OT:RR:BSTC:CCR H236467 LLB
Ms. Amy B. Mays
Federal Express
3650 Hacks Cross Road
Building E 3rd Floor
Memphis, Tennessee 38135-8800
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1); 10.41a(a)(2) and (3); Monitoring Devices; Accessories; Subheading 9803.00.50 , Harmonized Tariff Schedule of the United States Annotated (2013); Article 1, Customs Convention on Containers (1972).
Dear Ms. Mays:
This is in response to your September 25, 2012, ruling request which was referred to this branch on December 12, 2012, and your March 10, 2013, April 10, 2013; June 4, 6, and 14, 2013, supplements thereto. In your letter, you request a ruling concerning whether the SenseAware 1000, a package monitoring device used by your company, qualifies as an accessory for certain instruments of international traffic (IITs) under 19 C.F.R. §§ 10.41a(a)(2) and (3). Alternatively, you request whether the subject monitoring devices may be classified in subheading 8525.60.1050, Harmonized Tariff Schedule of the United States (HTSUS)(2013). Our decision follows.
FACTS
The following facts are from your ruling requests and supplements thereto. The SenseAware 1000 (hereinafter referred to as "monitoring device") is a device placed inside of a package or attached to the interior of a shipping container which uploads information relative to location coordinates, temperature, exposure to light, relative humidity and barometric pressure to a web-based application. Federal Express (“Fed Ex”) contemplates that the monitoring devices will arrive into the U.S. either with or without a container.
Fed Ex asserts that the monitoring devices will be used with shipping containers as set forth in Appendix 1 and Appendix 2 to its ruling request and described immediately below.
Appendix 1 –Air Freight Containers
The air freight containers listed in Appendix 1 to the subject ruling request (as depicted in the images below) feature body panels made up of aluminum alloy or impact-resistant polycarbonate and aluminum alloy base rails and corner gussets. One side of these containers either has vinyl roll-up door assemblies, aluminum alloy doors, or “net and cover” door assemblies. These containers are manufactured in the U.S., have internal volumes of between 3.68 and 57.6 cubic meters, and an average life span of 12 years. Pictured below are representative samples displaying certain details about these containers. Additional details regarding the air freight containers will be discussed in the Law and Analysis section below.
Corner Gussets (LD-1 AKC pictured) Container with vinyl door assembly
(LD-2 DPE pictured)
Container with Polycarbonate walls LD-9/AAK Container (solid door)
LD-3/AKE Container (Featherweight
pictured)
Container with “Net and Cover”
Door Assembly (A-2/AAA pictured)
Appendix 2-Air/Ground Shipping Containers
The shipping containers listed in Appendix 2 (as depicted in the images below) are used for air and ground transportation and are manufactured in the U.S. Additional details about these containers will be discussed in the Law and Analysis section below.
AcuTemp Insulated Shipping Boxes Attached Lid Shipping Containers
Temperature Controlled Cargo Containers
ISSUES
1. Whether the subject shipping containers for which the subject monitoring devices will be used are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
2. Whether the subject shipping containers for which the subject monitoring devices will be used are “containers” as defined by Article 1 of the Customs Convention on Containers (CCC).
3. Whether the subject monitoring devices themselves may be considered accessories of the subject shipping containers under 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(2).
4. Whether the monitoring devices may be considered accessories of the subject shipping containers under 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(3).
5. Whether the monitoring devices may be considered accessories of the subject shipping containers when placed inside of packages or imbedded with the cargo that are subsequently loaded into the subject shipping containers.
LAW AND ANALYSIS
Fed Ex asserts that the subject monitoring devices are accessories of the subject shipping containers which Fed Ex asserts are IITs, and therefore, pursuant to 19 C.F.R. § 10.41a(a)(2) may be entered separately from the shipping containers the monitoring devices are used with. In addition, Fed Ex asserts that the subject monitoring devices are used with “containers” as defined by Article 1 of the CCC and therefore, the monitoring devices could be imported without filing an entry and payment of duty pursuant to 19 C.F.R. § 10.41a(a)(3). Accordingly, as discussed further below, in order to address whether the subject monitoring devices are accessories as set forth in 19 C.F.R. §§ 10.41a(a)(2) and (3), it is necessary to determine whether the shipping containers the monitoring devices are to be used with, as set forth in Appendices 1 and 2 of the subject ruling request, are IITs within the meaning of 19 C.F.R. § 10.41a(a)(1) and whether those shipping containers are “containers” within the meaning of the CCC. Last, we will discuss whether the monitoring devices may be treated as “accessories” under 19 C.F.R. § 10.41a(a)(3) if the devices are placed inside packages which are then placed into IITs.
Issue 1-Shipping Containers as IITs under 19 C.F.R. § 10.41a(a)(1)
Pursuant to 19 U.S.C. § 1322(a), IITs 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 relevant Customs and Border Protection (CBP) regulations implementing that statute are found at 19 C.F.R.§ 10.41a(a)(1) which provides 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 IITs 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 an IIT 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 IIT within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1), an article 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).
