Request for Reconsideration of NY G86560; Tariff Classification of "Log Forwarders"

HQ H007048 January 23, 2009 CLA-2 OT:RR:CTF:TCM H007048 GC CATEGORY: Classification TARIFF NO.: 8704.23.00 Robert E. Burke, Esq. Barnes, Richardson and Colburn 303 East Wacker Drive, Suite 1100 Chicago, Illinois 60601 RE: Request for Reconsideration of NY G86560; Tariff Classification of "Log Forwarders" Dear Mr. Burke: This letter is in response to your request on behalf of your client, Deere and Company (Deere), dated February 14, 2007, for reconsideration of New York Ruling Letter (NY) G86560, which was issued by Customs and Border Protection (CBP) on January 30, 2001. In preparation of this ruling, consideration was also given to the video that you submitted on January 12, 2009. FACTS: NY G86560 pertains to the tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS) of the 610, 810, 1010, 1110, 1410, and 1710 D Series Forwarders imported by Deere. Depending on the model, the D Series Forwarders incorporate four, six, or eight wheels. They consist of a front vehicle portion that contains a Deere diesel engine (ranging from 215 horsepower for the 1710 model to 115 horsepower for the 810 and 1010 models) and a driver's cab. Each model is equipped with a "telescopic loader", which you also refer to as a "boom" or a "crane". The cranes are equipped with a variable reach mechanism at the end of which grapples of various sizes can be attached. The grapples are used for loading felled timber into the wood bunk, which is located at the back of the Forwarder. You state that a Forwarder is principally used in forestry applications to gather, move, and load felled lumber into the wood bunk of the Forwarder, and then to haul the lumber from the timberline to the collecting area. At the collecting area, the Forwarder uses the crane to unload the lumber. When hauling lumber, you state that a Forwarder travels between 13.7 and 14.3 miles per hour. You also submit a compilation of data from different studies on the use of the subject vehicles, which concludes the following: the Log Forwarders spend 15 to 20 minutes at the timberline loading lumber from the ground into the wood bunk of the Forwarder; 10 to 15 minutes transporting the timber from the timberline to the collecting area; 10 minutes at the collecting area unloading the timber; and 10 minutes traveling back to the timberline to begin loading more timber. In NY G86560, CBP determined that the D-Series Log Forwarders were classifiable under subheading 8704.23.00, HTSUS, which provides for: "[m]otor vehicles for the transport of goods: Other, with compression-ignition internal combustion piston engine (diesel or semi-diesel): G.V.W. exceeding 20 metric tons...". You propose that the proper classification of the subject Log Forwarders is subheading 8705.90.00, HTSUS, which provides for: "[s]pecial purpose motor vehicles, other than those principally designed for the transport of persons or goods (for example, wreckers, mobile cranes, fire fighting vehicles, concrete mixers, road sweepers, spraying vehicles, mobile workshops, mobile radiological units): Other...". ISSUE: Whether Log Forwarders are principally used for the transportation of goods classifiable in heading 8704, HTSUS, or not so principally used and therefore classifiable in heading 8705, HTSUS? LAW AND ANALYSIS: 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. The HTSUS provisions under consideration are as follows: 8704 Motor vehicles for the transport of goods: Other, with compression-ignition internal combustion piston engine (diesel or semi-diesel): 8704.23.00 G.V.W. exceeding 20 metric tons... * * * 8705 Special purpose motor vehicles, other than those principally designed for the transport of persons or goods (for example, wreckers, mobile cranes, fire fighting vehicles, concrete mixers, road sweepers, spraying vehicles, mobile workshops, mobile radiological units): 8705.90.00 Other... By its terms, heading 8705, HTSUS, covers special purpose motor vehicles other than those principally designed to transport goods. Vehicles principally designed to transport goods are covered by the terms of heading 8704, HTSUS. Principal use provisions are governed by Additional U.S. Rule of Interpretation 1, which states, in pertinent part: In the absence of special language or context which otherwise requires - (a) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use... You argue that the Log Forwarders are principally used as stationary vehicles which load and unload timber by use of the crane. However, you appear to use an essential character analysis of GRI 3(b) instead of a principal use analysis.? Both headings at issue describe the instant merchandise, per GRI 1, as being a vehicle principally used for transportation of goods or not so principally used. Consequently, it is not necessary to apply GRI 3 in this case. While the log forwarders are equipped with a crane, they are also equipped with large bunks, as well as chassis and engines designed to repeatedly carry loads of substantial weight from the