HQ 087097: Protest and Request for Further Review 0901-9-701322; Toyota 4-Runner SRS, two-door model; motor vehicle for the transport of goods; trucks; multi-purpose vehicles; sport utility vehicles; dual purpose vehicles

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 087097

                          July 23, 1990

CLA-2 CO:R:C:G  087097 JMH

CATEGORY:  Classification

TARIFF NO.:   8704.31.00

District Director
U.S. Customs Director
111 West Huron St.
Buffalo, New York  14202

RE:  Protest and Request for Further Review 0901-9-701322; Toyota
     4-Runner SRS, two-door model; motor vehicle for the 
     transport of goods; trucks; multi-purpose vehicles; sport
     utility vehicles; dual purpose vehicles

Dear Sir:

     The following is our decision regarding the Protest and
Request for Further Review No. 0901-9-701322, dated September 1,
1989.  At issue is the classification under the Harmonized Tariff
Schedule of the United States Annotated ("HTSUSA") for the Toyota
4-Runner SR5.

FACTS:

     The article in question is one two-door Toyota 4-Runner SR5
motor vehicle imported by Superior Auto Sales, Inc. of Hamburg, 
New York.   The 4-Runner was ordered in late 1988, received by the
importer on December 31, 1988, and entered on January 5, 1989. 
Upon entry, the importer classified the 4-runner under heading
8703, HTSUSA, as "Motor cars and other motor vehicles principally
designed for the transport of persons..."  This classification
requires a rate of duty of 2.5 percent ad valorem.  The importer
relied upon this classification since the same vehicles were
classified under the corresponding heading in the Tariff Schedules
of the United States ("TSUS").  The TSUS was replaced by the HTSUSA
on January 1, 1989.  The importer received notice by letter on
January 25, 1989, that certain sport utility 
vehicles, including Toyota 4-Runners, were under further review 
and may be subject to reclassification.   The notice included a
warning regarding a possible further assessment of duties.

     The notification the importer received was based upon
Headquarters Ruling Letter 083081 ("HQ 083081"), originally dated
December 30, 1989.  HQ 083081 addressed the classification of
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sport utility vehicles under the HTSUSA.  The ruling addressed 
the Suzuki Samurai, but was also applicable to all other similar
multi-purpose vehicles.   HQ 083081 held that under the new HTSUSA
these vehicles would be considered motor vehicles not principally
designed for the transport of persons, and therefore, properly
classified under heading 8704, HTSUSA.  This classification
requires a rate of duty of 25 percent ad valorem.

     On January 4, 1989, Customs Headquarters sent a telex to all
field personnel to notify the field of HQ 083081.   This telex
ordered the liquidation of all relevant entries to be withheld
pending further instructions.  On January 13, 1989, a second 
telex was sent to field personnel from Customs Headquarters
informing the field that the classification of sport utility
vehicles was under review.   The field personnel were instructed
to allow entry under heading 8703, but to withhold liquidation. 
The field personnel were also instructed to notify importers of 
the vehicles of the situation, that the possibility existed that
an additional duty may be assessed and to suggest that they make
the necessary financial arrangements.  The effective date.of HQ
083081 was modified to be February 13,  1989.   This second telex,
resulted in the letter which was received by the importer on
January 25,  1989.  

     In May 5,  1989, a third telex was sent to the Customs field
personnel from Headquarters.   This telex relayed the final
position of Customs on the classification of sport utility 
vehicles under the new HTSUSA.   Two-door models of the vehicles
are to be classified in heading 8704 and four-door models are to
be classified in heading 8703.   This telex instructed the field
to liquidate all entries entered on or after January 1, 1989, in
accordance with the new principles.  Since the importer entered a
two-door model,  it was classified under subheading 8704.31.00,
HTSUSA, and assessed a 25 percent rate of duty.

     The importer contends that the reclassification constitutes
a change of practice by Customs.  A change of practice requires
notification of the change.   Since he had no notice of the change
in regulations prior to importation and entry of the vehicle, the
importer asserts that the change in classification is not 
applicable to him.  The importer also contends that the 
retroactive nature of the classification was improper.

ISSUE:

     Issue 1:  Whether the importer's lack of knowledge of the
change in classification exempts the Toyota 4-Runner in question
from the assessment of additional duty.
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     Issue 2:  Whether the determination after the entry in
question that certain vehicles are to be classified in heading 
8704 may be applied retroactively to the Toyota 4-Runner.

LAW AND ANALYSIS:

Notice

     When the U.S. Customs Service contemplates a change in its
practice or position that will result in the assessment of a 
higher rate of duty, Customs must give notice by publishing in 
the Federal Register that it is reviewing the practice or 
position.  Interested parties must be given an opportunity to
comment.  Customs Regulation 177.10(c), 19 C.F.R. 177.10(c).
Publication in the Federal Register is required as it is 
impossible to personally notify every potential importer.

