Instruments of International Traffic; 19 U.S.C. § 1332(a); §§ 10.41a(a)(1), 10a(a)(2); Mazda Motor of America, Inc.; Returnable Containers and Racks; Accessories

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H323497 March 15, 2022 OT:RR:BSTC:CCR H323497 JLE CATEGORY: Carriers Alicia Rodriguez Customs Manager Mazda North American Operations 200 Spectrum Center Dr. Irvine, CA 92618 RE: Instruments of International Traffic; 19 U.S.C. § 1332(a); §§ 10.41a(a)(1), 10a(a)(2); Mazda Motor of America, Inc.; Returnable Containers and Racks; Accessories Dear Ms. Rodriguez: This is in response to your January 19, 2022, ruling request on behalf of Mazda Motor of America, Inc., Inc. In your request you inquire whether certain returnable containers and racks qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1332(a). Our ruling is set forth below. Facts The following facts are from your ruling request and supplements thereto. There are six subject items: totes, pallets, top caps, knock-down containers, steel bins and steel racks. These subject items are designed to cater to the production needs of Mazda North American Operations (“MNAO”). MNAO plans to import production parts into the Mazda/Toyota Manufacturing (“MTM”) plant in Huntsville, Alabama from approximately 50 suppliers in Mexico. The subject items will hold production parts delivered to MTM and return to Mexico empty. With respect to the subject totes, the items are made from injection-molded plastic with a plastic lid. They range in size from 12”x15”x4” to 48”x23”x14”. There are a total of 2,915 subject totes to be used during the year. Pictured below is a sample of the subject totes.
With respect to the subject pallets, the items are made from injection-molded plastic, it is flat with legs. The subject pallet is 48”x45”x6”. There are a total of 6,286 subject pallets to be used during the year. Pictured below is a sample of the subject pallet.
With respect to the subject top caps, the items are made from injection-molded plastic and fit on top of the pallet to hold the parts in place. The subject top caps are 48”x45”x3”. There are a total of 16,286 subject top caps to be used during the year. Pictured below is a sample of the subject top cap.
With respect to the subject knock-down containers, the items are made from injection-molded plastic. The sides fold down for easier loading of production parts. They range in size from 48”x45”x25” to 70”x48”x50”. There are a total of 1,547 subject knock-down containers to be used during the year. Pictured below is a sample of a subject knock-down container.
With respect to the subject steel bins, the item is made from steel, and has legs. The subject bin’s size ranges from 48”x30”x22” to 48”x45”x22”. There are a total of 4,189 subject steel bins to be used during the year. Pictured below is a sample of a subject steel bin.
With respect to the subject steel racks, the items are made from steel and designed to carry heavier parts, such as axle assemblies. The subject steel racks range from 48”x45”x27” to 96”x48”x36”. There are a total of 4,629 subject steel racks to be used during the year. Pictured below is a sample of the subject steel racks.
