BOR-4-07:OT:RR:BSTC:CCI H162376 WRB
John F. McManus
Director, Corporate Compliance
Legal Division
ITOCHU International, Inc.
335 Madison Avenue
New York, NY 10017
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); wheeled dollies; straps with ratchet closures.
Dear Mr. McManus:
This letter is in response to your letter of April 5, 2011, in which you request a ruling on behalf of ITOCHU Automobile America, Inc. (hereinafter “ITOCHU”) of Farmington Hills, Michigan. In your request, you inquire whether certain re-usable wheeled dollies and straps with ratchet closures 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 April 5, 2011, letter which includes pictures of the subject articles. The imported merchandise consists of re-usable wheeled dollies and straps with ratchet closures. They will assist in the packing and handling of truck parts shipped to the United States from Japan. The straps will secure packing frames together and the dollies will be attached to those secured frames, facilitating their loading in and unloading from shipping containers. After unpacking of the truck parts at various manufacturing facilities of Isuzu Motors America, LLC in the United States, these straps and dollies will be returned to Japan for re-use.
The straps are composed of woven polyester fabric, to which steel ratchet closures are attached. They have a net weight of approximately 1.5 kilograms each. There will be approximately nine hundred straps employed in this manner, and an average life span of some five to ten years is expected. The dollies are composed primarily of steel, with rubber wheels. Each dolly weighs approximately twenty kilograms. There will be some four hundred and fifty dollies used in this traffic. An average life span of at least twenty years is expected.
The dollies were originally purchased in Japan by Isuzu Motors Limited from a local manufacturer in 1994. Despite a diligent search, the records of that purchase have not been found. However, the shipper is confident that the country of origin is Japan. The straps were manufactured by KITO Corporation (2000 Tsuji Arai Showa-cho, Nakakoma-gun, Yamanishi 409-3867 Japan).
Upon exportation from the U.S. to Japan for re-use, the U.S. Principal Party in Interest will be ITOCHU Automobile America (address noted above) or Isuzu Motors America, LLC. The owner of the straps and dollies will at all times be Isuzu Motors Limited of Japan.
ISSUE:
Whether the re-usable wheeled dollies and straps with ratchet closures 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, containers or holder for the truck parts. The truck parts are actually held or contained within an ocean shipping container during transit. 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 wheeled dollies and straps with ratchet closures, do not actually serve as holders or containers. Rather, these items are placed into ocean shipping containers to enable them to perform the function of carrying the truck parts. Accordingly, these items are best understood as accessories of ocean shipping containers, 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 straps with ratchet closures, in CBP Ruling HQ 116513 (August 8, 2005) we ruled that tiedown straps used with pallets and containers for air transportation, were properly designated as accessories of instruments of international traffic of foreign production, and were eligible for duty-free treatment pursuant to the provisions of 19 U.S.C. § 1322, subheading 9803.00.50, HTSUSA, and 19 CFR § 10.41a. Similarly, in CBP Ruling HQ 116376 (January 11, 2005), we determined that certain decklashings were properly designated as instruments of international traffic within the meaning of 19 U.S.C. 1322(a) and 19 CFR 10.41a(a).
Regarding the re-usable wheeled dollies, in CBP Ruling HQ 112735 (July 16, 1993), we designated as IITs certain “saddles” used to connect new truck cabs piggy back while hauling them into the United States; and, CBP has consistently ruled that certain collapsible steel racks meet the qualifications of being instruments of international traffic. See HQ H022952 (Apr. 3, 2008) (stackable steel racks used to transport work trucks); HQ H007166 (May 10, 2007) (steel racks used to import automobile transmissions); HQ H002927 (Nov. 22, 2006) (steel crates racks to import doors); HQ 116047 (Dec. 1, 2003) citing HQ 113687 (Feb. 27, 1997) (steel racks used to import automobile parts) HQ 112303 (Aug. 14, 1992) and HQ 115959 (July 7, 2003) (collapsible steel racks).
The re-usable wheeled dollies and straps with ratchet closures, clearly meet the requirements of being substantial, and suitable for and capable of repeated use. The re-usable wheeled dollies are substantial, being made of steel, with rubber wheels, weighing approximately twenty kilograms, with an average life span of at least twenty years. Similarly, the straps are composed of woven polyester fabric, to which steel ratchet closures are attached, with a net weight of approximately 1.5 kilograms each, and an average life span of some five to ten years.
We are of the opinion that the straps with ratchet closures are similar to the tiedown straps used with pallets and containers for air transportation discussed in CBP Ruling HQ 116513 (August 8, 2005). Also, we are of the opinion that the re-usable wheeled dollies here are analogous to stackable steel racks used to transport work trucks discussed in CBP Ruling HQ H022952 (Apr. 3, 2008). Based on all the foregoing, we believe that the re-usable wheeled dollies and straps with ratchet closures meet the requirements for designation as accessories of instruments of international traffic within the meaning of 19 CFR § 10.41a(a)(2).
CONCLUSION
After careful consideration of your request, we are of the opinion, based on the information provided by ITOCHU International, Inc., that the requisite criteria for designation of the subject re-usable wheeled dollies and straps with ratchet closures as accessories of international traffic have been met. The re-usable wheeled dollies and straps with ratchet closures are used to facilitate the movement of truck parts during transportation to the United States from Japan. After arrival in the United States, the re-usable wheeled dollies and straps with ratchet closures will be returned to Japan, and reused, having been so used since 1994, demonstrating that they are capable of repeat use. They are also used in significant numbers in international traffic. Accordingly, the re-usable wheeled dollies and straps with ratchet closures meet the requisite criteria to qualify as accessories of IIT pursuant to 19 U.S.C. § 1322(a) and 19 CFR § 10.41a.
HOLDING:
The straps with ratchet closures 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 re-usable wheeled dollies 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