     On June 1, 1988, Customs published a notice at 53 Fed. Reg.
19933 that stated Customs intent to review the classification 
under the TSUS of certain motor vehicles including sport utility
vehicles.   This review was caused by the blurring of the
distinction between motor vehicles used for the transport of
persons and motor vehicles used for the transport of goods.

     On August 23, 1988, Congress passed the Omnibus Trade and
Competitiveness Act, Pub. L. 100-418, codified at 19 U.S.C. 3004.
The Omnibus Trade and Competitiveness Act incorporates the HTSUSA
at section 1217.   Congress required implementation of the HTSUSA
on January 1, 1989.   There is no requirement upon Customs to
notify all potential importers of an act of law passed by 
Congress.

     After passage of the Omnibus Trade and Competitiveness Act
Customs published in the Federal Register notice that it was
withdrawing the June 1, 1988 notice due to the enactment of the 
new trade act and the new tariff.  53 Fed. Reg. 46474 (November 
17, 1988).  Since the TSUS would be implemented for only a few 
more months it was unnecessary to review classification of motor
vehicles under the TSUS.  This publication stated the following:

          The tariff nomenclature under the HTS is 
     different from the TSUS nomenclature and will be 
     interpreted according to all relevant rules of 
     interpretation, legal notes, and if necessary, any 
     relevant legislative history.

          Because Customs will be addressing the 
     classification of all motor vehicles under the HTS, 
     rather than the TSUS, after January 1, 1989, review of
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     the criteria Customs should use in the future in
     classifying certain motor vehicles under the provisions 
     of the TSUS is no longer necessary.

This publication acknowledges that after January 1, 1989, 
different classification rules will be implemented and that the
analyses utilized under the TSUS may not apply to those under 
the HTSUSA.

     The importers contention that the change in classification
that occurred was a change in practice or position requiring 
prior notice is without merit.  There could be no prior positions
or practices of Customs as of January 1, 1989, since the new 
tariff had yet to be implemented.  Thus, Customs was not required
to give notice.   Despite the lack of a notice requirement, the
November 17, 1988 publication constitutes notice to the public
that the rules of classification were changing.   Customs met and 
exceeded its procedural notice requirements. 

Retroactive Effect

     The classification and rates of duty applicable to an entry
are those in force at the time of entry.  Since the Toyota 4
Runner was entered on January 5, 1989, the classification and 
rate of duty under the HTSUSA were applicable.   Customs 
Regulation 152.17, 19 C.F.R. 152.17.  When merchandise is entered
Customs has a minimum of one year to liquidate the entry.
Customs Regulation 159.11(a), 19 C.F.R. 159.11(a).  The purpose of
this year is to enable Customs to assess the correctness of the
classification of the merchandise, its value, its quantity, etc.
If an entry has been liquidated or an entry has been made under a
binding ruling, then Customs may not alter the classification for
that entry.   See Customs Regulations part 159, 19 C.F.R. 159, and
Customs Regulation 177.9(d), 19 C.F.R. 177.9(d).

     The importer states that it took more than six months for 
its entry to be liquidated.  This is well within the required 
time limit.  The importer received notification twenty days after
entry that the classification of the vehicle was being evaluated 
and that an additional duty may be assessed.  That an additional
duty was ultimately assessed against the entry in question does 
not create an unawful retroactive action.  The entry had not 
been liquidated, nor had a binding ruling been issued to 
Superior Auto Sales concerning this Toyota 4-Runner.  Customs
followed its procedures as required by law.

HOLDING:

     Customs published a notice in the Federal Register of the
enactment of the Omnibus Trade and Competitiveness Act and the
provision for the new tariff nomenclature, the HTSUSA.  This

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notice was all that customs was required by law to dispense.
Customs is not required to distribute personal notices to all
importers.  The importer's contention that the lack of prior 
notice exempts him from the assessment of the additional duty is
without merit.

     Customs notified the importer by letter within twenty days 
of the entry of the evaluation of the classification of certain
motor vehicles and that an additional duty may be assessed. 
Customs has a minimum of one year to liquidate an entry.   Customs
may use this year to determine the appropriate classification,
value and origin of the merchandise.   Since the entry had not 
been liquidated and a binding ruling had not been issued to the
importer, the change in classification and the assessment of a
higher rate of duty did not violate the Customs regulations.

     The protest should be denied in full.  A copy of this
decision should be attached to the Form 19 Notice of Action for
the protest.   Enclosed please find the original Form 19.

                              Sincerely,

 
                              John Durant, Director 
                              Commercial Rulings Division


Enclosures