The injection-molded plastic is “made up of different types of materials which can include high-density polyethylene (“HDPE”) to polypropylene plastic (“PP”) to Structural Foam to low-density polyethylene (“LPDE”).” The subject items are primarily manufactured in the United States and Mexico. They are designed to have a lifespan of five years. The subject items are expected to complete two cycles from Mexico to MTM per month. Issues Whether the subject totes qualify for consideration as IIT within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Whether the subject pallets qualify for consideration as IIT within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Whether the subject top caps qualify for consideration as IIT within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Whether the subject knock-down containers qualify for consideration as IIT within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Whether the subject steel bins qualify for consideration as IIT within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Whether the subject steel racks qualify for consideration as accessories to IITs within the meaning of 19 C.F.R. § 10.41a(a)(2). Whether the subject equipment would be required to bear country of origin markings? 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 (“IIT”). 19 C.F.R. § 141.4(b)(3). Subheading 9803.00.0, 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). 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 used as a container or holder must be: (1) substantial, (2) suitable for and capable of repeated use, and (3) used in significant numbers in international traffic. See HQ H291037 (Jan. 9, 2018); 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). Totes U.S. Customs and Border Protection (“CBP”) has previously determined that containers and holders constructed from PP and HDPE qualify as substantial. See HQ H319515 (Aug. 23, 2021). CBP has classified similar totes as an IIT. See HQ 114482 (Dec. 18, 1998). The totes were made from HDPE and approximately 400 sets of the totes were to be used per months with a life expectancy of five to seven years. Id. The subject totes are substantial insomuch they are made from injection-molded plastic comprising of PP and HDPE and have a lifespan of five years. They are capable of repeated use and thousands of subject totes are to be used in international traffic. Based on the foregoing, the subject pallets are designated as IITs; therefore, they qualify for entry-free and duty-free treatment as IITs pursuant to 19 C.F.R. § 10.41a(a)(1). Pallets Pursuant to 19 C.F.R. § 10.41a(a)(1), pallets are per se IITs. In HQ H119060, CBP held that “pallets have already been designated as an instrument of international traffic by regulation. See 19 C.F.R. § 10.41a(a).” HQ H119060 (Nov. 9, 2010); see also HQ H252710 (May 19, 2014) (CBP held “the subject plastic pallets are IITs.”) Based upon review of the submission and information provided, the subject injection-molded plastic pallets are containers that are substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. Based on the foregoing, the subject pallets are designated as IITs; therefore, they qualify for entry-free and duty-free treatment as IITs pursuant to 19 C.F.R. § 10.41a(a)(1). Top Caps CBP has classified, individually, containers and lids as IITs. In HQ 114482, CBP held both the totes and their accompanying lids, which were used for the transportation of automotive wire assemblies, qualified for treatment as IITs. See HQ 114482 (Dec. 18, 1998). The subject pallet and subject top caps “are all separate items. They are not dependent on one another but, they are secured together to complete the container.” Based upon review of the submission and information provided, the subject injection-molded plastic top caps are containers that are substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. Based on the foregoing, the subject top caps are designated as IITs; therefore, they will qualify for entry-free and duty-free treatment as IITs pursuant to 19 C.F.R. § 10.41a(a)(1). Knock-Down Containers Based upon review of the submission and information provided, the subject injection-molded plastic knock-down containers are containers that are substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. Based on the foregoing, the subject knock-down containers are designated as IITs; therefore, they will qualify for entry-free and duty-free treatment as IITs pursuant to 19 C.F.R. § 10.41a(a)(1). Steel Bins CBP has held equipment made from steel as substantial. See H116376 (Jan. 11, 2005) (CBP determined steel bins and steel chains were substantial); HQ303170 (Apr. 9, 2019) (CBP held steel container racks were substantial). Based upon review of the submission and information provided, the subject steel bins are containers that are substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. Based on the foregoing, the subject steel bins are designated as IITs; therefore, they will qualify for entry-free and duty-free treatment as IITs pursuant to 19 C.F.R. § 10.41a(a)(1). Steel Racks CBP has consistently held that steel racks of a similar type to the ones at issue qualify as IITs. See HQ H286143 (June 20, 2017) (steel racks used to transport automobile parts in sea containers); HQ H007166 (May 10, 2007) (steel racks used to transport automobile transmissions); HQ H002927 (Nov. 22, 2006) (steel racks used to import doors); HQ H113687 (Feb. 27, 1997) (collapsible metal racks used to import automobile parts). Based upon review of the submission and information provided, the subject steel racks are containers that are substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. Based on the foregoing, the subject steel racks 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) Country of Origin Requirement CBP has held that equipment designed as IITS are not considered imported into the U.S., and therefore not subject to the country of origin marking requirements of 19 U.S.C. § 1304. See H115644 (Jun. 24, 2002). Holding The subject totes, pallets, top caps, knock-down containers, steel bins and steel racks qualify for consideration as instruments of international trade within the meaning of 19 U.S.C. § 1322(a) and § 10.41a(a)(1). Inasmuch as they qualify for consideration as instruments of international trade, they are not subject to country of origin marking requirements as contemplated by 19 U.S.C. § 1304. Sincerely yours, W. Richmond Beevers, Chief Cargo Security, Carriers, and Restricted Merchandise Branch