BOR-4-07-OT:RR:BSTC:CCI H030677 JLB
Mr. Lars-Erik A. Hjelm
Akin Gump Strauss Hauer & Feld LLP
Robert S. Strauss Building
1333 New Hampshire Ave, N.W.
Washington, DC 20036-1564
RE: Instruments of International Traffic; Accessories; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a;
Dear Mr. Hjelm:
This is in response to your correspondence of June 11, 2008, on behalf of Archer Daniels Midland Company, in which you requested a ruling that intermodal cargo containers and enclosed freight trailers are “instruments of international traffic” pursuant to 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a and thermal blankets used for international shipments of temperature-sensitive products are “accessories” of “instruments of international traffic” pursuant to 19 C.F.R. § 10.41a(a)(3). Our ruling on your request follows.
FACTS
Archer Daniels Midland Company (“ADM”) is one of the largest processors of agricultural and food products in the world. The company serves as a link between farmers and consumers by processing crops to make food ingredients, animal feed ingredients, renewable fuels and naturally derived alternatives to industrial chemicals. To avoid spoilage, ADM uses thermal blankets designed and manufactured by Q Sales & Leasing L.L.C. (“Q Sales”) to provide a climate controlled environment during the transportation of the products from Canada into the United States.
The Q Sales thermal blankets are uniquely designed for use with intermodal cargo containers and enclosed freight trailers to protect merchandise stored within from fluctuations in temperature and humidity. Each thermal blanket is 36’ by 106” and consists of fiber insulation, a heavy-duty vinyl exterior, and Velcro straps for multi-layer insulation. ADM anticipates repeated and constant use of the blankets over their estimated four (4) year useful life given that they allow ADM the opportunity to use intermodal cargo containers and enclosed freight trailers, rather than refrigerated containers or trailers. ADM currently owns approximately one hundred and twelve (112) blankets that will be used in their international supply chain including the transportation of goods from Canada to the United States.
As for the packaging process, ADM will load pallets containing temperature-sensitive products into the intermodal cargo containers or enclosed freight trailers. Then the cargo will be covered with the thermal blankets either by covering an entire or partial load of freight in an enclosed trailer by a system of pull ropes and tape to attach the blankets to the container or trailer; or used in conjunction with the CQ Quilt Suspension Frame System, which uses a frame and winch system to cover and minimize the space in the trailer or container that needs to be thermally protected. Once the cargo is covered by the blankets, it will then be shipped by truck from Canada to an ADM or customer processing plant in the United States. Once the container or trailer is unloaded, the blankets will be returned directly to ADM at the point of origin in Canada.
ISSUES
Whether the intermodal cargo containers and the enclosed freight trailers described above qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a?
Whether the thermal blankets described above should be designated “accessories” of “instruments of international traffic” pursuant to 19 C.F.R. § 10.41a(a)(3)?
LAW AND ANALYSIS
Pursuant to 19 U.S.C. § 1322(a), “vehicles and other instruments of international traffic, of any class specified by the Secretary of [Homeland Security], 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…” Lift vans, cargo vans, shipping tanks, skids, pallets, caul boards, and cores for textile fabrics are explicitly classified as “instruments of international traffic.” 19 C.F.R. § 10.41a(a)(1). Additionally, the Commissioner of U.S. Customs and Border Protection (“CBP”) is authorized to designate other items besides those mentioned as “instruments of international traffic.” This includes “the normal accessories and equipment imported with any such instrument which is a container as defined in Article 1 of the Customs Convention on Containers.” 19 C.F.R. § 10.41a(a)(3). Once designated as such, the instruments may be released without entry or payment of duty.
To qualify as an “instrument of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a, 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 Headquarters Ruling Letter 109665, dated September 12, 1988; Headquarters Ruling Letter 109634, dated August 11, 1988; see also Headquarters Ruling Letter 113687, dated February 27, 1997. The concept of reuse contemplated above is for commercial shipping or transportation purposes, and not incidental or fugitive uses. See Tariff Classification Study, Sixth Supplemental Report (May 23, 1963) at 99; see also Holly Stores, Inc. v. United States, 697 F.2d 1387, 1388 (Federal Cir., 1982). Reuse has been held to mean using the containers more than twice. See Headquarters Ruling Letter 116032, dated October 30, 2003; Headquarters Ruling Letter 116391, dated February 16, 2005; Headquarters Ruling Letter 115754, dated August 19, 2002.
It is well settled that intermodal cargo containers and enclosed freight trailers qualify as “instruments of international traffic.” See, e.g., Headquarters Ruling Letter 113003, dated January 27, 1994 (intermodal cargo containers qualify as “instruments of international traffic”); Headquarters Ruling Letter 116684, dated August 17, 2006 (CBP specifically held that intermodal shipping containers are “instruments of international traffic”). Furthermore, the Harmonized Tariff Schedule of the United States (“HTSUS”) expressly states that both items qualify as such. It provides in pertinent part: “[i]nstruments of international traffic, such as containers, lift vans, rail cars and locomotives, truck cabs and trailers, etc. are exempt from formal entry procedures.” See U.S. Note 4 to Subchapter III, Chapter 98, HTSUS. Accordingly, these containers and trailers qualify as “instruments of international traffic” pursuant to 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a. The instruments may be released without entry or payment of duty.
With respect to the thermal blankets used to protect the products from fluctuations in temperature and humidity, you state that since these blankets are normal accessories imported with the intermodal cargo containers and enclosed freight trailers, they should be designated “accessories” of “instruments of international traffic” pursuant to 19 C.F.R. § 10.41a(a)(3).
