Actuators Used in Vehicular Systems Don't Meet NAFTA 'Parts' Exception

Electro-mechanical actuators used in automotive applications don't meet the “parts” exception to the NAFTA tariff shift rule because the parts at issue are provided for is a separate subheading, CBP said in a recent ruling.

Having found the actuators are classifiable as electric motors of heading 8501, rather than as parts of motor vehicles of heading 8701, CBP also found that the NAFTA provision excepting goods with parts imported under subheadings that describe both the finished good and its parts does not apply. Parts of electric motors are classifiable in heading 8503.

The merchandise consists of several models of electro-mechanical actuators for use in automotive applications. The actuators create mechanical force to move a vehicle’s drivetrain and to move a vehicle’s seat. Both are similar in design, except that the four-wheel drive actuator also features a shift fork mechanism. The subassemblies comprising both actuators are assembled separately and combined into the finished housing in Mexico prior to importation into the U.S.

The actuators were entered at El Paso in March 2018 and liquidated in February 2019 under Harmonized Tariff Schedule subheading 8501.10.40 as “electric motors and generators.” The date of entry and liquidation meant that NAFTA, rather than the current USMCA, applied, though a similar provision on parts is found in the USMCA.

Protestant Stoneridge Electronics sought classification of the four-wheel drive (4WD) actuators under subheading 8708.50.89 as “Parts and accessories of the motor vehicles of headings 8701 to 8705: Drive-axles with differential, whether or not provided with other transmission components, and non-driving axles; parts thereof: Parts: For vehicles of heading 8703: Other.” -- or, alternatively, under headings 8479, 8536, 8541, and 8543. Stoneridge sought classification of the vehicle seat actuators under subheading 8708.29.50 as “Parts and accessories of the motor vehicles of headings 8701 to 8705: Other parts and accessories of bodies (including cabs): Other: Other” -- or, alternatively, under heading 9401.

As to the classification issue, CBP said that because "heading 85.01 provides for, in pertinent part, electric motors, and the EN clarifies that the heading includes motors equipped with additional components such as pulleys, gears or gear boxes, or flexible shafts for operating hand tools, the subject actuators are classified under heading 8501, HTSUS, by application of GRI 1." Classification under heading 9401 would also be incorrect because specific headings take precedence over provisions for parts and accessories. General EN to Chapter 94 also directs that parts of articles of the chapter are only classified there when not specifically covered elsewhere.

For the "parts" exception, CBP pointed to the Rules of Origin appendix to NAFTA, which lays out certain exceptions to the change in tariff classification requirement. Section 4(4)(b)(ii) said that with the exception of a good of Chapters 61 through 63, "a good originates in the territory of a NAFTA country where ... the heading for the good provides for both the good and its parts ... ."

CBP noted that an "identical" ruling was issued in 2001, which covered a power pack assembly imported from the U.S. into Mexico and the importer claimed NAFTA preferential tariff treatment. Both the power pack and its Chinese motor were classified in heading 8501 and the motor did not undergo the required change in tariff classification. The importer in that case had argued that the parts exception would apply, but CBP ruled that heading 8501 does not provide for both the good and its parts and that the exception did not apply.

In the current case, each actuator "is an electric motor equipped with additional components," CBP said. The motor converts electric energy into mechanical force, while its additional components merely complement that function. Both the actuator assembly and the Chinese motor are classified in heading 8501, which still only provides for the good and does not provide for both the good and its parts.