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NY 882788

February 24, 1993

CLA-2-87:S:N:N1:101 882788


TARIFF NO.: 8702.10.0000; 8702.90.0000

Mr. Joseph S. Kaplan
Ross & Hardies
Park Avenue Tower
65 East 55th Street
New York, NY 10022-3219

RE: The tariff classification of trolley bus shells from Canada.

Dear Mr. Kaplan:

In your letter dated February 8, 1993, on behalf of New Flyer of America (N.D.) Inc. (NFND) of Grand Forks, N.D., you requested a tariff classific- ation ruling. The merchandise in question is trolley bus shells which NFND imports from New Flyer Industries, Manitoba, Canada. The vehicle is designed for the transportation of ten or more persons. You have enclosed several photographs illustrating visually the condition of the trolley bus shells at the time of importation.

NFND imports five models of bus shells: forty-foot diesel, forty-foot diesel low floor, forty-foot trolley bus, sixty-foot diesel, and a sixty- foot trolley bus. In their imported condition the shells are indicated to have the appearance of buses, roll on their own wheels, have installed windows, and are finish painted on their exterior surfaces. The trolley bus shells (which are representative of all five shell models), have the following components permanently installed prior to importation:
front suspension rear suspension wheels power steering brake, air and levelling system public address system exterior lamps passenger signals electrical system paint and decals safety equipment driver's controls base structure and body flooring windows door system

Not present in the shells at the time of importation are:
propulsion system traction equipment seats and stanchions bumpers cooling system fuel system interior lighting electrical system destination signs heating and air conditioning system chair lift customer options auxiliary power supply

The diesel shells will be equipped with engine, transmission and starter systems rather than propulsion systems and traction equipment.

You state that the shell represents about 49.5 percent of the cost of the completed bus. The remaining 50.5 percent is added in the final stage assembly by NFND. You also note the shells are substantial articles. As the component enumeration indicates, they incorporate the chassis (base structure, axles, suspension, wheels and rims), the body, and significant amounts of trim.

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

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. The issue in this case is whether trolley bus shells are more than mere bodies and in their condition as imported have the essential character of public transport vehicles.

The term "unfinished" was defined in American Import Co. v. U.S., 26 CCPA 72, 74, T.D. 49612 (1938), wherein the court stated:

/i/t has long been the generally accepted rule that a thing may be classified for tariff duty purposes under the eo nomine provision for the article unfinished if that thing has been so far processed towards its ultimate completed form as to be dedicated to the making of that article or class of articles alone.

It is our position that the trolley bus shells consisting of the vehicle body and engineless chassis is not classified under the provision for vehicle bodies, nor under the provision for parts and accessories of motor vehicles.

It is our further position the subject trolley bus shells impart the essential character of complete trolley bus coaches. The bus shells have been so far processed toward their ultimate completed form as to be dedicated to the making of trolley bus coaches. The imported articles have the appearance of a bus, and have no utility or function other than to be completed into buses.

The applicable subheading for the New Flyer trolley bus shells (that are designed for use with a diesel engine) will be 8702.10.0000, Harmonized Tariff Schedule of the United States (HTS), which provides for public-transport type passenger motor vehicles; with compression-ignition internal combustion piston engine (diesel or semi-diesel). The rate of duty will be 3.1 percent ad valorem.

The applicable subheading for the New Flyer trolley bus shells (not designed for use with a diesel engine) will be 8702.90.0000, HTS, which provides for public-transport type passenger motor vehicles: other. The rate of duty will be 3.1 percent ad valorem.

Goods classifiable under heading 8702, HTS, which have originated in the territory of Canada may be entitled to a free rate of duty under the United States-Canada Free Trade Agreement (FTA) upon compliance with all applicable regulations.

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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