BOR-07-OT:RR:BSTC:CCR H277751 ASZ
Marcela B. Stras
Cozen O’Connor
1200 Nineteenth St. NW
Washington, DC 20036
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1); HTSUS subheading 9803.00.50; Container Centralen, Inc. (“CC, Inc.”); Potted Plant Shelf Racks (“plant racks”).
Dear Ms. Stras:
This is in response to your July 19, 2016, ruling request on behalf of Container Centralen, Inc. (“CC, Inc.”), which we received on July 26, 2016. In your submission, you request a ruling concerning whether certain transport devices, identified by CC, Inc. as potted plant shelf racks (“plant 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). You also requested approval of your application for exemption from serial numbering or marking requirements pursuant to 19 C.F.R. § 10.41b(b). Our decision follows.
FACTS
The following facts are from your ruling request and the exhibits attached. The subject articles are plant racks used to hold and stack standard potted plants for transportation purposes. The plant racks are imported by CC, Inc. and are rented to customer nurseries and plant growers in the United States and Canada who fill the plant racks with plants and ship them to retailers. After the racks are emptied, they are returned to CC, Inc.’s agent in Canada who then transports the racks to the United States by truck for reuse.
CC, Inc. uses [] software to track the movement of its rack shipments. The subject plant racks are labeled with the letters “CC” appearing on each of the individual components, and each plant rack base has a unique RFID barcode that is scanned when rented out to customers and when returned to a CC, Inc. warehouse. CC, Inc. customers also scan the barcodes on the racks shipped to retail stores both in the United States and Canada to help keep accurate inventory and assist in the recovery of the racks. Although the plant racks are also currently being used in domestic traffic within the forty-eight contiguous United States, barcodes help CC, Inc. differentiate articles used in domestic traffic from articles used in international traffic. The approximate quantity of plant racks that were shipped in international traffic in years 2014 and 2015 were [].
There is only one type and size of plant rack used within the CC, Inc. lease program. These plant racks are manufactured in [] and are made of steel with a steel standard that is identified as []. Each one of the plant racks consists of three type component parts (1 base, 4 shelves, and 4 posts), with the following weights: the base, 45 pounds; the shelves, 14.3 lbs. (x 4); and the posts, 8.5 lbs. (x 4), for a total weight of 136.2 lbs. per one complete, assembled plant rack. The dimensions of the base, shelves, and posts of the plant racks are as follows: []. The plant racks have an estimated lifespan of [] years for each complete plant rack unit.
Below are images you provided of the subject plant racks.
Plant rack (empty) Plant rack (with potted plants)
ISSUE
Whether the subject plant racks are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
LAW AND ANALYSIS
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.
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.
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 C.F.R. § 10.41a(a)(1), “[t]he Commissioner of Customs [currently 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.” See 19 C.F.R. § 10.41a(a). We note that in regards to steel pallet roller boxes, in HQ H025196 (May 15, 2008), CBP held that, “[t]he subject steel pallet roller boxes are hereby designated as IITs pursuant to 19 U.S.C. § 1322(a) and 19 CFR 10.41a(a)(1).” In regards to collapsible wire containers, in HQ H240539 (May 6, 2013), CBP held that, “[t]he subject collapsible wire containers described above are designated instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a.”
Based upon review of the submission and information provided, the subject plant racks are containers that are substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. The articles are made of steel, have an estimated useful life of twenty years, and approximately 3,300 complete plant rack units are to be used in international traffic. An individual rack makes an average of four cycles through the supply chain per year.
Furthermore, the movement of the plant racks are tracked by scanning a unique RFID barcode, which helps distinguish between articles used in domestic traffic and articles used in international traffic. Based on the foregoing, the subject plant racks 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) and HTSUS subheading 9803.00.50.
With regard to the application you submitted with your ruling request pursuant to 19 C.F.R. § 10.41b(b), it should be submitted to the appropriate port director set forth in 19 C.F.R. § 10.41b(b)(1).
HOLDING
The subject plant 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 International Trade, Regulations and Rulings
U.S. Customs and Border Protection