Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 CFR § 10.41a; Reusable wooden pallets.

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H237914 February 15, 2013 CLA-2 OT: RR: CTF: TCM H237914 RES CATEGORY: Carriers Marcela B. Stras Cozen O’Connor The Army and Navy Club Building Suite 1100 1627 I Street, NW Washington, DC 20006-4007 RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 CFR § 10.41a; Reusable wooden pallets. Dear Ms. Stras: This is in reference to your request for a ruling, dated January 22, 2013, submitted on behalf of CHEP USA (CHEP), in which you inquire whether certain reusable wooden pallets qualify as “instruments of international traffic” (IITs) 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. FACTS: The following facts are from your January 22, 2013, letter, which includes pictures of the subject articles. The articles are described as pallets made out of wood that are 48” by 40” by 5.56” in size with their sides painted blue (see Figure 1) and are used by manufacturers and growers to load their products on the pallets and ship their goods through the supply chain. You state that CHEP only rents the pallets to customers and retains ownership of the pallets at all times and that when a customer’s goods reach the end of the supply chain the pallets are returned to CHEP’s service centers where they are placed in a pallet pool for reuse. In addition, you state that the life span of a pallet is approximately ten years and that there are approximately seventy-five million of the subject wooden pallets in CHEP’s pallet pool for use.

Figure 1 ISSUES: Whether the reusable wooden pallets described above may be designated as instruments of international traffic pursuant to 19 U.S.C. § 1322(a) and 19 CFR 10.41a. LAW AND ANALYSIS: Pursuant to 19 U.S.C. § 1322(a), instruments of international traffic (also referred to herein as “IITs”) are excepted from the application of the Customs laws to the extent that such terms and conditions are prescribed in regulations or instructions. 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 release without entry or payment of duty. To qualify as an IIT within the meaning of 19 U.S.C. § 1322(a) and 19 CFR 10.41a(a)(1), an article must be used as a container or holder. The article also must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. See Headquarters Rulings (HQ) 104766 and 108084. The concept of reuse contemplated above is for commercial shipping or transportation purposes, and not incidental or fugitive uses. See United States Trade Commission, 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. In addition, if an article is determined to be an instrument of international traffic, then it is classifiable under subheading 9803.00.50, HTSUSA, which provides: 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. CBP has consistently ruled that pallets made of various materials are instruments of international traffic within the meaning of 19 CFR § 10.41a(a)(2). See HQ H119060, dated November, 9, 2010 (pallets composed of plastic and wood); HQ H071856, dated September 14, 2009 (wooden pallets); HQ 226812, dated March 20, 1997 (wooden pallets); and HQ 112705, dated May 21, 1993 (wooden pallets). In regard to the articles at issue here, CHEP’s reusable wooden pallets satisfy the requirements establishing instrument of international traffic status. They appear to be substantial, suitable and capable of repeated use, and based upon the number of pallets in CHEP’s pallet pool, used in significant numbers in international trade. CHEP retains ownership of the pallets, indicating that they expect them to be returned so that they can be reused. Also, the pallets are specially marked with blue painted sides so that they can be easily identified as belonging to CHEP, indicating that CHEP expects to have the pallets returned to them for further repeated use. Furthermore, § 10.41a(a)(1) specifically designates pallets as instruments of international traffic. Therefore, CHEP’s reusable wooden pallets are designated as instruments of international traffic within the meaning of 19 U.S.C. 1322(a) and 19 CFR 10.41a(a). Accordingly, because we have determined that the articles at issue here qualify as instruments of international traffic, they are also classifiable under subheading 9803.00.50, HTSUSA. HOLDING: The subject reusable wood pallets described above are designated instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a and they may be released without entry or the payment of duty under subheading 9803.00.50, HTSUSA. Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Restricted Merchandise Branch Office of International Trade, Regulations & Rulings