timberline to the loading area. You point out that the Log Forwarders operate at a low average speed in comparison to a conventional truck. Yet this is not an indication of a non-transport principal use. Rather, it is a consequence of the fact that the trucks are designed to transport logs over a difficult span of terrain, which requires torque and stability as opposed to speed. While the crane function is certainly significant to the operation of the subject Log Forwarders (either with respect to properly stacking felled timber at the timberline area or in the loading and unloading operation), the non-transport function of the crane is designed to facilitate the vehicles' transport capabilities. Accordingly, the subject Log Forwarders fit the terms of heading 8704, HTSUS, not heading 8705, HTSUS, because they belong to the class or kind of vehicles principally used for the transportation of goods. This result is consistent with the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) relevant to this case. In understanding the language of the HTSUS, the ENs may be utilized. The ENs, though not dispositive or legally binding, 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). EN 87.05 indicates that heading 8705, HTSUS, covers a range of motor vehicles specially constructed, adapted or equipped with various devices that enable them to perform certain non-transport functions. EN 87.05 further states that, "[t]he heading includes... (7) Crane lorries (trucks), not for the transportation of goods, consisting of a motor vehicle chassis on which a cab and a rotating crane are permanently mounted. However, lorries (trucks) with self-loading devices are excluded (heading 87.04)" (emphasis in original). EN 87.04 states that heading 8704, HTSUS, covers, "(3) Self-loading vehicles equipped with winches, elevating devices, etc., but designed essentially for transport purposes" (emphasis in original). Accordingly, if the device is designed essentially for the transport of goods, then it is specifically covered by the terms of heading 8704, HTSUS, in spite of subsidiary functions involving "winches, elevating devices, etc." The "non-transport" function of the subject Log Forwarders is subsidiary to its principal function of transporting felled timber. Indeed, CBP has consistently classified merchandise similar to the subject Log Forwarders in heading 8704, HTSUS, and not in heading 8705, HTSUS. For instance, in HQ 957397, we found that the design features of the forwarders subject to that case were indicative of a "rugged, off-road vehicle designed to transport logs over short distances in the forest to points where they can be collected". Furthermore, we found that the crane "merely facilitates the transportation function". Accordingly, the vehicles were found to be vehicles for the transport of goods covered by heading 8704, HTSUS, thus precluding heading 8705, HTSUS, from consideration. See also HQ 957397, HQ 959625, HQ 966463, dated August 4, 2003, NY A83723, dated June 14, 1996, and NY R03795, dated April 28, 2006. The same reasoning applies to the subject Log Forwarders. Their design features indicate that the principal function of the vehicles is to transport loads of felled timber over difficult terrain. They are therefore classified under heading 8704, HTSUS. Lastly, you cite to ASEA, Inc. v. United States, 7 C.I.T. 128, 587 F.Supp. 1072 (CIT 1984) (ASEA), to support the proposition that "where merchandise has a single primary function and an incidental, subordinate function, it is classifiable on the basis of the primary design". See Id, 587 F.Supp. at 1073, citing Tridon, Inc. v. United States, 4 C.I.T. 167 (CIT 1983). Due to the fact that ASEA was decided under the old Tariff Schedule of the United States, to which the current GRIs do not apply, and involved entirely different merchandise (shunt reactors), we find that its applicability to the present case is very limited. However, to the extent that the analysis of ASEA may be instructive here, we note that classification of the subject Log Forwarders in heading 8704, HTSUS, is consistent with the result in that case in light of the fact that the merchandise is principally used for the transportation of goods. HOLDING: By application GRI 1, the aforementioned D Series Forwarders are provided for in heading 8704, HTSUS. They are specifically classified in subheading 8704.23.00, HTSUS, which provides for: "[m]otor vehicles for the transport of goods: Other, with compression-ignition internal combustion piston engine (diesel or semi-diesel): G.V.W. exceeding 20 metric tons..." The column one, general rate of duty is 25 percent ad valorem. Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov. EFFECT ON OTHER RULINGS: NY G86560, dated January 30, 2001, is AFFIRMED. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division ? GRI 3 states, in pertinent part: When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: * * * (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retain sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. ?? ?? ?? ?? 2