BOR-07-OT:RR:BSTC:CCR H296743 TNA
Cecelia Rothrock, Customs Regulatory Manager
Crane Worldwide Logistics, LLC
1500 Rankin Road
Houston, TX 77073
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1); HTSUS subheading 9803.00.50; Doosan Fuel Cell America, Inc.; Steel Frames
Dear Ms. Rothrock:
This is in response to your April 13, 2018, ruling request on behalf of Doosan Fuel Cell America, Inc. (“Doosan”). In your submission, you request a ruling concerning whether certain steel frames 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 April 13, 2018 ruling request and your May 17, 2018, email to the Cargo Security, Carriers and Restricted Merchandise Branch, which responded to CBP’s questions requesting further information about the steel frames at issue. The subject steel frames are designed to hold and ship wall set enclosures. When the frames contain the enclosures that they transport, they are loaded into shipping containers for ocean conveyance. The enclosures will be removed from the frames after the cargo is released in the U.S., and the steel frames will be returned for loading new orders of enclosures to be shipped. Doosan expects to ship three to four containers a month containing goods secured on frames. The company will then re-export the empty frames back in sets of eight. The frames will be loaded again at origin with new product orders of wall enclosures destined for the U.S. The expected turn around period for these frames is two to three months in Shanghai, their point of origin, and two to three months in the U.S. The frames will be imported into the port of Newark/ New York; after importation, they will be shipped to one of two locations as necessary: either a warehouse in New Jersey, or your offices in Connecticut. Once in the U.S., the frames are tracked via a serial number on the frames until they are returned to Shanghai.
The subject steel frames have an expected life cycle of five years. You also stated that although none of these steel frames are currently in circulation, Doosan currently has plans to enter thirty of them into circulation, and that they will make an average of ten cycles through the importer’s supply chain per year. The images below are taken from the ruling request. The first two images show the base of the steel frames at issue, from the top and side, respectively. The first two images show the location of the serial number used to track the frames while they are in the U.S. The last two images show the frames as they are used in international traffic.
ISSUE
Whether the subject steel frames 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).
The subject steel frames are substantial inasmuch they are made of steel and have a life expectancy of five years. These items are also suitable for and capable of reuse, in that they are made of steel and are reused an average of ten times a year for each year of their life expectancy. 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). The subject steel frames will be used in significant numbers in international traffic inasmuch as approximately thirty of them will soon be entered into circulation.
In addition, CBP has consistently held that steel racks qualify as instruments of international traffic. See HQ H286143, dated June 20, 2017 (steel racks used to transport automobile parts in sea containers); HQ H022952, dated November 22, 2006 (steel racks used to transport Honda work trucks); HQ 116240, dated July 23, 2004 (steel film frames and plastic cases); HQ H007166 (May 10, 2007) (steel racks used to transport automobile transmissions); HQ H002927 (Nov. 22, 2006) (steel racks used to import doors); HQ H113687 (Feb. 27, 1997) (collapsible metal racks used to import automobile parts). Based on the foregoing, the subject steel racks 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.
HOLDING
The subject steel frames are 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 Trade, Regulations and Rulings
U.S. Customs and Border Protection