Subheading 9803.50.00, HTSUS provides for the duty-free treatment of:
Substantial containers and holders, if products of the United States (including shooks and staves of United States production when returned as boxes or barrels containing merchandise), 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 added). 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.
As concerns the the air freight containers in Appendix 1, they are substantial inasmuch as they are made of aluminum or impact-resistant polycarbonate and have aluminum alloy base rails and corner gussets for reinforcement. Further, they are suitable and capable of repeated use insofar as they are used 60,096 times annually and the containers are used in significant numbers in international traffic inasmuch as 76,342 of them will be used each year to transport cargo. Based on the foregoing, the air freight containers listed in Appendix 1, are IITs; therefore, they will qualify for entry-free and duty-free treatment as IITs pursuant to 19 C.F.R. § 10.41a(a)(1) and 9803.50.0000, HTSUS.
As concerns the AcuTemp® insulated shipping boxes, plastic totes, and C-Safe® temperature controlled containers listed in Appendix 2, they are substantial insofar as they are made of glass fiberglass and phenolic foam insulation material inside durable corrugated boxes. Further, the boxes are also suitable and capable of repeated use insofar as they are used 50 times annually and the containers are used in significant numbers in international traffic insasmuch as 100 of them will be used each year to transport cargo.
As concerns the “attached lid containers” (which you also refer to as “plastic totes”) they too are substantial insofar as they are made of plastic polyethelene; are suitable and capable of repeated use inasmuch as they have unlimited warranty uses; and are used in significant numbers in international traffic insofar as 1000 of them will be used annually to transport cargo. CBP has previously determined that similar plastic totes used to ship automobile parts were IITs. See HQ 115506 (Oct. 29, 1998).
As concerns the C-Safe ® temperature-controlled cargo containers they are substantial insofar as they are made of aluminum and stainless steel outer metal sheeting; are suitable and capable of reuse inasmuch as they have unlimited warranty uses; and are used in significant numbers in international traffic insofar as 75 units will be used annually.
Based on the foregoing, the AcuTemp® shipping boxes, plastic totes, and C-Safe temperature controlled containers listed in Appendix 2 to the ruling request are IITs and therefore will qualify for entry-free and duty-free treatment as IITs pursuant to 19 C.F.R. § 10.41a(a)(1) and 9803.50.0000, HTSUS.
Issue 2-Shipping Containers as “Containers”under the CCC
The CCC 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, acessories 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. (emphasis added).
With regard to the air freight containers listed in Appendix 1, the elements that define a “container” under the CCC appear to be met. The containers are fully enclosed with the intention of transporting packages; they are substantial and capable of reuse; are specially designed to facilitate the transportation of cargo by air and truck; have doors or net and cover walls that allow packages to be loaded in the containers; and have internal volumes of between 3.68 and 57.6 cubic meters.
With regard to the shipping containers listed in Appendix 2, with the exception of the RKN C-Safe® temperature controlled cargo container and the 710003-04 and 710003-05 part numbers of the AcuTemp® insulated boxes, the remaining shipping containers do not present with internal volumes of one cubic metre or more. Accordingly, subpart (vi) of Art. 1(c) of the CCC has not been met and therefore, those shipping containers are not considered “containers.”
The remaining elements of Article 1 of the CCC, as it relates to the RKN C-Safe temperature controlled cargo container and the 710003-04 and 710003-05 part numbers of the AcuTemp insulated boxes appear to have been met. The foregoing items are fully enclosed with the intention of transporting packages; they are substantial and capable of reuse; are specially designed to facilitate the transportation of cargo by air and truck; and the RKN C-Safe® temperature controlled cargo container has doors that allow packages to be loaded in the containers and the AcuTemp® boxes have flaps for easy loading of cargo.
Based on the foregoing, while the air freight containers listed in Appendix 1 would be considered “containers” within the meaning of Art. 1, section (c) of the CCC, the shipping containers listed in Appendix 2, with the exception of the RKN C-Safe® temperature controlled cargo container and the 710003-04 and 710003-05 part numbers of the AcuTemp® insulated boxes, would not be considered “containers” under the CCC.
Issue 3 -Monitoring Devices as Accessories under 19 C.F.R. § 10.41a(a)(2)
Pursuant to 19 C.F.R. § 10.41a(a)(2), which provides:
Repair components, accessories, and equipment for any container of foreign production which is an instrument of international traffic may be entered or withdrawn from warehouse for consumption without the deposit of duty if the person making the entry or withdrawal from warehouse files a declaration that the repair component was imported to be used in the repair of a container of foreign production which is an instrument of international traffic, or that the accessory or equipment is for a container of foreign production which is an instrument of international traffic. The port director must be satisfied that the importer of the repair component, accessory, or equipment had the declared intention at the time of importation.
(emphasis added). The foregoing regulatory provision allows, in relevant part, accessories of foreign-produced IITs to be entered separately, without payment of duty, upon approval from the port director at the port of arrival that such accessories will be used with foreign-produced IITs.
Insofar as all the subject shipping containers were manufactured in the U.S., the monitoring devices would not be considered accessories to the subject IITs within the meaning of 19 C.F.R. § 10.41a(a)(2) and therefore, if the devices are imported without the subject IITs, they would have to be entered and duty, if applicable, would have to paid on the devices.
