BOR-07-OT:RR:BSTC:CCR H286143 SWM
Linda S. Waits
Schenker, Inc.
2431 Aviation Avenue, Suite 709
North Charleston, South Carolina 29406
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1); HTSUS subheading 9803.00.50; Mercedes Benz Vans; Load carriers; Racks.
Dear Ms. Waits:
This is in response to your May 1, 2017, ruling request on behalf of Mercedes Benz Vans (“MBV”). In your submission, you request a ruling concerning whether certain load carriers, specifically fourteen types of steel racks to transport automobile parts, 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 1, 2017 ruling request, May 22, 2017 e-mail, and May 30, 2017 email. The subject articles are steel racks owned by MBV and will be used to transport up to 4,000 parts to produce the Sprinter VS30 (the “parts”). The steel racks will be used to transport the parts in sea containers from Germany to MBV’s plant in Charleston, South Carolina, where the automobiles will be assembled. MBV anticipates that parts will be shipped in the steel racks three times a week.
Once each shipment reaches Charleston, it is unpacked and all empty steel racks will be shipped back to Germany from Charleston within one to twenty weeks after arrival in the United States. None of the steel racks will remain in the United States. Each type of steel rack will have a special load carrier number that will enable MBV to track the location of each load carrier through a special information technology program, LTM. You provided this office with master data sheets with the specifications of the steel racks.
Each steel rack will be reused approximately every sixteen weeks and has an estimated life expectancy of five to twelve years. The 38 steel racks are each designed to carry various parts for assembly of the Sprinter VS30, specifically: The driver’s door shell, driver’s door, inner parts (Innenteil), rear door paneling, sliding door, door frame, front fender, hood, sliding door paneling, floor, side walls (ZB Seitenwand), inside lining (Eck-Beplankung innen), and roof (BPL Dach). There are varying quantities of each type of rack, ranging from 17 (Part 66146) to 1,440 (Part 66115). In total, there will be approximately 13,683 of the 38 types of steel racks in use.
Below are a sampling of the images you provided of the steel racks.
Part 66102 – Rack Driver s Door
Part 66103 – Rack Innenteil
Part 66111 – Rack Door Frame
ISSUE
Whether the subject steel 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 C.F.R. § 141.4(a), “[a]ll 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).
Based upon a review of the information you submitted, the subject steel racks are substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. The steel racks are substantial as they are made of steel and have a life expectancy of five to twelve years. They are suitable for and capable of reuse insofar as they are intended to complete a transportation cycle approximately every sixteen weeks for the duration of their life expectancy. The concept of reuse contemplated 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 steel racks are used in significant numbers in international traffic inasmuch as the minimum quantity for one type of rack is seventeen and the maximum quantity for one type of rack is 1,440. In total, approximately 13,683 racks will be in circulation.
CBP has repeatedly held that steel racks qualify as instruments of international traffic. See HQ H022952 (steel racks used to transport Honda work trucks); 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 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) and subheading 9803.00.50 HTSUS.
HOLDING
The subject steel 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