International Traffic; Usui Limited; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a.

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H255763 August 15, 2014 OT:RR:BSTC:CCR H255763 WRB CATEGORY: Carriers Mr. William A. Atteberry Executive Vice President Usui International Corp. 3824 Cook Boulevard Chesapeake, VA 23320 RE: International Traffic; Usui Limited; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a. Dear Mr. Atteberry: This is in response to your July 11, 2014, ruling request on behalf of Usui International Corporation (hereinafter “Usui”). In your request you inquire whether certain re-useable containers, racks and trays qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a. Our ruling is set forth below. FACTS Usui imports component parts that are used in the manufacturing of diesel fuel lines, including steel tubing. The diesel fuel lines are manufactured at Usui’s facility in Chesapeake, Virginia. The imported components, as well as containers, racks, and trays used to transport them, arrive from Japan at Tacoma, Washington, and are transported in-bond to Usui’s facility, which is located in a foreign-trade zone (FTZ). Imported components, and the products that incorporate them, are then entered on FTZ consumption entries. Some of the component parts are packed in reusable metal containers and racks, and plastic trays, during shipping. These metal containers and racks, and plastic trays, are designed to transport the steel tubing. The plastic trays are used to hold the tubing in place within the metal containers and racks to avoid damage during transportation. Usui re-exports the metal containers and racks, and plastic trays, to Japan on a weekly and monthly basis for reuse. During the last 12 months, Usui has imported and re-exported approximately 1,500 metal containers and racks to be reused in the shipment of steel tubing. The metal containers and racks may be described separately on commercial invoices as “metal container boxes” or “returnable cargo-racks.” For the purposes of this ruling, they are described as “metal containers and racks.” Metal Containers and Racks Each of the metal containers and racks weighs approximately 300 pounds, and are of two types, MRR (beige) containers and blue containers. They are delivered in either fixed or various lengths, blue containers being all the same length. Each container or rack has the capacity to carry between 600-800 pieces of steel tubing, and arrives with a cardboard top. The average usable lifespan on the metal containers and racks is estimated to be 5-7 years, at which time they may be replaced with new metal containers and racks.



Plastic Trays Plastic trays are only used in the MRR (beige) containers. Each of the plastic trays weighs approximately .6 pounds and are fixed in their dimensions (4.5’ x 1.5’ x ½”).
ISSUE Whether the containers, racks and trays described above qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a? LAW AND ANALYSIS Usui asserts that the subject containers, racks and trays may be classified under subheading 9803.00.50, Harmonized Tariff Schedule of the United States (HTSUS) because they qualify as IITs. 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 Customs and Border Protection (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. 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 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). Subheading 9803.50.00, 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. As concerns the containers, racks and trays, described in the FACTS section above, they are substantial inasmuch as the containers and racks are made of metal, and trays made of plastic. Further, they are suitable and capable of repeated use insofar as the current inventory of such containers, racks and trays numbers in the thousands, they have a service life expectancy of 5-7 years, and will be re-used approximately 1,500 times per year. Based on the foregoing, the containers, racks and trays 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 9803.50.0000, HTSUS. HOLDING The subject containers, racks and trays, described in the FACTS section above, 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 Cargo Security, Carriers and Restricted Merchandise Branch Office of International Trade, Regulations and Rulings U.S. Customs and Border Protection