BOR-4-07:OT:RR:BSTC:CCI H161055 WRB
Barbara Dawley, Esq.
Meeks, Sheppard, Leo & Pillsbury
1735 Post Road
Suite 4
Fairfield, CT 06824
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1); subheading 9803.00.50, Harmonized Tariff Schedule of the United States Annotated (2010); compressor crates with compressors, tarp crates, and tarps with chimneys to ship MRI permanent magnets.
Dear Ms. Dawley:
This letter is in response to your letter of March 30, 2011, in which you request a ruling on behalf of your client, Philips Electronics North America (hereinafter “Philips”) of Andover, Massachusetts. In your request, you inquire whether certain compressor crates with compressors, tarp crates, and tarps with chimneys to ship MRI permanent magnets, as described below, qualify for designation as instruments of international traffic under 19 U.S.C. § 1322(a) and 19 CFR § 10.41a, and, therefore, whether, they may be released without entry or the payment of duty under subheading 9803.50.00, HTSUS. Our ruling is set forth below.
FACTS:
The following facts are from your March 30, 2011, letter which includes pictures of the subject articles. The subject articles are compressor crates with compressors, tarp crates, and tarps with chimneys. The compressors are made in Japan. The compressor and tarp crates, and tarps with chimneys, are made in the Netherlands. These articles will be repeatedly used by Philips to ship and protect sensitive MRI permanent magnets from the U.S. to Europe, after which the compressor crates with compressors, tarp crates, and tarps with chimneys will be returned to the
U.S.
Each of these articles has an expected useful life of three years during which time it is anticipated that they will make seven round trips between the U. S. and Europe each year. There are fifteen sets of compressor crates with compressors, tarp crates, and tarps with chimneys that will transit between the U.S. and Europe each year. Each outbound journey from the U.S. to Europe consists of no more than two magnets, two compressors, and an empty tarp crate, in a standard ocean container, which is covered by the tarp with chimney. The compressors are necessary to maintain the magnets at a proper temperature during shipment and are attached to the magnets by gas lines. The tarps with chimneys are necessary to create air flow to vent the magnets while they are in the ocean container during transit. After the magnets are unpacked in Europe, the compressor crates with compressors are returned to the U.S. with a tarp crate containing the tarp for reuse in additional shipments of magnets to Europe.
The compressor crates are made of rigid plastic and are 120 centimeters in length, 100 centimeters in width, and 125 centimeters in height. The compressors inside the compressor crates are essential to maintain the magnets at a proper temperature during transit. The tarp crates are also made of plastic and are 120 centimeters in length, 100 centimeters in width, and 60 centimeters in height. The tarps with chimneys are 1240cm x 265 cm in size. Philips will track the outbound and inbound transit of the compressors, compressor crates, tarp crates, and tarps with chimneys, by their serial numbers.
ISSUE:
Whether the compressor crates with compressors, tarp crates, and tarps with chimneys to ship MRI permanent magnets as described above may be designated as instruments of international traffic (IIT) within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a(a)(1). LAW AND ANALYSIS:
Title 19, United States Code, section 1322(a) (19 U.S.C. § 1322(a)), provides, in pertinent part, that “[v]ehicles and other instruments of international traffic…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…” The CBP Regulations issued under the authority of § 1322(a) are contained in section 10.41 et seq. (19 CFR § 10.41a). To qualify as an IIT within the meaning of 19 U.S.C. § 1322(a) and the regulations promulgated pursuant thereto (19 CFR § 10.41 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 Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 9803.00.50; Tariff Schedule of the United States Headnote 6(b)(ii). See also CBP Rulings HQ 104766 and HQ 108084. 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; Holly Stores, Inc. v. United States, 697 F.2d 1387 (Fed. Cir. 1982). CBP has consistently held that single use is not sufficient; reuse means more than twice. See, e.g., CBP Rulings HQ 105567 and HQ 108658.
