Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1); HTSUS subheading 9803.00.50; Indiana Automotive Fasteners, Inc.; Plastic Containers; Plastic and Steel Holding Racks.

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H294387 May 10, 2018 BOR-07-OT:RR:BSTC:CCR H294387 TNA CATEGORY: Carriers Walter Zimmerman Manager, Chicago Customs Brokerage Nippon Express USA Inc. 401 East Touhy Ave. Des Plains, IL 60018 RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1); HTSUS subheading 9803.00.50; Indiana Automotive Fasteners, Inc.; Plastic Containers; Plastic and Steel Holding Racks. Dear Mr. Walter: This is in response to your January 18, 2018, ruling request on behalf of Indiana Automotive Fasteners, Inc. (“IAF”). In your submission, you request a ruling concerning whether certain plastic containers and plastic and steel holding racks 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 January 18, 2018 ruling request, and your March 28, 2018 email to the Cargo Security, Carriers and Restricted Merchandise Branch, which responded to CBP’s questions requesting further information about the containers and holding racks at issue. IAF imports finished and non-finished steel and plastic fasteners that are used in the American automotive industry. IAF also imports steel wire to be manufactured into steel fasteners at its Greenfield, Indiana location. The imported fasteners are imported in bulk from Japan, and are transported in the reusable polypropylene or polyvinyl chloride (“PVC”) containers that are the subject of this ruling. Once the shipment arrives in the U.S. and the fasteners and wire are unloaded, the empty plastic containers and racks are returned to Japan for reuse. They are returned within one to three weeks of importation, and the total time in transit is approximately 14 weeks round trip. The plastic containers have an expected life cycle of 15 years. There are approximately 4000 of them in circulation. They make an average of four cycles through the importer’s supply chain per year. The steel wire that IAF imports is transported via the holding racks at issue in this ruling. These racks consist of three components that are used in combination with each other as a single unit. As such, the racks are transported into the U.S. as complete racks; the three components stay together throughout the racks’ movement in international traffic. The first component is a steel rack, also called an angle. It consists of steel tubes that form a base, as well as additional steel tubes that extend upwards from the base to create a tower. Round steel coils are placed over the top of the rack; the center of the coils flow over the tower portion of the rack and rest on the base of the rack. The second component of the rack is the circle board, which is a thin ring made of polypropylene. Lastly, the Kanban base is a small, clear polyvinyl chloride (“PVC”) envelope that is attached to the racks’ steel coils. This envelope contains a tag with the specifications of the wire that makes up the coil. These three components are used together to keep the imported merchandise in place during transportation, and are used exclusively for importing steel wire from the exporter to the importer. Like the plastic containers at issue, they have an expected life cycle of 15 years, there are 4000 of them in circulation, and they make an average of four cycles through the importer’s supply chain per year. Below are images you provided in your March 28, 2018 email: Plastic Containers:





Covers of the Plastic Containers:

The following are the three components of the steel and plastic holding racks at issue: Angle:
Circle Board:
Kanban Case:
ISSUE Whether the subject plastic container and plastic and steel holding rack assemblies 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). The subject reusable plastic containers and plastic and steel holding racks are substantial inasmuch they are made of steel and polypropylene or PVC and have a life expectancy of 15 years. These items are also suitable for and capable of reuse, in that they are reused an average of four times a year for each year of their life expectancy. 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). The subject reusable plastic containers and plastic and steel holding racks are used in significant numbers in international traffic inasmuch as approximately 4000 are currently in circulation. In addition, CBP has held that certain collapsible assemblies are IITs so long as their component parts remained together during its transit in international traffic. See HQ H113687 (Feb. 27, 1997) (collapsible metal racks used to import automobile parts); HQ 114506 (Oct. 29, 1998)(plastic tote boxes used to import car replacement parts); and HQ H282408 (Apr. 12, 2017) (intermodal containers, steel pallets with platform bases, laser module cases, and locking fixtures). Based on the foregoing, the subject steel racks and reusable plastic containers 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 subheading 9803.00.50 HTSUS. HOLDING The subject reusable plastic containers and plastic and steel holding racks 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/Supervisory Attorney-Advisor Cargo Security, Carriers and Restricted Merchandise Branch Office of Trade, Regulations and Rulings U.S. Customs and Border Protection