>> HOST: Good afternoon, I'm Chrissi with
office of trade relations. Today's
webinar is on the Classification Issues
with Engines, Drive-Axles & More!. This
webinar is part of the NCDs 2023 webinar
series. You will be on mute during the
presentation. Therefore we ask you
submit any questions you have in the
chat feature..
Now I would like to pass over to national
import specialist, Liana Alvarez.
>> LIANA ALVAREZ: Good afternoon,
everyone. And good morning to all the
friends in on the West Coast. Welcome
to the Classification Issues with Engines, Drive-Axles & More!
My name is Liana Alvarez, as Chrissi
said I'm the national import specialist
with the xhauddy division.
The commodities under my purview include
engines and motors in chapter 84 of the
schedule of the United States,
automotive parts, trailers and parts of
trailers on chapter 87. Aircraft parts
of chapter 88. Except drones. That's
Matt Sullivan.
And floating structures of chapter 89.
And because I handle such a variety of
articles within the HTUS, I receive
multiple requests to discuss different
topics not really related to one or
another. As a result, I decided to put
them all together in a very, oddly,
named webinar. So enjoy.
Here's our -- oops -- let's see. Our
mission statement. The CBP mission
statement. The office of trades mission
statement states that the office of
trade facilities legitimate trade,
enforces laws, and prex the economy
economy to ensure consumer safety and
create a level playing field for
American businesses.
This is just a little heads up that this
webinar is for general information
purposes only. And it's just intended
to provide some guidance. You may want
to wish to obtain a binding ruling or
may be seek guidance from a private
sector expert. Because relying solely
on general information in this webinar
may not be considered reasonable care.
Another disclaimer that the order of
visual media including images, video and
sound contained in this webinar is
either public domain or was obtained
through appropriate copyright licenses
and educational purposes only and no
endorsement by CBP.
And because many complicated factors can
be involved in customs issues, you may
want to obtain a binding ruling via the
website, via the link, that's on this
slide.
So, let's begin. We'll begin with the
topic of large vertical shaft engines.
I'm assuming that this topic was
requested because the of recent
antidumping case from large vertical
shaft engines from China.
I was I asked to identify features of
engines. I will try to do so in the
next few slides. But I will not be
discussing the actual dumping case
itself.
So this is under the purview of the
department of commerce. So if you are
interested in the antidumping case
itself, you can either e-mail me or I'll
find an appropriate point of contact for
you for the case itself.
So large vertical engines are basically,
these are gasoline engines. They are --
they have -- they're designed for and
used in riding lawn mowers and zero turn
radius lawn mower. And can be used in
other non-hand held outdoor commitment
such as brush mowers, grinders and
vertical start generators. They have to
say a minimum displacement of 225 cubic
centimeters, cc. And the maximum
displacement of 999 cc.
Here is the equipment that such engines
are used on. They're usually larger
equipment, and this is the riding and
zero turn radius lawn mowers.
On this slide you can see certain
features that the large vertical engines
may have and the location of some
components as you can see. I'm not
going to go in it. It really -- it's
self-explanatory.
And then we'll go into small vertical
shaft engines. Which is basically the
same as the large vertical shaft
engines. However, the displacement in
the small vertical shaft engines are
between 99 cc up to 225 cc.
And they are predominantly used for and
work behind lawn mowers and other
non-hand held outdoor equipment such as
pressure washers.
Now let's talk classification. Large
vertical shaft? Gens are engines that
generate gross power between 6.7
kilowatts to about 42 kilowatts.
Small vertical shaft engines are
typically engines that generate gross
power between 1.95 kill ought and 4.75
kilowatts.
So as a result the classification may
vary between sub heading and 7108090
depending on the gross power and the
equipment that it's used on.
Now, let's go into the next topic. Anyone
have any questions regarding engines?
[Pause for questions].
No? Okay. The next topic that was
requested was the classification of
drive axles with differential parts vs.
transaxle with differential parts. I
know it's a mouthful. But we'll go into
it deeper.
With the automotive industry constantly
evolving and it seems everyday there's a
new invention in this field, it's very
difficult to keep up and classify such
articles. As NIS for almost 9 years in
this field, it's always challenging.
However, drive-axles with differentialles
and transaxles have been around for some
time. And we will try to address each.