Issue 4-Monitoring Devices as Accessories under 19 C.F.R. § 10.41a(a)(3)
IITs as used in 19 C.F.R. § 10.41a(a)(3), "includes the normal accessories and equipment imported with any such instrument which is a "container" as defined in Article 1 of the CCC. See 19 C.F.R. § 10.41a(a)(3). Thus, in order to be considered an accessory to an IIT under 10.41a(a)(3), not only would the instrument for which the accessory will be used have to be an IIT under 19 C.F.R. § 10.41a(a)(1), but also a "container" pursuant to the CCC. As discussed above, the air freight containers in Appendix 1 are both IITs within the meaning of 19 C.F.R. § 10.41a(a)(1) and the CCC. As such, the monitoring devices may be imported with the subject air freight containers pursuant to 19 C.F.R. § 10.41a(a)(3).
With regard to shipping containers in Appendix 2, although all of the containers are IITs under 19 C.F.R. § 10.41a(a)(1), only three of the containers, the C-Safe® temperature controlled container and the 710003-04 and 710003-05 part numbers of the AcuTemp® insulated boxes are “containers” as defined by the CCC. As such, the monitoring devices may be imported with only the subject RKN C-Safe® temperature controlled container and the AcuTemp® boxes (part numbers 710003-04 and 710003-05) without entry and the payment of duty pursuant to 19 C.F.R. § 10.41a(a)(3). The monitoring devices would be subject to entry and duty payment if shipped with any other non-CCC container listed in Appendix 2.
Issue 5-Use of Monitoring Device inside of Packages
Fed Ex states that it may also place the monitoring devices inside packages that will be shipped inside the subject IITs. We note that in order for the monitoring device to maintain its “accessory” status, the monitoring device must be attached to the IIT itself. If the monitoring device is placed inside a package which is then placed in an IIT, it will no longer be considered an accessory to the IIT. See HQ H055197 (June 16, 2009) (determining that a covert tracking device which is similar to the subject monitoring device, when embedded in cargo or a shipment, serves no purpose to the IIT itself, rather, it would be more akin to being an accessory of the cargo, e.g. the container would not be tracked, the merchandise would be tracked); see also, Art. 1(c), CCC (stating that “[t]he term “container” shall not include . . . packaging.”).
In conclusion, the air freight containers listed in Appendix 1 and the shipping containers listed in Appendix 2 are considered IITs pursuant to 19 C.F.R. § 10.41a(a)(1); however, only the air freight containers in Appendix 1 and the RKN C-Safe® temperature controlled containers and AcuTemp® insulated boxes (part numbers 710003-04 and 710003-05) listed in Appendix 2 are “containers” as defined by the CCC. As such, the monitoring devices would only be considered accessories exempt from entry and duty payment pursuant to 19 C.F.R. § 10.41a(a)(3), when they are imported with the foregoing “containers.” In addition, because all the shipping containers are manufactured in the U.S., pursuant to 19 C.F.R. § 10.41a(a)(2), the monitoring devices must be entered, and duty, if
applicable, must be paid at the time of entry if they are imported separately from the subject IITs. Last, should the monitoring devices be placed inside packages rather than attached to IITs, they would not be considered accessories for IITs and would be subject to entry and any applicable duty payment.
Fed Ex’s assertion that the subject monitoring devices may be classified in subheading, 8525.60.1050, HTSUS concerns a tariff classification issue that is outside the purview of this branch. However, the Tariff Classification and Marking Branch of this office is currently considering that issue and will respond directly to you.
HOLDINGS
1. The subject shipping containers listed in Appendix 1 and Appendix 2, for which the subject monitoring devices will be used are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
2. The subject shipping containers listed in Appendix 1 and the RKN C-Safe® temperature controlled containers and the AcuTemp® insulated boxes (part numbers 710003-04 and 710003-05) shipping containers listed in Appendix 2 for which the subject monitoring devices will be used are “containers” as defined by Article 1 of the CCC.
3. The subject monitoring devices are not considered accessories of the subject IITs pursuant to 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(2) insofar as the IITs are manufactured in the U.S. Therefore, the subject monitoring devices must be entered and duty paid, if applicable, if they are imported separately from the IITs for which they are used.
4. The subject monitoring devices are considered accessories, pursuant to 19 C.F.R. § 10.41a(a)(3), to the shipping containers listed in Appendix 1 and the RKN C-Safe® temperature controlled and the AcuTemp® insulated boxes (part numbers 710003-04 and 710003-05) listed in Appendix 2 , insofar as these shipping containers are defined as “containers” as defined by Article 1 of the CCC. Therefore, the monitoring devices may be imported without entry and payment of duty if they are imported with the foregoing containers.
5. The subject monitoring devices will not be considered accessories to the subject IITs if they are placed inside of packages or imbedded with the cargo that are subsequently loaded into the subject IITs.
Sincerely,
George F. McCray
Supervisory Attorney/Chief
Office of International Trade/Regulations and Rulings
Cargo Security, Carriers and Restricted Merchandise Branch