Knocked-down backhoe excavators

HQ 086555 April 16, 1990 CLA-2 CO:R:C:G 086555 JMH CATEGORY: Classification TARIFF NO.: 8429.52.10 Mr. Martin W. Dooley President Multimodal International, Ltd. 2258 Landmeier Road Elk Grove Village, Illinois 60007 RE: Knocked-down backhoe excavators Dear Mr. Dooley: Your December 29, 1989, request for a classification ruling under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) for certain knocked-down backhoe excavators entered minus key components, on behalf of Kobelco Construction Machinery (U.S.A.), has been referred to this office for a reply. FACTS: The articles in question are backhoe excavators imported from Japan. The excavators are entered minus several key components. These components include the link-bucket, the arm, the boom, the counterweight, and the cab assembly. You state that you are considering importing two alternative forms of excavators. Alternative A consists of a backhoe excavator without the link-bucket, arm, and the boom. The percentage of total component value to total excavator value for these parts ranges from 5.58% to 6.91%, depending on the model excavator. Alternative B would import a backhoe excavator without the link-bucket, the arm, the boom, the counterweight, and the cab assembly. This alternative provides a range from 11.72% to 13.19% for percentage of total component value to the total excavator value, depending on the excavator model. ISSUE: Whether the backhoe excavators imported are complete excavators within the meaning of General Rule of Interpretation (GRI) 2(a), HTSUSA, so to be classified within heading 8431, HTSUSA. -2- LAW AND ANALYSIS: The classification of merchandise under the HTSUSA is governed by the GRI's. GRI 1, HTSUSA, states in part that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and...according to the following provisions..." The "following provisions" mentioned within GRI 1, includes GRI 2(a), HTSUSA, which states: Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. According to GRI 2(a), if an incomplete article has the essential character of the complete or finished article of a heading, it is classified as the complete or finished article. Little guidance is given for the determination of an article's essential character. The nature of the item, its bulk, quantity, or value may be looked to. However, such a determination varies between different types of merchandise. See Explanatory Note 3(b)(VIII), Harmonized Commodity Description and Coding Service (HCDCS), Vol. 1, p. 4. The Explanatory Notes, although not dispositive, are to be examined for the proper interpretation of the HTSUSA. 54 Fed. Reg. 35127, 35128 (August 23, 1989). For machinery, the nature of the item is generally determinative. For an item to have the essential character of a machine, it must be recognizable as such a machine. In this instance, an incomplete or unfinished backhoe excavator would be classified as an excavator, if it has the essential character of an excavator. The incomplete or unfinished excavator must be easily recognizable as an excavator. Although a part may be clearly recognizable as a component of a specific machine, the part's presence does not guarantee essential character nor does its absence guarantee the lack of essential character. If certain components are absent upon importation, but the remainder has the essential character of an excavator, then the portion of the machine which is present should be classified as an excavator. It is the propelling base of an excavator which imparts the essential character of an excavator. Alternative A, the backhoe minus the link-bucket, arm, and the boom, has the essential -2- character of a excavator. Alternative B, the backhoe without the link-bucket, the arm, the boom, the counterweight, and the cab assembly also has the essential character of an excavator. In both situations the propelling base is substantial enough so that it has the essential character of a incomplete or unfinished excavator within the meaning of GRI 2(a). An incomplete or unfinished article, with the essential character of a complete or finished article, is to be classified as the complete or finished article. Therefore, the two alternative backhoe excavators are properly classified within subheading 8429.52.10, HTSUSA, as "Self-propelled bulldozers, angledozers, graders, levelers, scrapers, mechanical shovel, excavators... Mechanical shovels, excavators and shovel loaders...Backhoes, shovels, clamshells and draglines..." HOLDING: A backhoe excavator imported without a link-bucket, arm, and boom, or a backhoe excavator imported without a link-bucket, arm, boom, counterweight and cab assembly are incomplete and unfinished backhoe excavators within the meaning of GRI 2(a), HTSUSA. They are to be classified as a backhoe excavator, since they have the essential character of a backhoe excavator. The proper classification is within subheading 8429.52.10, HTSUSA, as "Self-propelled bulldozers, angledozers, graders, levelers, scrapers, mechanical shovel, excavators... Mechanical shovels, excavators and shovel loaders...Backhoes, shovels, clamshells and draglines..." Sincerely, John Durant, Director Commercial Rulings Division