HQ 087738: Internal Advice Request No. 2/88 concerning the classification of certain "All Terrain Bicycles"

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 087738

                         August 27, 1990

CLA-2 CO:R:C:G 087738 TLS

CATEGORY: Classification

TARIFF NO.: 732.24; 8712.00.30

District Director of Customs
U.S. Customs Service
103 South Gay Street
Baltimore, Maryland 21202

RE:  Internal Advice Request No. 2/88 concerning the
     classification of certain "All Terrain Bicycles"

Dear Sir:

     In a letter dated June 29, 1990, you were instructed to
withhold liquidation of certain entries for certain models of
Service Supply Corp. all terrain bicycles, pending a decision by
the Office of Regulations and Rulings on the classification of
these bicycles.  The decision follows.

FACTS:

     The Service Cycle models which are the subject of this
decision are the Alta, the Hilltopper and the Switchback.  These
bicycles have wheels which are over 25 inches in diameter when
measured to the outer circumference of the tire mounted thereon,
weigh less than 36 pounds complete without accessories and are
valued over $16.66 2/3 each.  They are imported equipped with
tires having a cross-sectional diameter which does not exceed
1.625 inches.

     All have frames that look like traditional ATB frames in
shape and size.  The importer states that these bikes have longer
wheelbases than "true ATBs" and steeper head and seat angles.
The importer also points out that these bicycles have softer
seats, handlebars with larger spans, plastic pedals instead of
metal, and braking systems designed for more gradual output
rather than the direct response of true ATBs.  The bicycles are
stated to be priced toward the lower end of the bicycle market to
specifically target those consumers who want ATB styling and
comfort but do not necessarily wish to ride their bicycles off-
road or on mountain trails.



ISSUE:

     The issue presented is whether the bicycles are "not
designed for use with tires having a cross-dimensional diameter
exceeding 1.625 inches" within the meaning of item 732.18, Tariff
Schedules of the United States.  If not, they are classifiable in
item 732.24, TSUS.

LAW AND ANALYSIS:

     In a letter dated April 21, 1989 (our file 082732), issued
in response to a request for Internal Advice, Customs concluded
that the bicycles were classifiable in item 732.18 TSUS.  That
conclusion was based in significant part on the assumption that a
bicycle designed for off road use is most likely designed for use
with tires larger than 2.0 inches, while a bicycle designed for
street use is not designed for use with a wide tire, even if it
can accommodate such a tire.  We then considered these bicycles
to be not designed for use with larger tires because they are not
marketed as "true all-terrain bicycles."  This was based on our
belief that only true all-terrain bicycles would be used with
larger tires.  Thus, the decision focused on whether the bicycles
were designed to be used off-road or on paved streets.  For the
reasons that follow, we find that whether a bicycle is designed
for street use is not the relevant inquiry in determining its
classification.

The Statutory Standard

     The courts have not had occasion to construe the phrase,
"not designed for use with tires with a cross-dimensional
diameter exceeding 1.625 inches."  The first source of
interpretation of the statute is, of course, the terms of the
language itself.  In examining this language, we find that the
term "not designed for use" is susceptible of different
interpretations.  For example, the phrase, could simply refer to
the subjective intent of the manufacturer in the design of the
bicycle.

     Alternatively, the language may be regarded as requiring an
objective inquiry of suitability for use with larger tires.
Under this test it would not matter whether there was intent to
use larger tires.  Rather the inquiry would be whether the
merchandise is capable of use with larger tires.  Because the
statute is subject to differing interpretations, it is
appropriate to examine its legislative history.  Al Tech
Specialty Steel Corp. v. United State, 10 CIT 743 (1986).

     As originally enacted, paragraph 371, Tariff Act of 1930,
provided simply for bicycles and applied a unitary rate of 30
percent ad valorem.  As the result of a bilateral trade agreement
with the United Kingdom, effective January 1, 1939, this
paragraph was subdivided into three subcategories on the basis of
wheel diameter (i.e., "over twenty-five inches" "over nineteen
but not over twenty-five inches", and "not over nineteen
inches").  Each category was subject to a specific rate of duty
provided that such rate was neither less than 15 percent nor more
than 30 percent ad valorem.

     In 1947, during negotiations concerning the General
Agreement on Tariff and Trade, initially conducted with the
United Kingdom, the record indicates that the U.S. agreed to a 50
percent tariff reduction for the following category:

     Bicycles with or without tires, having wheels over 25 inches
     in diameter (measured to the outer circumference of the
     tire), weighing less than 36 pounds complete without
     accessories and not designed for use with tires having a
     cross-sectional diameter exceeding 1-5/8 inches.

     The language applicable to the entries which are the subject
of this letter was adopted with the enactment of the Tariff
Schedules of the United States in 1963.  The TSUS created only
editorial changes in the formulation agreed to in GATT.  The
Tariff Classification Study issued by the Tariff Commission
provided the following explanation of the language:

     Items 732.14 through 732.18 cover bicycles having both
     wheels over 25 inches in diameter "if weighing less than 36
     pounds complete without accessories and not designed for use
     with tires having a cross-sectional diameter exceeding 1.625
     inches".  This description is intended to "carve out" for
     separate duty treatment so-called lightweight bicycles.

