BOR-4-07-RR:IT:EC 116391 IDL
Karen Quintana
NYK Logistics (Americas), Inc.
NVOCC and CHB Division
2417 E. Carson Street, Suite 200
Long Beach, CA 90810
Re: Instruments of International Traffic; Subheading 9803.00.50, HTSUSA; 19 U.S.C. § 1322; 19 CFR § 10.41a
Dear Ms. Quintana:
This is in response to your letter dated December 14, 2004, to the Director, National Commodity Specialist Division, U.S. Customs and Border Protection (CBP), concerning the importation of plastic pallets from Japan. Your letter was forwarded to this office for direct response. Our ruling on this matter is set forth below.
FACTS:
Plastic pallets, made in Japan, will be shipped from Japan to Oakland, California. The pallets, numbering approximately five thousand, will be used to load cases of bottled water for export to Japan, and then returned to the United States. Although the specific life of these pallets cannot be estimated, they will be used repeatedly for this purpose an indefinite number of times.
ISSUE:
Whether the plastic pallets described above may be designated as instruments of international traffic within the meaning of 19 U.S.C. § 1322 and 19 CFR § 10.41a, and therefore, are classifiable under subheading 9803.00.50, HTSUSA?
LAW AND ANALYSIS:
Title 19, United States Code, § 1322(a) (19 U.S.C. § 1322(a)), provides that "[v]ehicles and other instruments of international traffic, of any class specified by the Secretary… shall be excepted from the application of the customs laws to such extent and subject to such terms and conditions as may be prescribed in regulations or instructions of the Secretary…." The U.S. Customs and Border Protection (CBP) Regulations issued under the authority of § 322(a) are contained in section 10.41a (19 CFR § 10.41a). Section 10.41a(a)(1) specifically designates lift vans, cargo vans, shipping tanks, skids, pallets, caul boards, and cores for textile fabrics as instruments of international traffic. Once designated as instruments of international traffic, these items may be released without entry or the payment of duty, subject to the provisions of § 10.41a. To qualify as an "instrument of international traffic" within the meaning of 19 U.S.C. § 1322(a) and the regulations promulgated pursuant thereto (19 CFR § 10.41a et seq.), an article must be used as a container or holder. The article must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. (See subheading 9803.00.50, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), and former Headnote 6(b)(ii), Tariff Schedules of the United States (TSUS), as well as Headquarters Decisions 104766; 108084; 108658; 109665; and 109702). The concept of reuse contemplated above is for commercial shipping or transportation purposes, and not incidental or fugitive uses. Tariff Classification Study, Sixth Supplemental Report (May 23, 1963) at 99. See Holly Stores, Inc. v. United States, 697 F.2d 1387 (Federal Circuit, 1982). CBP rulings on this matter have held that single use is not sufficient; reuse means more than twice (Headquarter rulings 105567 and 108658).
We are of the opinion that the requisite criteria for designation of the subject pallets as instruments of international traffic discussed above would be met. In addition, CBP has previously ruled that certain articles of a similar use and construction as those pallets currently under consideration qualify as instruments of international traffic pursuant to 19 U.S.C. § 1322(a) and § 10.41a, CBP Regulations (see ruling letter 113531, dated August 31, 1995).
In addition, you inquired on duties, clearance procedures, documentation requirements, recordkeeping requirements, any special declarations, and serial numbers on the pallets for import/export tracking purposes. As mentioned above, the pallets are classifiable under 9803.00.50, HTSUS, duty-free. Your concerns with respect to documentation and clearance/serial numbers are addressed within the provisions of 19 CFR §§ 10.41a and 10.41b, respectively. Furthermore, CBP requirements pertaining to recordkeeping are set forth in Part 163 of our regulations (19 CFR Part 163).
HOLDING: The pallets described above are designated as instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and § 10.41a, CBP Regulations (19 CFR § 10.41a), and are therefore classifiable under subheading 9803.00.50, HTSUSA. Sincerely,
Glen E. Vereb
Chief
Entry Procedures and Carriers Branch