What is a differential? It is a set of
gears that transmits engine power to the
wheel allowing to turn to different
speeds on turns. If you have a solid
axle on the set of the wheels, it will
not turn basically.
That's the differential comes in. The
front wheel drive, the FWD, it's usually
along the transmission inside of housing
and the whole unit is called transaxle..
With rear wheel drive cars, RWD, the
differential is between the rear wheels
and connected to the transmission by a
drive-axles. Sorry, by a drive shaft --
sorry.
And all wheel drive, AWD, ask 4 wheel
drive vehicles at a center differential
or transfer case to distribute power
from the rear.
The drive-axles is a component that
extends from the differential into the
tire. Drive-axleses can be found in
both front or rear wheel cars and
necessary to operate both front and rear
axle.
As I mentioned earlier, the transaxle
performance both gear changing function
over transmission and the power
splitting ability of a differential and
non-integrated unit.
The operation of a transaxle is the same
of any transmission. The only
difference is instead of being connected
to a long drive shaft to the rear axles
the transmissions output shaft -- drives
the large gear that matches with the
differential gear. And the transmission
itself is in the transaxle housing
mounted parallel to the transmission.
There's what the transaxle looks like
with the differential. The interesting
part is the classification.
All right. So sub heading 870840
provides for transmission and parts
thereof. While sub heading 870850
Provides For Drive-axless with
differential non-driving axles and
parts. What is the classification of
drive-axleses with differential
transaxle and their respective parts?
In headquarters ruleling 954982, oh, look
at that, I don't have the date of this
ruling, but I will get it for you, if
you need the date.
CBP discussed the classification of
transaxles. It states in the ruling
that the unit has a three speed
synchromesh transmission and high
efficiency bevel differential gears
along with other components. This
component is directly coupled to an
engine. The transaxle precisely
delivers to the near wheels. In that
ruling CBP determined -- oh, thank you.
It's dated November 17th, 1993. Thanks,
Philip?
Yes. So and that ruling CBP determined
that the transaxle is correctly
classified in 870840 as a transmission
equipment or gear box.
Now let's go back to our HTS. So, what
do we do when we have to classify
individual component? When the question
was first submitted there was an
assumption that sub heading 70850
coverings axles typically found in rear
wheel drive lay outs. As the result the
dinchlgzs found in transaxles it found
as transmission equipment -- as part of
gear boxes and transmission.
I disagree, however. In headquarters
rulings, H963031 and H96322, both dated
March 3rd, 2000, CBP discussed
classifications within automatic
transmissions and they were classified
in sub heading 870893 which provides for
clutches 6789 rather than parts of
transmissions in 870840.
The ruling stated, both rulings stated
that automatic transmissions have
internal clumps to engage and disengage
the engines. And -- sorry,
automatically as the gears change.
Articles that engage and disengage the
engine automatically perform the
function of a clutch within the common
and commercial meaning of them.
For purposes of sub heading 70893 the
provision of clutches described the
commodity -- and it could be the
construed within the transaxle. A
transaxle as a whole is classified in
sub heading 870840 as transmission
equipment or gear boxes.
Individual components related to axles,
half shafts or difference part will be
classified in sub heading 870850.
You can also check a few rulings that
classify transaxle components that
related to differentials and parts of
the drive-axles. There are some rulings
-- that classified those components in
sub heading 870850. And the rulings are
N041 dated October 21st, 2008. N267122
dated August 7th, 2015. And N317521
dated March 5th, 2021.
Okay. All right. So next I would like
to discuss some recently issued
headquarters rulings that were either
result of for further review or
applications for further review.
Internal advice or reconsideration for
New York rulings. The authority that
oversees the decisions is titled in
CFR177.12.
Which talks about modification or
revocation of interpretive rulings for
review decisions and previous treatments
of substantial identical transactions.
The first ruling that I would like to
discuss is headquarters ruling 309484,
dated Nevada 192021. This was for
further review.
The merchandise is rider. It is
described as portable automobile safety
device designed to use by children ages
3-11-year-olds. The rider is further
described as being a car seat option
that fits in your pocket. And it has
the design of a vest or harness.
In other words it is designed to function
as a safety device to the effects of the
seatbelt of an automobile like a car
seat or harness.
Chelsea, you can hold on to your
question. We can answer all the
questions at the end of the
presentation, thank you.
