BOR-4-07-OT:RR:BSTC:CCR H286142 SWM
Mr. Kevin Radford
Toyota Motor Manufacturing Canada
1055 Fountain Street North
N3H 5K2
Cambridge, Ontario
Canada
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1); HTSUS subheading 9803.00.50; Toyota Motor Manufacturing Canada; Engine Hooks.
Dear Mr. Radford:
This is in response to your ruling request submitted on April 7, 2017, on behalf of Toyota Motor Manufacturing Canada (“TMMC”). In your request, you inquire whether certain engine hooks (the “hooks”) qualify as “Instruments of International Traffic” (“IIT”) within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Our ruling is set forth below.
FACTS
The following facts are from your ruling request and supplements thereto. TMMC purchases and imports engines into Canada from engine plants located in Alabama, Toyota Motor Manufacturing Alabama (“TMMAL”), and West Virginia, Toyota Motor Manufacturing West Virginia (“TMMWV”). On an annual basis, TMMC imports over 100,000 engines from TMMAL and TMMWV respectively, which represents an annual usage of approximately 200,000 subject hooks. The engines require two hooks each to move, and Toyota has an excess of 5,000 of each type of hook in circulation. The engines are transported from TMMAL and TMMWV to TMMC by applying the hooks to the engines so that they can be loaded into steel engine racks for safe transportation. The hooks do not attach to the racks in which the engines are transported; the hooks are only used to hoist the engines on to and off of the racks. Upon receipt of the engines at TMMC, the engines are lifted off of the racks using the hooks and placed on to a jig. After removing the engine from the racks, the hooks are unbolted from the engines and placed in totes for return to TMMAL and TMMWV.
You state that TMMAL and TMMWV ship approximately 2,000 hooks each business day and that TMMC returns 2,000 hooks each business day. The hooks remain in Canada for approximately three days. Once the hooks are returned to TMMAL and TMMWV, they are in the U.S. for approximately fourteen days before they are reused to ship more engines to TMMC.
There are three types of hooks, used to transport engines for the Lexus, Corolla, and RAV-4. The hooks are manufactured in Japan, made of steel alloy, are approximately 6” in length, and vary in weight from 1.5 lbs to 2.5 lbs. The hooks can each be reused 50 times and have a life expectancy of one year. They are tracked in groups, each painted a different color. Each color can stay in use for a particular period of time calculated by how many are in each group and what the production volume of engines is for that period of time. The color groups of hooks are tracked in Microsoft Excel files by TMMAL and TMMWV.
Below are images you provided of the subject hooks:
RAV-4 Left Engine Hook RAV-4 Right Engine Hook
Corolla Left Engine Hook Corolla Right Engine Hook
Lexus Left Engine Hook Lexus Right Engine Hook
ISSUE
Whether the hooks described above qualify as “instruments of international traffic” (IITs) within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a?
LAW AND ANALYSIS
Pursuant to 19 C.F.R. § 141.4(a), “[a]ll 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 hooks are used to move the engines on to and off of the racks. In your June 20, 2017 e-mail, you stated that the hooks are attached to the engines, however they are not attached to the racks. To qualify for entry-free and duty-free treatment as an IIT, the article must be a substantial container or holder. The hooks neither contain nor hold anything. Much like the locking fixtures that attached to the cargo for stabilization during transport in HQ H282408 (Apr. 12, 2017), and which we declined to designate as IITs, the hooks attach to the engines, but they do not hold or contain the engines. The hooks are essentially tools necessary to lift and move the automobile engines. Based on the foregoing, the hooks are not IITs because they are not substantial holders or containers.
HOLDING
The subject hooks, described in the FACTS section above, are not IITs within the meaning of 19 U.S.C. § 1322(a) or 19 C.F.R. § 10.41a(a)(1).
Sincerely,
Lisa L. Burley, Chief
Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection