Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 CFR 10.41a; Wire Reels and Shipping Containers

HQ H191165 January 19, 2012 BOR-4-07:OT:RR:BSTC:CCI H191165 WRB CATEGORY: Carriers Lawrence W. Hanson, Esq. The Law Office of Lawrence W. Hanson, P.C. One Riverway Suite 2300 Houston, TX 77056 RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 CFR 10.41a; Wire Reels and Shipping Containers Dear Mr. Hanson: This is in response to your letter, dated October 20, 2011, in which you requested a ruling on behalf of your client, Shin-Etsu America, Inc. (“SEH-A”), on whether certain wire reels and shipping containers qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a. Our ruling is set forth below. FACTS: The reels and containers at issue are used by Shin-Etsu America, Inc. (“SEH-A”) to transport a proprietary wire wound on a specific type of reel and transported in a box designed to carry six (6) reels. SEH-A is part of a producer of semiconductor silicon, Shin-Etsu Handotai, Ltd. (“SEH”). SEH-A manufactures single-crystal silicon ingots, polished and epitaxial wafers, and provides service and engineering support for its customers in its Vancouver, Washington facility. Sliced from an ultra-pure crystalline ingot and then polished, silicon wafers are processed by SEH-A’s customers through the addition of circuit patterns arranged in tiny squares commonly referred to as “computer chips.” These chips are then separated and packaged into electronic components that are part of many products, including computers, lasers, automotive electronics, telecommunications and many consumer products. The silicon wafers are manufactured from a large, cylindrical silicon ingot weighing several hundred pounds. In order to transform these large ingots into hundreds of thin silicon wafers, SEH-A uses a proprietary cutting method to achieve precision cuts and uniform wafer thicknesses. A thin wire of a particular metallurgy is used in SEH-A’s silicon cutting machine. This wire is imported from Japan Fine Steel Co., Ltd., in Japan and arrives at SEH-A wound on a specially designed reel made to fit inside the wire saw wafer cutting machine. These reels are shipped in wooden containers designed to transport the reels six (6) reels to a container. You submitted photographs showing these reels packaged in the specialized container and an individual reel of cutting wire loaded into the wire saw machine. These wire reels are made of metal and are designed to feed SEH-A’s wire saw used to slice the silicon ingots into individual silicon wafers. There are two reels installed on the wire saw machine. As the wire is used and becomes worn, it is wound onto an empty reel. At the end of the life of the reel of wire, the reel with the spent wire is packaged and returned to Japan. SEH-A removes the spent wire reel and loads six (6) reels of spent wire back into the wooden container for return shipping to Japan Fine Steel to be rewound with new wire. These reels are shipped back and forth between SEH-A and Japan Fine Steel several times a year. In the past twelve months, SHE-A has used approximately 450 reels corresponding to 75 wooden shipping containers being utilized. The durable manufacture of the reels allows for multiple shipments and a useable life measured in years. The subject merchandise is depicted below:

You indicate in your letter that the wire reels and their containers are used for the transportation of the specialized metal wire and the reels and are manufactured from durable metal. The wire reels cost approximately $700.00 each and are reused for transporting the wire and use in the wire saw machine. SEH-A estimates several hundred reels are being used in the international shipment of wire saw material. The containers used to ship the set of six (6) wire reels cost approximately $300.00 each and are designed to be reused for transport back and forth between the wire manufacturer and SEH-A’s facility multiple times. SEH·A estimates a couple hundred of the wooden containers are presently in use transporting the wire reels, both full of new wire saw material and empty for international shipping operations. ISSUE: Whether the wire reels and shipping containers described above qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a? 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). Pursuant to 19 CFR 10.41a(a)(1), the Commissioner of Customs and Border Protection (CBP) is authorized to designate as IITs such additional articles not specifically noted in that section. Once designated as such, the instruments may be released without entry or payment of duty.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 ask that the subject wire reels and their associated shipping containers be considered as 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 CFR § 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 CFR § 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 CFR § 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). We have previously considered similar merchandise. In Customs Ruling HQ H111358, dated August 5, 2010, we determined that steel spools, used to export steel tire cord could be designated as instruments of international traffic (IIT). Similarly, in Customs Ruling HQ H113897, dated August 5, 2010, we ruled that plastic spools, used to export steel tire cord could be designated as IIT. Similarly, in Customs Ruling HQ 116649, dated July 24, 2006, we were of the opinion that steel spools used to hold the brass wire during transportation from the United States were substantial, suitable for and capable of repeated use; and used in significant numbers in international traffic, so as to meet the requisite criteria to qualify as IITs. Also, in Customs Ruling HQ 112836, dated October 7, 1993, we held that plastic reels with covers used to ship glass fiber internationally met the requirements to be designated as IITs. Upon reviewing the request, the subject reels for transport of proprietary wire appear to be substantial, suitable for and capable of repeated use, and will be used in significant numbers in international traffic. Furthermore, CBP has previously ruled that items of similar use and construction as the subject merchandise qualify as “instruments of international traffic” pursuant to 19 U.S.C. § 1322(a) and 19 CFR § 10.41a. Accordingly, the reels for transport of proprietary wire qualify as “instruments of international traffic.” The instruments may be released without entry or payment of duty and are eligible for treatment under subheading 9803.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”). In accordance with 19 CFR § 10.41a(a)(3), instruments of international traffic (IIT) also “includes the normal accessories and equipment imported with any such instrument which is a ‘container’ as defined in Article 1 of the Customs Convention on Containers.” We have herein determined the reels for transport of proprietary wire meet the requirements of a container and IIT. Therefore, the boxes designed to carry six (6) reels each when accompanying the reels container are to be considered “accessories” to IITs within the meaning of 19 CFR § 10.41a(a)(3). HOLDINGS: The reels for transport of proprietary wire described above qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a and may be released without entry or the payment of duty. The boxes designed to carry six (6) reels each described above meet the requisite criteria to qualify as accessories of IIT within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a(a)(2), may be entered duty-free as accessories of instruments of international traffic. 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