So two possible sub headings were
discussed. Heading 6307 on that
provided for other need of articles and
heading 8708 as parts and accessories of
vehicles.
So headquarters stated this subject
safety vest or harness device is
designed for use solely and exclusivey
in automobiles for seatbelt systems for
children. In the heading -- informs
that seeblths and other similar articles
which are part for vehicles are provided
in this heading. What do you guys think
the final classification of this little
vest was?
All right. 8708. Anyone else wants to
jump in? No one else? Yup. 8708. As
headquarters indicated, the seatbelt
systems are described in the explanatory
notes to heading 8708 as being provided
for in this heading.
All right. So, the next ruling that I
would like to discuss is headquarters
ruling H317007. Dated February 13,
2023. And it was a result of a
reconsideration request of ruling
N312073 dated on June 8th, 2020.
And it was filed by Samo Travis and
Rosenburg. The classification of cast
iron cinder heads and blockcaseings.
The steps including manufacturing of
cast iron parts, cleaning and machine
needing to finish machinery. One of
those steps including a primer. A coat
of primer paint to prevent rest.
The possible classification sub headings
were presented. One of them is
84099910. Which is cast iron parts not
advanced beyond cleaning and machine
only for removal of fence
(Indiscernible) risers for location
machinery.
And the second one was 84099991 as parts
of -- other parts of diesel engines.
In ruling 312073 that was the subject of
this reconsideration request, the NIS,
me, [Chuckles] relied on ruling, on
headquarters ruling H2876670 -- among
other headquarters decisions.
Where CBP stated regarding castings that
CBP has consistently held that coating,
lacquering, and paintering processes not
incidental to nonfoundry work.
As a result, I classified this article in
sub heading 84099991 as other parts of
diesel engines.
However I didn't take into consideration
the rose machine and mill supply
incorporated vs. United States court
case. Or in short, rose machine.
In that case we held that painting cast
iron rollers for machines to protect
against oxidation did not advance them
beyond being cleaned for purposes of
classification under the tariff
schedule.
So, therefore, what do you think
happened? Did headquarters agree with
me? Or did they reclassify it in
84099910? Any takers on this one?
Anyone?
You think they agreed with me?
[Pause].
Okay. All right. All right. Perfect.
So, the headquarters did not agree with
me and they applied the rose machine
case to this issue and the ruling was
revoked, reflexing the classification of
84099910 as cast iron parts not advanced
cleaning and so forth.
Next case. We have two cases. We have
two headquarters rulings that are also
reconsideration requests. Of rulings
N264869, and N264870. They were both
dated June 21st, and this was reconciled
by Hyundai motor company.
Under review was -- and timing tensioner.
It's a mouthful. I do apologize for the
terminologies, but that's the way it
works with automotive parts. The
tensioner arm assembly is comprised of a
plastic shoe in base and attach to the
chain. And maintain it's constant and
regular orbit. One end of the item is
fixed on automobile engine with a bolt.
And the other end of the item transmits
pressure from the timing tensioner to
the chain and maintains its tension. Ive
it is attached to the chain directly and
prevents the chain from getting off the
frag. The base is fixed to the engine
and attached to the thymic tensioner.
The second item is the time in chain
tensioner is describes to time in chain
and consisting of steel housing, spring
ratchet, and a ring, and plunger. In
controlling the chain, it performs a
dampening function maintaining the
stability of the stretched chain during
operation.
Okay. It's not moving. All right.
Let's talk classification.
Um, two possible classification headings
were presented in this case. Um, is the
tension arm assembly and the timing
chain classified as part of engines or
parts of motor vehicles in heading 0708
as parts in vehicles? Who wants to take
a stab at this one? 8409. 8708. Okay.
Okay.
All right.
[Pause].
So, headquarters while we receive
multiple responses coming through, the
headquarters stated the tension arm
holds the timing chain in place and in
addition to enabling the timing chain
also prevents from it coming into direct
contact with the engine block or the
engine head. The base or tension or arm
assembly connects the shoe to the
engine. Without the tension arm
assembly, the timing chain cannot
function and the engine cannot properly
ignite the fuel mixture inside the
silllender, and time and chain to
prevent engine failure.
As a result, headquarters classified both
of these assemblies in sub heading 84991
as part of gas lean engines.