Subheading 9803.50.00, HTSUS (2010) provides, in pertinent part, for the duty free treatment of:
Substantial containers and holders, if products of the United States . . . , or if of foreign production and previously imported and duty (if any) thereon paid, or if of a class specified by the Secretary of the Treasury as instruments of international traffic, repair components for containers of foreign production which are instruments of international traffic, and accessories and equipment for such containers, whether the accessories and equipment are imported with a container to be reexported separately or with another container, or imported separately to be reexported with a container . . . (footnote and emphasis supplied).
Subchapter 98 of the HTSUS only applies to:
(a) Substantial containers or holders which are subject to tariff treatment as imported articles and are:
(i) Imported empty and not within the purview of a provision which specifically exempts them from duty; or
(ii) Imported containing or holding articles, and which are not of a kind normally sold therewith or are entered separately therefrom; and
(b) Certain repair components, accessories and equipment.
See U.S. Note 1, et seq., Chapter 98, HTSUS.
You assert that the subject articles are instruments of international traffic. Pursuant to 19 U.S.C. § 1322(a), instruments of international traffic shall be excepted from the application of the Customs laws to the extent that such terms and conditions are prescribed in regulations or instructions. The Customs and Border Protection (CBP) regulations, promulgated under the authority of 19 U.S.C. § 1322(a), provide in pertinent part:
Lift vans, cargo vans, shipping tanks, skids, pallets, caul boards, and cores for textile fabrics, arriving (whether loaded or empty) in use or to be used in the shipment of merchandise in international traffic are hereby designated as “instruments of international traffic” . . . The Commissioner of Customs[now CBP] is authorized to designate as instruments of international traffic, . . ., such additional articles or classes of articles as he shall find should be so designated. Such instruments may be released without entry or the payment of duty, subject to the provisions of this section. 19 C.F.R. § 10.41a(a)(1)(emphasis added).
To qualify for entry-free and duty-free treatment as instruments of international traffic under the aforementioned statutory and regulatory authority, the article must be a substantial container or holder. As stated above, CBP is authorized to designate as instruments of international traffic such additional articles not specifically noted in 19 C.F.R. § 10.41a(a)(1). Historically, CBP has held in its published decisions that in order 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(a)(1), a container or holder must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. See HQ H016491 (Oct. 1, 2007); HQ 114150 (Dec. 12, 1997); HQ 107545 (May 7, 1985); Treas. Dec. 71-159, Cust. B. & Dec. 296 (June 18, 1971); 99 Treas. Dec. 533, No. 56247 (Aug. 26, 1964).
It is noteworthy that none of the items discussed in your request actually serve as, or are used as, a container or holder for the permanent magnets. The permanent magnets are actually held or contained within the open-top ocean shipping container. Pursuant to 19 C.F.R. § 10.41a(a)(1), cargo vans are already designated as IIT. The items which are the subjects of your inquiry, the compressor crates with compressors, tarp crates, and tarps with chimneys, do not actually serve as holders or containers. Rather, these items are placed into or onto the open-top ocean shipping container to enable it to perform the function of carrying the permanent magnets. Accordingly, these items are best understood as accessories of the open-top ocean shipping container, rather than holders or containers themselves.
In previous determinations, CBP has ruled that certain articles of similar nature, use and construction as those presently under consideration qualify as accessories of instruments of international traffic within the meaning of 19 CFR § 10.41a(a)(2), as discussed below:
Regarding the tarps with chimneys, in CBP Ruling HQ H044815 (December 18, 2008) we ruled that aluminum boxes for the carriage of isotopes, which included an orange cover, were proper designated as IITs pursuant to 19 U.S.C. § 1322(a) and 19 CFR 10.41a(a)(1). Similarly, CBP Ruling HQ 116641 (June 15, 2006), we determined that plastic cassettes for the transport of hard disk drives, that used a polypropylene cover, qualify as instruments of international traffic within the meaning of 19 U.S.C. § 1322(a). Lastly, in Customs Service Ruling HQ 113389, (April 6, 1995) we determined that collapsible plastic boxes, which included a shallow square box cover, qualified for treatment as instruments of international traffic.
