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NY 853719

July 13, 1990



TARIFF NO.: 8607.99.1000

Mr. George C. Steuart
Miller & Steuart
400 International Square
1825 I Street, N.W.
Washington, D.C. 20006

RE: The tariff classification of carbody shells from Japan

Dear Steuart:

In your letter dated May 17, 1990, on behalf of Kawasaki Rail Car, Inc., Yonkers, NY, you requested a tariff classification ruling. Your client manufactures double decker passenger rail cars for use by the Massachusetts Bay Transportation Authority in the United States. The rail cars are manu- factured and assembled in the United States. However, parts and components will be sourced in Japan and the United States. It is your contention that the imported products are not classifiable in subheadings 8603, Harmonized Tariff Schedule of the United States (HTS), which is the provision for self-propelled railway coaches, or 8605, HTS, which is the provision for not self-propelled railway coaches. You believe the merchandise is classifiable in subheading 8607.99.10, Harmonized Tariff Schedule of the United States (HTS), which is the provision for parts of not self- propelled railway passenger coaches.

You state that there are two types of non self-propelled coaches that will be imported. Control Trailer Coaches (CTCs) which are equipped with cab and control equipment, and Blind Trailer Coaches (BTCs) which do not have any control equipment. The total contract price of each finished rail car delivered to the customer in the United States is $1,476,000 for each CTC and $1,341,600 for each BTC. Each of these amounts include $52,000 for truck parts to be shipped separately from the carshells. U.S. costs of manu-facturing combined with other U.S. costs not directly associated with manufacturing totals $958,400 for each CTC and $863,700 for each BTC.

The carbodies will be imported in shell form with stairways, insulation, some interior panels, windows and doors, wiring, piping and duct work as part of the shell. All other major components will be obtained separately and assembled in the United States at the point of manufacture. Specif- ically, the imported car bodies will not include electrical equipment, lighting fixtures, seats, HVAC, trucks, coupling equipment, braking equipment, interior finishings, floor coverings, baggage racks or control equipment. The total value of the imported components of the railway car is 37 percent or less of the total value of the finished rail car.

General Rule of Interpretation (GRI) 1, HTS, 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.

Is the imported merchandise classifiable as unfinished railway coaches, or as parts of railway rolling stock? In letter 084845 dated November 24, 1989, U.S. Customs Headquarters stated, "Determining an articles's essential character will depend, of course, on the merchandise.... 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." The subject carbody shells are imported without a number of significant components and lack the essential character of a completed railway passenger coach. In addition, the total value of the imported carbody shells is purported to be 37 percent or less of the value of the total value of the finished rail car. Therefore, the described carbody shells are not classifiable as unfinished railway coaches.

The applicable subheading for the imported car body shells will be 8607.99.1000, Harmonized Tariff Schedule of the United States (HTS), which provides for parts of not self-propelled railway passenger coaches. The rate of duty will be 5.5 percent ad valorem.

This ruling is being issued under the provisions of Section 177 of the Customs Regulations (19 C.F.R. 177).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is imported. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.


Jean F. Maguire
Area Director

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