle has for example, a 1.5 inch tire at time of importation, if a change of tire makes the bicycle suitable for offroad riding, it cannot be said to be designed for use with the narrow tire. It is, in fact, designed for use with the wide tire. On the other hand, if the bicycle is designed for street use, it can be said that it is not designed for use with the wide tire, even if it can accommodate the wide tire. LAW AND ANALYSIS: Our files contain a rather lengthy discussion of the history and evolution of bicycles and their tariff treatment. It is fairly evident that the true all terrain bicycle was designed to accommodate a certain class of riders who were interested in off road bicycle riding but who could not use the traditional "English" bicycle or the "10 speed" racer type bicycle. Specialized claims that the bicycles under consideration were designed in response to a rapidly changing market demand. More people wanted a bicycle which could be ridden comfortably on the street rather than strictly off road. Specialized asserts that they redesigned both the bicycle and the tire and rim combination to bridge the gap between off road and street uses. In redesigning the original off road model a new fork crown was designed and employed, the brake pivot was repositioned and the brakes adjusted to accommodate the new tire and rim combination, and a new spoke structure was designed and used on the new rim. Specialized further asserts that the optimum functioning of the bicycles, as designed, is dependent upon use of the 1.5 inch tire size. They were designed to have certain minimum dimensions between tire, frame, and brakes. Specialized specifically states that their research and development indicates that their clearance specifications are necessary for optimum safe performance in the ordinary use for which the bicycle was designed. The specifications are achieved with a 1.5 inch tire and rim combination. The use of a bigger tire and rim requires installation of a different fork to achieve the same dimensions and an adjustment of the brakes. Further, although a larger rear tire could in fact be mounted on the rear of a "Rockhopper", this same tire will not spin freely in the front fork when the required reflector bracket is used. Specialized claims that the redesigned bicycles with new tire and rim have been very successful in achieving stability in on/off road uses, optimum pedaling efficiency for smooth or   3  rough surfaces, good traction and a comfortable riding position for the rider. The new design results in a lighter bicycle with a sportier look. Against this background of assertions and claims it is argued that a new fork is required only if the specified clearances are to be maintained and if the user wants a 2.125 inch tire rather than a 1.75 inch tire. In other words, a 1.75 inch tire could be mounted on these bicycles. Despite Specialized's statements as to the reasons for the design of the bike, a conclusion is made that the real reason is to avoid the higher rate of duty. It is well established that merchandise is classified in its condition as imported as long as no deception is practiced. The Carrington Co. v. The United States, 61 CCPA 77, 496 F.2d 902, C.A.D. 1126 (1974). Where classification rests on the design of an article its condition as imported must be presumed to reflect its design. Only where evidence to the contrary is sufficient to overcome this presumption should the condition of an imported article be considered inconsistent with its design. As imported the bicycles all have tires measuring less than 1.625 inch. There are uncontradicted statements regarding the reasons for the design of the various models and there are no allegations of fraud although there are claims that the tire size is only to take advantage of the lower duty rate. We find these claims untenable. A 2.125 size tire cannot fit on these bicycles without major modification of the bicycle. We deem it unlikely that there is a significant number of purchasers of these bicycles who will change to a larger size tire. We do not contend that no one will make a change. However, a change to the 2.125 size cannot be made without modification of the bicycle. This shows that in their condition as imported the bicycles are not designed to take the 2.125 size tire. As for changing to a 1.75 inch tire, we cannot see any real purpose for doing so, as the small increase in size does not appear to afford any significant advantage. Although capable of taking a 1.75 inch tire, considering all the uncontradicted assertions of the importer, we find that the bicycles in their condition as imported were not designed to be used with a tire exceding 1.625 inches. We hold this position even if one of the aims of the bicycle designer was to avoid the higher duty rate because it is also well established that an importer has a right to fashion his merchandise to take advantage of the lower rate of duty.   4  Finally, in CIE 1784/58, copy enclosed, it was held that a bicycle which is regularly equipped with a tire measuring slightly over 1.625 was not a bicycle not designed for use with tires having a crosssectional diameter over 1.625 inches. In our opinion the reasoning of this decision is as applicable today as it was 30 years ago. If a bicycle is regularly equipped with a tire measuring under 1.625 inch it should be entitled to the low rate of duty absent any compelling evidence requiring otherwise. HOLDING: The Street Stomper, Hard Rock, Rock Hopper and Stump Jumper are not designed for use with tires having a crosssectional diameter exceeding 1.625 inches and are classifiable under item 732.18, TSUS. The Harmonized Tariff Schedule of the United States annotated (HTSUSA) replaced the TSUS on January 1, 1989. The HTSUSA provision applicable to these bicycles is 8712.00.2000 which provides for bicycles having both wheels exceeding 65 cm in diameter if weighing less than 16.3 kg complete without accessories and not designed for use with tires having a crosssectional diameter exceeding 4 cm. Sincerely, John Durant, Director Commercial Rulings Division Enclosure