Our next topic, can a ruling be revoked
-- sorry, can a ruling be revoked
without headquarters specifically
indicating so? Does anyone know the
answer to that? I kind of have the
slide open [Chuckles]
So the answer is yes. Yes, they can. We
call it revoked by operation of law.
There are only a few instances when that
could happen and they're listed on the
slide. The first one is the certain
rulings or decisions, I should say,
certain decisions can be revoked by law
based on the court decision.
If there are changes in the legal notes
of the harmonized tariff schedule or
changes in the language of the tariff
chapter, heading, or sub heading.
All right. So the first -- and the
reason I chose the next few court cases
is because we discussed mostly parts of
whether it's parts of engines, parts of
certain equipment, or parts of the
vehicles.
So the next few cases that I will be
discussing are the decisions that had to
do with parts of articles. So one of
the oldest court cases that CBP kil
relies on is United States vs. will be
camera stores.
[Reading the slide].
So, the item under review was a tripod,
a wooden tripod for a camera. It was
1933, mind you.
To make their argument, that a tripod is
a part of a camera, these are the
arguments that were presented. The
tripods are essential to the cameras
because this camera must, while in use,
be supported and held in a given
position, either horizontal and vertical
and the tripods are such supports.
Tripods are so made that objects
supported by them may be elevated and
they are connected to cameras when in
use extend upwardly through the flat
circular heads through the tripods and
fit into sockets of the cameras.
And some of the arguments against it,
those tripods being parts of cameras,
are the cameras and tripods are rarely
sold together. Tripods are used for
other purposes. And the use of the
tripod is optional. They compared it to
a type writer desk. What do you think
the court decision was? It's a really
really old case. But we always that in
our rulings.
(Indiscernible) that's right. The court
decision was not a part.
Or may be part of the furniture? Maybe
[Chuckles]
All right. Our next case is also an
oldie, 1955. But it's not quite as old
as willow be. It's United States vs.
Antonio Pompeo. The article must be
solely dedicated for use with the
product it claimed to be apart of it.
And when in use that article cannot
function without the article at issue.
The item discussed was a super charger.
Here are some arguments to for it to be
a part. It's designed specifically for
use on automobiles and in specific
engines. Extensive alterations in the
engines were necessary to installed and
once installed the engine will not
operate if the tuber charger fails.
Some arguments against it, it's not an
intergrl part for which the article it
is to be joined could not function as
such article. Because the automobiles
could function as automobiles without
the imported super charges, those super
charges parts at the time of
importation.
The third argument is that the
automobiles are -- as manufactured --
did not have super charges. It would
operate perfectly without the super
charger being installed. What do you
think the court decision was?
All right I see different responses.
Mostly apart. Not a part. Okay. All
right.
The court was decision was it's apart.
As, I said, the article must be solely
dedicated for use with the product it is
claimed to be a part of. And when you
applied to that use the article cannot
function without the article at issue.
So, there's a couple of other cases.
I'm not going into depth, but these are
the cases we use. Not as old as the
first two. But we still rely on them to
determine whether an article is a part.
The first one is born technologist
limited vs. United States and where it
says imported item is not a part if it's
a separate and distinct commercial
entity. And the subject of this course
case was a canopy for a car seat.
And in this case, the canopy was
determined to be a part. Because it did
not have a separate and distinct
commercial entity.
The second case we use quite often in our
rulings and decisions is mitts bihe and
-- where the article is part of a part
then an a part of the whole. The
subject of this case was electronic --
sorry, electronic motor. That had its
internal valves and a little part of the
valve was determined to be a part of the
valve rather than a part of the whole
electronic motor.
Next. And let me go back. And so the
reason I brought up these cases is just
to show you that the rulings that
involved determining parts of articles
issued prior to these court cases, in
contrary to the court decisionerize now
revoked by operation of law.
So now we're going to change and sub
headings. As you maybe aware in 2021,
the international trade commission
implemented major changes in the
harmonized tariff schedule. For
example, prior to 2021, automotive wind
shields and windows which did not meet
the terms of heading 7007, I want to
reiterate that did not meet the terms of
heading 7007, glass articles were in sub
heading -- as other automotive body
parts.
After the changes took effect in 2021,
now those wind shields and windows are
provided for in sub heading 870822.