     Our examination of the legislative history provides two
noteworthy observations.  First, the intent of the language at
issue was to carve out or provide more advantageous tariff
treatment for a particular type of article, lightweight English
style bicycles.  This is evident from the combination of maximum
weight and maximum wheel diameter.  Secondly, to effectuate this
result, Congress employed an unusual negative formulation of "not
designed for use".   Congress could have articulated the
provision affirmatively, so that bicycles designed for use or
imported equipped with smaller tires would have received the
tariff benefit.  That they saddled the importer with proving a
negative indicates an intent to carve out a narrow category
within the provision for bicycles.

     The next question to be examined is the criteria to be used
in determining whether a bicycle has been shown to be not
designed for use with larger tires.  In the absence of decisions
construing the term "not designed for use" we seek guidance from
court decisions examining whether an article is specially
designed or specially constructed for a particular purpose.

     In Plus Computing Machines, Inc. v. United States, 44
C.C.P.A. 160, 167, C.A.D. 655 (1957), the issue before the court
was whether the importer's computing machine was specially
constructed for multiplying and dividing.  In fact, the machine
could be used to perform multiplication and division but operated
through addition and subtraction.  In concluding that the
machines were specially constructed for the statutory purpose,
the court stated:  "the statement that an article is specifically
constructed for a particular purpose means merely that it
includes particular features which adapt it for that purpose.
The purpose in question need not be the sole one served by the
article and may not even be the principal one."

     In Porter v. United States, 409 F. Supp. 757, C.D. 4641
(1976), the issue presented was whether motorcross gloves could
be considered "specially designed for use in sports" under TSUS
item 735.05.  The court, citing Sports Industries, Inc. v. United
States, 65 Cust. Ct. 470, C.D. 4125 (1970) stated "it is well
established that whether an article is 'specially designed' or
'specially constructed' for a particular purpose may be
determined by an examination of the article itself, its
capabilities, and its actual use or uses."  (emphasis added).
The court then concluded that the gloves had features which
satisfied the specially designed requirement.

     Under these cases, the inquiry is whether the article has
features which make it suitable for the statutory purpose.  In
applying the approach followed in these cases to the particular
negative language at issue here, and given the legislative
history cited above, we conclude that in order to qualify for
classification in item 732.18, the importer must demonstrate that
there are important design features in the bicycles that preclude
the use of tires exceeding 1.625 inches in diameter.  In this
regard, it is not enough to prove that a bicycle was designed
with smaller tires in mind.  Rather, the use of larger tires must
be inconsistent with the safe and proper operation of the
bicycle.

     Clearly such a showing requires more than the fact that as
presented for importation, the bicycle is equipped with smaller
tires.  As we observed in our earlier decision, this factor
cannot be dispositive of the classification issue.  To decide
otherwise would mean that identical models equipped with
different size tires would be classifiable in different tariff
provisions.  We do not believe that such a result is consistent
with the statutory test.

     In the instant case, the bicycles can easily accommodate
large tires.  Nothing about the bicycles' frames or components
would have to be altered or modified to accommodate the larger
tires.  It has been demonstrated that a rim measuring 26" by 1.5"
would easily accommodate a tire measuring 26" by 1.75" without
any modifications to the rim.  Moreover, a survey of
representatives at bicycle shops in the Washington D.C. area
disclosed that this is routinely done.  All representatives
stated that these bicycles can be used with such tires without
any changes to the bicycles themselves and are in fact used that
way regularly.  The testimony of expert users of the article is
deemed to be of "high probative value."  Porter, supra, at 761.
Thus, our examination of "the article, its capabilities, and its
actual uses", rather than precluding the use of larger tires,
indicates suitability with larger tires.

     In our original letter, we noted the importer's claim that
the manufacturer's warranty would be voided if the bicycle were
altered in any way inconsistent with its design.  Our inference
was that such an alteration would be necessary in order to
accommodate larger tires.  In addition, we noted that the
manufacturer proposed to issue a warning label stating that the
bike is designed for small tires and that changing tires would
risk safety and void the warranties.

     We no longer find this argument persuasive.  All of the
warranties submitted for review speak of "alterations" or
"modifications."   As we noted above, such alterations or
modifications are not necessary to change the tires.  Moreover,
our information indicates that the use of a larger tire would not
risk safety.  Accordingly, the limitations of the warranty are
not evidence that the design precludes the use of large tires.

     It has been suggested by the importer that despite the
suitability of using larger tires on this bicycle such use is a
fugitive use.  Firstly, this claim is contradicted by the survey
discussed above.  Secondly, based on our interpretation of the
statute, it need not be shown that the bicycles are principally
used with larger tires.  See Plus Computing Machines v. United
States, supra.  Rather, the relevant consideration is whether or
not the bike can be used in its proper manner with the larger
tires.

     The importer also argued that it is cost prohibitive for a
consumer to purchase the bicycle and immediately change to larger
tires.  Assuming this to be correct, it does not demonstrate that
use of larger tires with the bicycles is fugitive.  In any event,
there is no guarantee that worn or damaged tires would be
replaced with tires of the same size.  In fact, there is nothing
that would prevent the consumer from replacing the worn or
damaged tires with larger tires.

CONCLUSION:

     In view of their suitability for use with large tires, it
has not been demonstrated that the bicycles are not designed for
use with tires exceeding 1.625 inches.  Accordingly, they are
classifiable in item 732.24, TSUS, dutiable at the rate of 11
percent ad valorem.

     You are instructed to resume liquidations of entries of
these models in accordance with the terms of the foregoing
decision.


                              Sincerely,





                              Harvey B. Fox
                              Director
                              Office of Regulations and Rulings