Tariff classification of a fixed joint drive shaft for use in the Oshkosh MTVR Cargo Vehicle; Protest Number 1401-07-100034

HQ H018497 May 30, 2008 CLA-2 OT:RR:CTF:TCM H018497 GC CATEGORY: Classification TARIFF NO.: 8708.99.6790 U.S. Customs and Border Protection Norfolk Service Port 101 East Main Street Norfolk, Virginia 23510 Attn: Port Director RE: Tariff classification of a fixed joint drive shaft for use in the Oshkosh MTVR Cargo Vehicle; Protest Number 1401-07-100034 Dear Port Director: The following is our decision regarding Protest and Application for Further Review (AFR) number 1401-07-100034, dated October 2, 2007. The protest, filed on behalf of GKN Driveline North America, Inc. (GKN), pertains to Customs and Border Protection’s (CBP) classification and subsequent liquidation of an entry of an inboard fixed joint drive shaft for use in different models of the Oshkosh Medium Tactical Vehicle Replacement (MTVR) Standard Cargo Truck and the MTVR Extended Cargo Truck, used by the military. Specifically, this protest covers the entry which occurred on March 8, 2006 and was liquidated on January 19, 2007. FACTS: The item at issue is an inboard fixed joint drive shaft (drive shaft) for a motor vehicle. The metal part attaches a vehicle’s differential gearbox to a drive-axle or drivetrain, thus becoming part of the vehicle’s power train (the parts which, collectively, transmit power from the vehicle’s engine to its wheels). The drive shaft will be used in several different models of MTVR vehicles manufactured by Oshkosh – the MK23 and MK 25 MTVR Standard Cargo Truck and the MK27 and MK 28 MTVR Extended Cargo Truck. Generally speaking, the MTVR vehicles are six-wheel drive all-terrain vehicles used by the military. All of the MTVR models feature a winch, used for “self-recovery”, as well as the possibility of attaching a crane used for lifting and towing other vehicles. The MTVR vehicles are capable carrying cargo weighing up to 15 tons on the road and cargo weighing up to 7 tons off-road. Some of the different payloads for the MTVR vehicles include tanks, helicopters, fuel and water assets, troops, and a variety of other equipment used by the military. The subject drive shafts have previously been classified under heading 8708, HTSUS, as parts of a motor vehicle of headings 8701 to 8705, and more specifically under subheading 8708.99.6790, HTSUSA, as other parts of drive trains. In its protest, GKN disagrees with CBP’s classification determination at the subheading level, and asserts that the subject drive shafts are more specifically described by subheading 8709.99.4000, HTSUSA, which provides for, in pertinent part, other parts of tractors. ISSUE: Are the subject drive shafts, which are used as parts of the MTVR Cargo Trucks, parts of tractors, or parts of other vehicles? LAW AND ANALYSIS: Initially we note that the matter is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification and the rate and amount of duties chargeable. The protest was timely filed on February 6, 2007, within 180 days of liquidation on January 19, 2007, pursuant to 19 U.S.C. §1514(c)(3). Further review of Protest 1401-07-100034 was properly accorded to protestant pursuant to 19 C.F.R. §174.24. In accordance with Section 174.24(b), the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts. Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. Because the dispute in this case is between HTSUS subheadings, GRI 6 is applicable. It states that for legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, by appropriate substitution of terms, to Rules 1 through 5, on the understanding that only subheadings at the same level are comparable. The HTSUS provisions under consideration in this case are as follows: 8708 Parts and accessories of the motor vehicles of headings 8701 to 8705: * * * Other parts and accessories: * * * 8708.99 Other: * * * Parts of other tractors (except road tractors): * * * 8708.99.4000 Other parts for power trains… * * * Other: * * * Other: 8708.99.67 Other parts for power trains, * * * 8708.99.6790 Other… In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The ENs, though not dispositive or legally binding, may provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. CBP believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). Section XVI, Note 1(l), HTSUS, excludes from that section articles of Section XVII. Section XVII, Note 2(e), HTSUS, in relevant part, excludes from the expressions “parts” and “parts and accessories” articles of heading 8483, provided they constitute integral parts of engines or motors. As there is no indication that the subject drive shaft is within the Note 2(e) exclusion, it is provided for in the most appropriate subheading of heading 8708, HTSUS. Additional U.S. Rule 1(a), states, in relevant part, that a classification controlled by use is determined by the use in the United States at, or immediately prior to, the date of exportation of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use. In addition, EN 87.08 states that that to be eligible under heading 8708, HTSUS, a part or accessory must be identifiable as being suitable for use solely or principally with the vehicles of headings 8701 to 8705. Principal use, in this context, is that use which exceeds any other single use of the good. See Headquarters Ruling Letter (HQ) 954370, dated September 1, 1993, and HQ 954256, dated September 29, 1994. Consequently, to determine the principal use of the subject drive shaft, a discussion of the MTVR vehicle, and its status as a truck of heading 8704 