Regarding the compressor crates with compressors, in CBP Ruling HQ 116575 (January 26, 2006), we designated as IITs shock/climate measuring devices installed as accessories inside containers; and, in CBP Ruling HQ 116684 (August 17, 2006) and HQ 116288 (August 12, 2004), we designated as IITs security monitoring and tracking devices. Lastly, in CBP Ruling HQ H004789 (January 12, 2007), we determined that acceleration measuring devices placed inside containers for the transportation of paper rolls were properly considered as accessories for use with IIT containers.
Regarding the tarp crates, used to facilitate the return of the tarps with chimneys after delivery of the permanent magnets, in Customs Service Ruling HQ 114506 (October 29, 1998) certain plastic totes used to transport automotive parts were designated as IITs. Similarly, in Ruling Customs Service Ruling HQ 115108 (August 24, 2000) we designated certain collapsible shipping hampers, consisting of pallets and tops, plastic outer rings, plastic and cardboard pads, and form trays, assembled together to form shipping hampers to protect ceramic logs during transit, as instruments of international traffic.
We are of the opinion that the compressor crates, tarp crates, and associated tarps with chimneys, used together with a standard, open top ocean shipping container to transport MRI permanent magnets to Europe, meet the requirements of being substantial, and suitable for and capable of repeated use. The compressor crates are substantial, being made of rigid plastic, and are suitable for and capable of repeated use during seven roundtrips between the U.S. and Europe each year. Similarly, the tarp crates are made of heavy plastic and are suitable for and capable of repeated use during the same roundtrip shipments as the compressor crates. In addition, the subject compressor crates with compressors, the tarp crates, and the tarps with chimneys here will be used in seven roundtrips between the U.S. and Europe each year, meeting the “repeated use” requirement.
We are of the opinion that the tarps with chimneys are similar to the associated articles discussed in CBP Ruling HQ H044815 (December 18, 2008), orange covers for aluminum isotope boxes; CBP Ruling HQ 116641 (June 15, 2006), polypropylene covers for plastic hard disk drive transport cassettes; and, in Customs Service Ruling HQ 113389, (April 6, 1995), shallow square box covers for collapsible plastic boxes. Also, we are of the opinion that the compressors in the crates here are analogous to shock/climate measuring devices, security monitoring and tracking devices, and acceleration measuring devices, as noted above. The compressors are essential to maintaining the MRI permanent magnets at a proper temperature during transit. Lastly, the tarp crates are analogous to the plastic totes used to transport automotive parts in Customs Service Ruling HQ 114506 (October 29, 1998), and collapsible shipping hampers in Customs Service Ruling HQ 115108 (August 24, 2000). Based on all of the foregoing, we believe that the compressor crates with compressors, tarp crates, and tarps with chimneys meet the requirements for designation as accessories of instruments of international traffic within the meaning of 19 CFR § 10.41a(a)(2).
CONCLUSION
Upon reviewing your request in the present case, we are of the opinion, based on the information provided by Philips, that the requisite criteria for designation of the subject compressor crates with compressors, tarp crates, and tarps with chimneys as either accessories of, or instruments of international traffic have been met. The compressor crates with compressors, tarp crates, and tarps with chimneys, are used to facilitate the movement of permanent MRI magnets during transportation to the United States from Europe. After arrival in Europe, the compressor crates with compressors, tarp crates, and tarps with chimneys will be returned to the
U.S., and reused, approximately seven times per year, which demonstrates that they are capable of repeat use. They are also used in significant numbers in international traffic. Accordingly, the compressor crates with compressors, tarp crates, and tarps with chimneys meet the requisite criteria to qualify as IIT pursuant to 19 U.S.C. § 1322(a) and 19 CFR § 10.41a.
HOLDING:
The compressor crates with compressors used inside the open-top ocean containers described above may be entered duty-free as accessories of instruments of international traffic within the meaning of 19 CFR § 10.41a(a)(2).
The reusable tarps with chimneys used as covers for the open-top ocean containers described above may be entered duty-free as instruments of international traffic within the meaning of 19 CFR § 10.41a(a)(2).
The tarp crates used to return the tarps with chimneys described above may be entered duty-free as accessories of instruments of international traffic within the meaning of 19 CFR § 10.41a(a)(2).
Should you have any questions regarding this matter, please contact W. Richmond Beevers, of my staff, at (202) 325-0084.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Immigration Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection