(S) Read our solution of how you classify a radiator for an automotive motor vehicle for customs purposes.
Imagine you have to import a radiator for an automotive motor vehicle, and you are asked to provide a tariff classification for this.
What would you do?
About the Product
Radiators are heat exchangers that are used to cool internal combustion engines, mostly in vehicles, but also in piston-engined aircraft, railway locomotives, motorbikes, stationary generating facilities, and other applications. We're talking about an automobile radiator here.
Internal combustion engines are frequently cooled by cycling engine coolant through the engine block, where it is heated, then through a radiator, where it loses heat to the environment, and finally back to the engine. Engine coolant is often water-based, although it can also be oil-based. A water pump is commonly used to push the engine coolant to circulate, as is an axial fan to drive air through the radiator.
The Solution
Ambiguity
In terms of GRI 1 and GIR 6 a radiator can be classified under tariff subheadings 8409.91 as part of a motor engine used within a motor vehicle, right?
Or is it found in Section XVII, 8708.91 as a part and accessory of the motor vehicle, specifically calling out radiators?
Which tariff subheading should be used?
GIR 1
This is where the GRI 1 comes in handy, since it states, amongst other things, that “classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes.”
Note 1 (g) states that Chapter 84, covering machinery and mechanical appliances, excludes radiators for the articles of Section XVII. These win over chapter 84, if the goods we look at are actually in this Section.
Now, Chapter 87 falls under Section XVII. Good. But is our radiator to be classified there in the first place?
Notes to Section XVII and Note 2 (e) require that parts and accessories of automotive motor vehicles constituting an integral part of an engine or motor is excluded from Section XVII.
So, if the radiator was an integral part of the engine or motor then it is not in Section 87 and, therefore, back in Chapter 84, potentially.
Staying with GRI 1, the key is found in the detail of the Chapter and Section Notes, that is, it boils down to how well we read these notes.
Consult a Dictionary: What means "integral"?
Section XVII has a provision that states the parts and accessories are excluded from, for example, Chapter 87 if these parts and accessories constitute or forms an integral part of an engine or motor. Sometimes when you classify goods in accordance with GRI1 and 6 there is a need to consult a dictionary of your choice.
The Merriam-Webster On-Line Dictionary gives, amongst other things, the following definition for the word "integral":
(1) essential to the completeness
(2) composed of integral parts
(3) lacking nothing essential.
The question then is whether the radiator should be considered an integral part of the motor vehicle engine? Can it be argued that automotive motor vehicle radiators are not directly mounted onto engines but are usually separate from the engine and connected to an engine through tubes - and as a result, it is not an integral part of the motor vehicle engine?
It depends....
In other words, if a radiator is part of an engine without using tubes, then Chapter 84 applies. Put another way, an automotive motor vehicle radiator is separate from the engine and this could be the very reason why the Tariff has a specific provision under Section XVII and Chapter 87 for automotive motor vehicle radiators.
Recommendation
Tariff classification is undoubtedly difficult, and it is recommended that a tariff library be created to retain a record of the procedure followed in applying the GRIs, including how and why a certain product is categorised under a specific tariff subheading.
Finally, if the Customs Authority determines that the choice was erroneous, the trader's tariff library records can be utilised to lessen possible fines and, more crucially, testify that the goal is always to apply and comply with the appropriate Customs regulations.
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