As front wind screens and so forth.
That's all rulings involving such
articles prior to 2021 or evoked by
operation of law.
And this is our last slide. I promise,
it's the last slide [Chuckles]
It's about a radiator of sections 17
prior to 2017, Section 17 note 2 E
stated that machines or apparatus of
headings 8401 to 84709, articles of
heading of these -- provided that
constute integral motors. Articles --
are excluded from Section 17.
As a result some temperature changing
equipment used with articles of Section
17 such as vehicles, air craft were in
heading 8419. However, after 2017, the
legal notes were changed to include
other than the radiators for the
articles of this section.
Which means that all rulings, prior to
2017, involving temperature changing
equipment with vehicles, for vehicles,
or other articles of Section 17 are
revoked by operation of law. And that's
it.
Now, does anyone have any questions?
[Pause for questions].
Sandra? Any questions?
>> SANDRA WALIA: No previous questions,
no.
>> LIANA ALVAREZ: Someone had a raised
hand? Do you want to top off a
question?
[Pause for questions]
>> HOST: There's a question in the chat
box. You said earlier an item cannot be
considered a part if it's a separate and
distinct identity. Can you expand what
makes that difference?
>> LIANA ALVAREZ: Distinct and commercial
entity. Let me go back. Hang on. Is
this an imported item is not a part if
it's a separate and distinct commercial
entity.
So, let me explain it, I guess, in
better terms. If an article is
described, it's described as a distinct
entity, then it would be classified as
that entity. For example, I always
bring that example with let's say,
automotive seats.
Automotive seats are not exclusively
excluded from Section 17. However,
seats are specifically provided for in
chapter 94.
As a result, we don't classify automotive
seats as parts of vehicles. They have
their own distinctive, commercial
entity. And if they are as such, we
don't classify them as parts.
So does that make sense?
[Pause].
Did somebody ask about the information
slide? Okay. I'm going backwards. I
have my contact information, hang on a
second. I'm getting there.
All right this is my contact information.
Again, just one note that I would like
to make, is if you have questions about
a particular product, I will not be able
to answer by e-mail or even a phone
call. You should probably seek binding
ruling for such article. I can always
discuss certain terminologies or
regulations that oversee certain
products. But we can't really discuss a
classification of a merchandise by
e-mail.
So, if you do have any questions
regarding particular articles, I would
strongly suggest filing for binding
ruling. Or seek -- seek advice from, um,
automotive and air space centers of
excellence and expertise if your
shipment is eminent.
>> There was a question. If you could
give an example of the last slide? I
believe that might have been 32?
>> LIANA ALVAREZ: Uh, okay. Um, are you
asking for an example -- for ruling on
radiators? Or temperature changing
apparatus? I'm not sure what example
are you looking for? Can you please
explain?
[Pause].
I don't have any particular rulings or
examples of rulings about certain engine
coolants. So basically, if you do have
an engine cooler, within the vehicle,
and previously it was classified in
heading 8419 as a temperature changing
apparatus, after this note was
implemented in 2017, we started
classifying such engine cooling
apparatus' in heading 8708. Does that
answer your question? I don't have any
examples. My only example would be
engine coolant.
>> I see one more question. Ruling
K83251 is not listed as being revoked --
this seems a similar product. But
remains under 8708.
>> LIANA ALVAREZ: I will have to
research. Can you send me that question
by e-mail. Yeah. Whoever asked that
question, you could send by e-mail and I
will review and we can reach out to
headquarters and see what happened
there.
>> That seems to be all the questions for
now. One more. Regarding the super
charger, wouldn't Section 1602 override?
And specific -- takes part of
provision?
>> LIANA ALVAREZ: Yes, that's right. I
think in this case, in the case -- what
was it, 1955? The super chargers at the
time were parts. And the point of the
court case wasn't really where we
classify super chargers. It's how we
determine whether an imported article is
a part or not.
That's the importance of this court case.
[Pause].
Again, so many things could have taken
place within the last 70 years that may
overtake this provision. Have overtaken
this provision -- sorry.
>> That's it for the questions.
>> LIANA ALVAREZ: Okay.
[Pause].
Thank you all.
>> HOST: This concludes our webinar for
the afternoon. This will be posted on
the CBP website. Thank you for joining
[End of webinar