Excavating Tariff Classifications
A common error in tariff classification is to assume that some doodad used in or with a machine is necessarily classified as part of that machine. That is not always the case, which is why it is important to check the "relative" Chapter and Section Notes. For example, Section XVI, Note 2(a) states, that "Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings . . . ." That means, for example, that a valve of Heading 8481 will usually be classified as a valve without regard to the machine into which it is assembled. The heading for the valve prevails over, for example, 8431, which covers "Parts suitable for use solely or principally with the machinery of headings 8425 to 8430." The latter including goods of Heading 8429, meaning "Self-propelled bulldozers, angledozers, graders, levelers, scrapers, mechanical shovels, excavators, shovel loaders, tamping machines and road rollers," which is really the topic of this post.
In Norca Engineered Products, LLC v. United States, the Court of International Trade classified cast-iron counterweights for self-propelled mini excavators. There was no dispute that the mini excavators are machines of Heading 8429. Moreover, the weights, which are used on the excavators to prevent them from rolling over are classifiable as parts of the machines classifiable in Heading 843. That means the weights are classifiable in subheading 8431.49 as "other" parts of these machines and then in 8431.49.90 as "other parts."
Typically, that would resolve the case. Legally, tariff classification is complete at the 8-digit level. The additional two-digit statistical suffix is often (but not always) a compliance afterthought because the suffix does not usually impact duties, taxes, and fees. These, however, are not typical days in customs law as the Section 301 duties imposed on products from China continue to raise issues. Here, the statistical suffix controls whether the merchandise is within the scope of an exclusion from Section 301 duties.
If the counterweights are parts of "backhoes," they are classifiable in 8431.49.9044 and not excluded from Section 301 duties. If, as plaintiff contends, the counterweights are parts of "other machines" of 8429, they are excluded from Section 301. That means the resolution turns on the nature of the finished machines, which are Doosan Bobcat mini excavators.
|Source: Product Brochures - Bobcat Company
So, when is a backhoe a backhoe? According to the United States, a backhoe is a mechanical excavator that has a bucket and an arm the extends and excavates by drawing the bucket back toward the power unit. That seems to describe the product based on the picture. But Norca pointed to a number of commercial sources including John Deere, Caterpillar, and CASE Construction Equipment to show that the commercial understanding of backhoe is distinct from an excavator.
Normally, the Court interprets the HTSUS consistent with the common and commercial meaning and those are presumed to be the same. If one side argues that a more specific commercial meaning is intended to prevail over the common meaning, that party has to meet a higher burden. Norca tried to do that with evidence of the commercial understanding that backhoes do not have the ability to rotate through 360 degrees, which these machines can do.
The Court did not buy this argument because, according to the decision, the HTSUS provides for backhoes with 360-degree rotation. This follows because HTSUS subheading 8429.51 covers excavators of the front-loading type. Subheading 8429.52 covers non-front-loading excavators and segregates them into two distinct groups: those that can rotate 360 degrees and those that cannot. That group is then further broken down into backhoes, shovels, clamshells and draglines. Of those, the only possible classification is "backhoes," which means Norca's assertion that backhoes cannot rotate is incorrect.
Given that the machine in question is a backhoe, the counterweights are parts of backhoes of 8429, they are classified in 8431.49.9044, making them subject to the Section 301 duties.