or tractor of heading 8701, is necessary. In support of its claim that the drive shaft is principally used as a part of a tractor, protestant asserts that the Oshkosh MTVR Cargo Vehicle is constructed essentially for “hauling or pushing anther vehicle, appliance, or load,” thus making the vehicle classifiable as a “tractor.” Protestant submitted specification and product information for the various models of MTVR Cargo Vehicles that utilize the subject drive shaft. Chapter 87, Note 2, HTSUS, defines “tractors” as vehicles “constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not they contain subsidiary provision for the transport, in connection with the main use of the tractor, of tools, seeds, fertilizers or other goods.” Based on the 4-digit heading text and corresponding ENs, CBP has traditionally classified a vehicle based on its design features which establish whether it is constructed primarily to withstand the vertical stresses associated with transporting goods or rear-mounted machines and their loads, or the horizontal or tractive stresses associated with hauling or pushing another vehicle, appliance or load. See HQ 963263, dated May 20, 2000. In addition to the Note 2 definition of “tractor”, EN 87.01 states that tractors of heading 8701 “may contain subsidiary provision for the transport, in connection with the main use of the tractor, of tools, seeds, fertilisers and other goods, or provision for fitting with working tools as a subsidiary function.” The fact that additional functions (i.e. transport) must be subsidiary to the primary construction of hauling or pushing is consistent with the Note 2 definition of “tractors.” In similar manner, EN 87.01 notes that the heading covers “tractors fitted with winches (e.g. as used for hauling out bogged-down vehicles; for up-rooting and hauling trees…” From the submitted product information, the MTVR models are equipped with winches for “self recovery”. The winch may also be used in situations to move another vehicle or load that is stuck. The MTVR models are also capable of being used with a crane or lifting device as part of the payload area in the same manner as a tow truck. Assuming arguendo that these two features, alone, would indicate that a vehicle is constructed essentially for hauling or pushing, it is apparent that they are not indicative of the essential construction of the MTVR models. The product information highlights the ability of the MTVR vehicles to transport a payload over all types of terrain, rather than its ability for hauling or pushing, as defined in Note 2. Thus, because the MTVR models incorporating the subject drive shaft do not fit the Note 2 definition of “tractors”, they are not classifiable in heading 8701, HTSUS. On the other hand, the MTVR vehicles do fit within the scope of heading 8704, HTSUS, which covers “[m]otor vehicles for the transport of goods”. The vehicles’ attributes are more consistent with trucks than tractors. For instance, the MTVR models using the subject drive shaft feature cabs, cargo beds, bulk cargo tie downs and can support and transport vehicles as large as helicopters. It is clear from these features that the vehicles are designed primarily to transport goods and equipment, making them classifiable in heading 8704, HTSUS, as trucks. EN 87.04 supports this conclusion. It notes, in pertinent part, that the following features, which the MTVR vehicles possess, are indicative of the design characteristics generally applicable to the vehicles covered by the heading: (b) Presence of a separate cabin for the driver and passengers and a separate open platform with side panels and a drop-down tailgate (pick-up vehicles); * * * (d) Presence of a permanent panel or barrier between the area for the driver and front passengers and the rear area; (e) Absence of comfort features and interior finish and fittings in the cargo bed area which are associated with the passenger areas of vehicles (e.g., floor carpeting, ventilation, interior lighting, ashtrays). In addition to possessing these features, the vast majority of information from Oshkosh (www.oshkoshtrucks.com) refers to the vehicles as military trucks, stating the vehicles capability of transporting cargo on and off road, and marketing the MTVR’s ability to transport “forces and supplies into placed no ordinary military truck could ever go.” Furthemore, EN 87.04 states that the heading also covers, “(3) Self-loading vehicles equipped with winches, elevating devices, etc., but designed essentially for transport purposes” (emphasis in original). It is evident from the information about the MTVR vehicles that they are not tractors with subsidiary transport functions, but rather they are indeed vehicles for the transport of goods classifiable under heading 8704, HTSUS. Accordingly, this office finds that the MTVR vehicles are classifiable in heading 8704, HTSUS. Consequently, the subject drive shafts are not parts of tractors, and are properly classified as other parts of power trains. HOLDING: By application of GRI 6 and GRI 1, the subject inboard fixed joint drive shaft is classifiable under heading 8708, HTSUS, and is specifically provided for in subheading 8708.99.6790, HTSUSA (2006), which provides for: “Parts and accessories of the motor vehicles of headings 8701 to 8705: Other parts and accessories: Other: Other: Other: Other parts of power trains, Other.” The column one, general rate of duty at the time of entry was 2.5 percent ad valorem. The protest should be DENIED. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division