Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1); HTSUS subheading 9803.00.50; IAC Group; non-saleable headliner substrates.

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H287536 August 28, 2017 BOR-07-OT:RR:BSTC:CCR H287536 ASZ CATEGORY: Carriers Brian K. Smith IAC Group North America 28333 Telegraph Road Southfield, Michigan 48034 RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1); HTSUS subheading 9803.00.50; IAC Group; non-saleable headliner substrates. Dear Mr. Smith: This is in response to your May 23, 2017, ruling request on behalf of International Automotive Components Group North America, Inc. (IAC). In your submission, you request a ruling concerning whether certain transport devices, identified by IAC as non-saleable headliner substrates, qualify as instruments of international traffic (IIT) and are therefore, classifiable under subheading 9803.00.50 of the Harmonized Tariff Schedule of the United States (HTSUS). Our decision follows. FACTS The following facts are from your May 23, 2017 ruling request and June 30, 2017 and July 5, 2017 e-mails to this office. IAC’s Port Huron, Michigan location produces headliner substrates, i.e. the interior roof of vehicles prior to the installation of the electrical and trim components. IAC Port Huron ships the headliner substrates to IAC’s Concord, Ontario, Canada and IAC’s Windsor, Ontario, Canada locations where the electrical and trim components are installed prior to delivery to the customer. The headliner substrates are hung on metal racks as they are transported on trucks from IAC Port Huron to IAC Concord and IAC Windsor. The “Class A” and “Class B” surfaces of the headliner substrates are exposed on either side of the metal rack during shipping. In order to protect the “Class A” surface, a non-saleable headliner substrate is placed on one end of the metal rack. A non-saleable headliner substrate is a headliner substrate that has been rejected by the customer because it does “not meet the customer’s quality requirements.” A headliner substrate can be rejected by the customer due to problems with its fit, finish, and function, such as incorrect sizing, delamination, and pitting. The non-saleable headliner substrate is secured to one end of the metal rack with two tie straps. The word “dunnage” is handwritten on the exposed side of the non-saleable headliner substrate. Once the saleable headliner substrates have been used at the IAC Concord and IAC Windsor locations, the non-saleable headliner substrates will be placed on the metal racks and shipped back to IAC Port Huron for reuse. IAC does not use a tracking system to account for the non-saleable headliner substrates. The subject articles are composed of a polypropylene and/or fiberglass scrim layer, non-woven fabric upholstery coverstock, and polyurethane foam. They can be reused approximately fifteen times and have an estimated life expectancy of fifteen weeks. IAC anticipates that it will have approximately 250 non-saleable headliner substrates in circulation each week. You provided this office with the specifications of the subject articles. Below are images you provided of the subject articles.

 
  ISSUES Whether the subject non-saleable headliner substrates are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). LAW AND ANALYSIS Per 19 C.F.R. § 141.4(a), “all 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). You make several arguments as to why the subject articles should be designated as IITs. First, you argue that the subject articles are “caul boards” under 19 C.F.R. § 10.41a(a)(1). The subject articles, however, are defective headliner substrates, not caul boards. Therefore, the items would not qualify for per se IIT status under 19 C.F.R. § 10.41a(a)(1). You also argue that the subject articles are “containers” under the Customs Convention on Containers (CCC). The CCC defines the term "container" as an: . . . article of transport equipment (lift-van, movable tank or other similar structure): (i) fully or partially enclosed to constitute a compartment intended for containing goods; (ii) of a permanent character and accordingly strong enough to be suitable for repeated use; (iii) specially designed to facilitate the carriage of goods, by one or more modes of transport, without intermediate reloading; (iv) designed for ready handling, particularly when being transferred from one mode of transport to another; (v) designed to be easy to fill and to empty; and (vi) having an internal volume of one cubic metre or more; the term "container" shall include the accessories and equipment of the container, appropriate for the type concerned, provided that such accessories and equipment are carried with the container. The term "container" shall not include vehicles, accessories or spare parts of vehicles, or packaging. Demountable bodies, are to be treated as containers; Customs Convention on Containers, 1972, Ch. 1, Art. 1(c), et seq. The subject articles are not “containers” under the CCC. “Containers” under the CCC must have an internal volume of one cubic metre or more. The non-saleable headliner substrates do not have an internal volume. Accordingly, subpart (vi) of Art. 1(c) of the CCC has not been met and therefore, the subject articles are not considered “containers.” Finally, you argue that the subject articles meet the requirements to be designated as IIT by CBP under 19 C.F.R. § 10.41a(a)(1). Based on the facts you have provided us, we decline to extend IIT status to the subject articles. You describe the subject articles as headliner substrates that have been rejected by the customer because they do “not meet the customer’s quality requirements” due to problems with fit, finish, and function. The subject articles are essentially defective goods that are repurposed to protect the non-defective goods being shipped. Based on the foregoing, the subject non-saleable headliner substrates are not IITs because they are not substantial holders or containers and therefore not IITs within the meaning of 19 C.F.R. § 10.41a(a)(1). HOLDING The subject non-saleable headliner substrates are not 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/Supervisory Attorney-Advisor Cargo Security, Carriers and Restricted Merchandise Branch Office of International Trade, Regulations and Rulings U.S. Customs and Border Protection