In this regard we refer to 19 C.F.R. § 10.41a(a)(3) which provides:
“As used in this section, ‘instruments of international traffic’ includes the normal accessories and equipment imported with any such instrument which is a ‘container’ as defined in Article 1 of the Customs Convention on Containers.”
The Customs Convention on Containers defines the term “container” as an:
…..article of transport equipment (lift-van, movable tank or other similar structure):
(i) fully or partially enclosed to constitute a compartment intended for containing goods;
(ii) of a permanent character and accordingly strong enough to be suitable for repeated use;
(iii) specially designed to facilitate the carriage of goods, by one or more modes of transport, without intermediate reloading;
(iv) designed for ready handling, particularly when being transferred from one mode of transport to another;
(v) designed to be easy to fill and to empty; and
(vi) having an internal volume of one cubic metre or more;
the term “container” shall include the accessories and equipment of the container, appropriate for the type concerned, provided that such accessories and equipment are carried with the container. The term “container” shall not include vehicles, accessories or spare parts of vehicles, or packaging. Demountable bodies, are to be treated as containers;
Customs Convention on Containers, 1972, Ch. 1, Art. 1(c), et seq.
It is readily apparent that the intermodal cargo containers and enclosed freight trailers in question qualify as “containers” as defined in the Customs Convention on Containers. Both the cargo containers and the freight trailers are enclosed, of a permanent character, designed to facilitate the carriage of goods and ready handling of such goods, designed to be easily filled and emptied and have an internal volume of one cubic metre or more. In fact, CBP has previously held that intermodal cargo containers qualify as “containers” under the Convention. See Headquarters Ruling Letter 116684, dated August 17, 2006. As to the freight trailers, they constitute demountable bodies in that they are capable of being separated from the truck cabs that tow them, therefore, under the explicit terms of the Convention, they too are to be treated as “containers.” Consequently, the provisions of 19 C.F.R. § 10.41a(a)(3) are applicable in this case.
In determining whether the thermal blankets are “instruments of international traffic” pursuant to 19 C.F.R. § 10.41a(a)(3), the following factors must be met: the product must be substantial; suitable for and capable of
repeated use with containers that are “instruments of international traffic;” used in
significant numbers in international traffic; and “accessories” for such containers that qualify as “instruments of international traffic.” See, e.g., Headquarters Ruling Letter H004789, dated January 12, 2007; Headquarters Ruling Letter W116719, dated November 30, 2006; Headquarters Ruling Letter 116288, dated August 12, 2004.
Upon reviewing the request and the accompanying documentation, the thermal blankets appear to be substantial, suitable for and capable of repeated use with the cargo containers and freight trailers, and used in significant numbers in international traffic. They have a useful life of at least four years, consist of durable fiber padding, a heavy-duty vinyl exterior and are designed to provide insulation from excessive temperature variations during transport. ADM’s current inventory of one hundred and twelve (112) blankets, which will be used continuously throughout the supply chain, constitute a significant number in international traffic. We note CBP previously concluded thermal blankets fulfill all the abovementioned requirements necessary to be designated “instruments of international traffic” pursuant to 19 U.S.C. § 1322(a). See Headquarters Ruling Letter 115974, dated July 14, 2003 (hundreds of thermal blankets made of three-layer material (a reflective layer, fiber filler, and PVC outer layer), with a useful life of approximately three years qualify as “instruments of international traffic”). In that case, however, since the thermal blankets completely encased a pallet of shipping boxes containing vials so as to form a cube with the thermal blankets containing a top, bottom, and two sides, the blankets qualified as “instruments of international traffic” pursuant to 19 U.S.C. § 1322(a) as opposed to “accessories” to “instruments of international traffic” pursuant to 19 C.F.R. § 10.41a(a)(3).
In the present case, we find that the thermal blankets are the “normal accessories” of the intermodal cargo containers and the enclosed freight trailers as they are designed for and will be used in the subject containers. The Oxford English Dictionary defines an “accessory” as “a thing which can be added to something else to make it more useful, versatile, or attractive.” Compact Oxford English Dictionary, Oxford University Press, 2008. After an examination of previous CBP rulings, this definition is reinforced as acceleration-measuring devices, container security units, and tamper-resistant embedded controllers constitute “accessories” within the meaning of 19 C.F.R. § 10.41a(a)(3). See Headquarters Ruling Letter 116684, dated August 17, 2006 (tamper-resistant embedded controllers are “accessories” to intermodal cargo containers and qualify as “instruments of international traffic”); Headquarters Ruling Letter 116575, dated January 26, 2006 (shock/climate measuring devices designated “accessories” of “instruments of international traffic” for intermodal containers given that they were designed for and will be used with the containers). These examples of “accessories” demonstrate that the thermal blankets are “accessories” to the subject intermodal cargo containers and enclosed freight trailers since they make them “more useful, versatile, or attractive.” If the thermal blankets were not used in the subject containers and trailers, ADM would need to utilize refrigerated units to prevent spoilage, accordingly, the blankets serve to make both the containers and trailers more useful and versatile. Accordingly, as discussed above, the thermal blankets constitute “accessories” of “instruments of international traffic” and may be released without entry or payment of duty pursuant to 19 C.F.R. § 10.41a(a)(3).
HOLDINGS
The intermodal cargo containers and enclosed freight trailers described above qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a and may be released without entry or the payment of duty.
The thermal blankets described above are “accessories” of “instruments of international traffic” pursuant to 19 C.F.R. § 10.41a(a)(3).
Sincerely,
Glen E. Vereb, Chief
Cargo Security, Carriers and Immigration Branch