BOR-07-OT:RR:BSTC:CCR H282408 ASZ
Edward F. Juliano, Jr.
Attorney at Law
303 Wyman Street, Suite 300
Waltham, Massachusetts 02451
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1); HTSUS subheading 9803.00.50; ASML US, Inc.; Intermodal Containers, Steel Pallets with Platform Bases, Laser Module Cases, Locking Fixtures.
Dear Mr. Juliano:
This is in response to your December 20, 2016, ruling request on behalf of ASML US, Inc. (ASML). In your submission, you request a ruling concerning whether certain transport devices, identified by ASML as intermodal containers, steel pallets with platform bases, laser module cases, and locking fixtures qualify as instruments of international traffic (IIT) and are therefore, classifiable under subheading 9803.00.50 of the Harmonized Tariff Schedule of the United States (HTSUS). Our decision follows.
FACTS
The following facts are from your December 20, 2016 ruling request, February 21, 2017 letter, February 22, 2017 e-mail, March 23, 2017 letter, March 24, 2017 telephone conference, March 29, 2107 letter, and April 4, 2017 e-mail to this office. The subject articles are owned by ASML Holding N.V., the parent company of ASML US, Inc., and are used to transport modular assemblies for ASML’s Extreme Ultraviolet Lithography (EUVL) machines. Each EUVL machine weighs over 100 tons and must be broken down into modular assemblies for shipment to the United States from the Netherlands. Each assembly is mounted on a steel pallet or placed inside a case. Metal locking fixtures are attached to the machine itself to prevent it from shock and vibration during transportation. The modular assemblies, cases, and pallets are placed inside ASML’s intermodal containers for transportation to manufacturing plants in the United States.
Once the shipment reaches the customer site, it is unpacked by ASML technicians. You state that all of the containers and locking fixtures will be returned to the Netherlands within ten weeks after receipt of all modules at the customer site and that none of the items will remain in the United States. All of the cases and containers are serialized and tracked, and the locking fixtures are accounted for by ASML technicians. You also provided this office with the specifications of the subject articles.
The subject articles can be reused ten to fifteen times and have an estimated life expectancy of five to ten years. ASML has approximately 30 intermodal containers; 275 steel pallets with platform bases; 55 cases for lockings; 25 laser module cases; and 160 sets of lockings, frames for lockings, and miscellaneous locking fixtures for the shipment of the EUVL machines.
Below are images you provided of the subject articles.
Intermodal container
Steel Pallets with Platform Bases
Laser Module Case and Fixture
Locking Fixtures
ISSUES
Whether the subject intermodal containers are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
Whether the subject steel pallets with platform bases are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
Whether the subject laser module cases are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
Whether the subject locking fixtures are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
LAW AND ANALYSIS
Per 19 C.F.R. § 141.4(a), “all merchandise imported into the United States is required to be entered, unless specifically excepted.” The four exceptions to the requirement of entry are listed under 19 C.F.R. § 141.4(b), one of which is instruments of international traffic. 19 C.F.R. § 141.4(b)(3).
Subheading 9803.00.50, 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.
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 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.
19 C.F.R. § 10.41a(a)(1)(emphasis added).
Such instruments may be released without entry or the payment of duty, subject to the provisions of this section.
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).
Issue 1 - Intermodal Containers as IITs under 19 C.F.R. § 10.41a(a)(1)
The intermodal containers are substantial inasmuch as they are made of aluminum and have a life expectancy of five to ten years. The subject intermodal containers are suitable for and capable of reuse, insofar as the intermodal containers can be reused ten to fifteen times. 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 HQ 105567 and HQ 108658. The intermodal containers are used in significant numbers in international traffic inasmuch as approximately 30 containers will be in circulation.
CBP has held that intermodal containers qualify as instruments of international traffic. See HQ H044900 (Dec. 18, 2008)(holding that “it is well settled that intermodal cargo containers qualify as ‘instruments of international traffic’” citing HQ 113003 (Jan. 27, 1994)); see also HQ 116684 (Aug. 17, 2006) and HQ W116719 (Nov. 30, 2006) (holding that intermodal containers are IITs). Based on the foregoing, the subject intermodal containers 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 subheading 9803.00.50 HTSUS.
Issue 2 - Steel Pallets with Platform Bases as IITs under 19 C.F.R. § 10.41a(a)(1)
Pursuant to 19 C.F.R. § 10.41a(a)(1), pallets are per se IITs. In HQ H119060 (Nov. 9, 2010), CBP held that “pallets have already been designated as an instrument of international traffic by regulation. See 19 C.F.R. § 10.41a(a).” Based on the foregoing, the subject steel pallets and platforms 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 HTSUS subheading 9803.00.50.
Issue 3 - Laser Module Cases as IITs under 19 C.F.R. § 10.41a(a)(1)
The laser module cases are substantial inasmuch as they are made of PP-H and Neopolen plastics and have a life expectancy of five to ten years. The subject laser module cases are suitable for and capable of reuse, insofar as they can be reused ten to fifteen times. 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 HQ 105567 and HQ 108658. The laser module cases, however, are not used in significant numbers in international traffic inasmuch as approximately 25 cases will be in circulation. In HQ 113041 (June 1, 1994), we held that 22 piston/ram pans could not be designated as IITs because they were not used in significant numbers in international traffic. Based on the foregoing, the subject laser module cases are not IITs because they are not used in significant numbers in international traffic.
Issue 4 - Locking Fixtures as IITs under 19 C.F.R. § 10.41a(a)(1)
The subject locking fixtures are used to hold moving parts on modular assemblies in place during shipments so as to avoid damage to the cargo. In the March 24, 2017 conference call, the ASML representative stated that the locking fixtures are attached to the machines themselves; they are not attached to any of the pallets, intermodal containers, or cases used to transport the machine. In your December 20, 2016 ruling request, you requested that the subject locking fixtures be designated as accessories of IITs. In your subsequent letter of March 29, 2017, you requested that the locking fixtures be designated as IITs rather than accessories of IITs. We will address both arguments in this ruling.
With regard to your initial argument that the locking fixtures serve as accessories of IITs, we disagree. When secured to the cargo itself, the subject locking fixtures would not qualify as an accessory of an IIT. In order for the locking fixture to maintain its “accessory” status, the locking fixture must be attached to the IIT itself. See HQ H055197 (June 16, 2009) (determining that a covert tracking device 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). Based on the foregoing, the subject locking fixtures are not accessories of an IIT because they are not attached to an IIT.
With regard to your argument that the locking fixtures are IITs, we also disagree. To qualify for entry-free and duty-free treatment as an IIT, the article must be a substantial container or holder. Upon reviewing your submission, the locking fixtures do not appear to be substantial containers or holders. They attach to the cargo itself to keep it from shifting during transportation. You argue that they are similar to the strong-backs described in HQ 116689 (Sept. 14, 2006) in that the strong-backs and locking fixtures both perform the function of preventing damage to the cargo during shipment. Although that may be true, the strong-backs were “used to hold the aircraft goods.” You argue that the locking fixtures serve as holders, but your description of the articles evidences that they do not. They simply secure parts of the EUVL machine to itself, thus serving no holding function. Based on the foregoing, the subject locking fixtures are not IITs because they are not substantial containers or holders.
HOLDING
The subject intermodal containers are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
The subject steel pallets with platform bases are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
The subject laser module cases are not IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
The subject locking fixtures are not IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
Sincerely,
Lisa L. Burley
Chief/Supervisory Attorney-Advisor
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations and Rulings
U.S. Customs and Border Protection