Ford Motor Co. v. United States

United States Court of International Trade · Corporations

CorporationsCustoms classificationTariff engineeringHTSUS 8703HTSUS 8704Marubeni testcondition as importedlegitimate tariff engineering

Facts

Ford imported MY2012 Transit Connect 6/7 vehicles from Turkey with a second-row rear seat installed, declared them as passenger vehicles under HTSUS 8703.23.00, and after customs clearance but before the vehicles left the port, removed the second-row seat and made other changes before delivering them as two-seat cargo vans. Customs classified the entry instead under HTSUS 8704.31.00, reasoning that the rear seat was an improper artifice disguising the vehicles' true nature as cargo vans. As imported, the vehicles had passenger-oriented features including rear seats, seat belts, rear windows, sliding side doors with windows, no partition between front and rear, child locks, dome lighting, carpeted rear footwells, and seat anchors. The rear seat at issue was a cost-reduced but functional seat that still had seatbelts, foam contours for passenger support, and LATCH child-seat capability.

Issue

Whether the MY2012 Transit Connect 6/7 vehicles, in their condition as imported, were properly classified under HTSUS heading 8703 as motor vehicles principally designed for the transport of persons or under heading 8704 as motor vehicles for the transport of goods. More specifically, the question was whether Ford's installation of a cost-reduced rear seat that was removed after importation should be disregarded as disguise or artifice.

Rule

Customs classification is based on the imported article in the condition in which it is imported. For distinguishing heading 8703 from heading 8704, a vehicle is classifiable under heading 8703 if, as imported, its intended purpose of transporting persons outweighs its intended purpose of transporting goods, and that determination is made by examining both the vehicle's structural and auxiliary design features. A manufacturer's intent to minimize duties and post-importation processing do not control, absent a true disguise or artifice that merely makes the article appear to be something it is not.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakeview Auto Works imports compact vans through Savannah, Georgia. At entry, each van has a second-row bench with seat belts, rear side windows, sliding side doors with windows, child locks, interior dome lights, and no partition behind the front seats. Two days after release, while the vans remain in the port area, Lakeview removes the bench and installs a flat cargo floor before delivery to customers.

How should a court most likely classify the vans under the governing doctrine?

Explanation. Classification turns on the article in its condition as imported. For vehicles potentially falling under the passenger-vehicle heading, the court asks whether, as imported, the vehicle is designed more for transporting persons than goods by examining structural and auxiliary design features. A planned post-importation conversion, even at the port, does not control absent a true disguise or artifice. (Derived from Ford Motor Co. v. United States (n.d.).)