BOR-07-OT:RR:BSTC:CCR H291037 ASZ
Jason Joubert
va-Q-tec Ltd.
105 Rochester Airport Industrial Estate
Rochester, Kent
ME1 3QX
United Kingdom
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1); HTSUS subheading 9803.00.50; Va-Q-tec Ltd.; temperature control containers.
Dear Mr. Joubert:
This is in response to your July 12, 2017 ruling request on behalf of Va-Q-tec Ltd. (Va-Q-tec), which was referred to this branch by the National Commodity Specialist Division of U.S. Customs and Border Protection (CBP) for our direct response to you. In your submission, you request a ruling concerning whether certain temperature control containers, as described below, 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 July 12, 2017 ruling request and your November 15-16, 2017 and December 14, 2017 e-mails to this office. Va-Q-tec offers temperature control containers for hire to customers in the pharmaceutical, biotech, and medical industries. The containers use vacuum insulation technology to maintain the required temperatures for transportation. The company rents the containers to its customers through the use of 25 network stations around the world. For example, a customer will collect a container from a foreign network station, load its product inside the container, and ship it via air to the United States. Upon arrival, the customer will unload the product and return the empty container to the local U.S. network station. Next, a U.S.-based customer will collect the container from the local network station, load its product into the container, ship the container to a foreign location, unload its product, and return the empty container to a nearby network station. The cycle then repeats.
The subject temperature control containers are composed of fiber reinforced polyester, birch plywood, and polyurethane foam. The containers are capable of being reused over one hundred times with an estimated lifespan of seven years. Va-Q-tec has approximately 1,000 containers in circulation, and each container has a unique serial number for control purposes. The containers are currently planned for shipping products to and from Europe, Central America, North America, South America, Asia, and Africa. You provided this office with the specifications of the containers.
Below are images you provided of the temperature control containers.
ISSUE
Whether the subject temperature control containers 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 temperature control containers are substantial inasmuch as they are made of fiber reinforced polyester, birch plywood, and polyurethane foam and have a life expectancy of seven years. The subject temperature control containers are suitable for and capable of repeated use insofar as the containers can be used over 100 times. 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 temperature control containers are used in significant numbers in international traffic inasmuch as approximately 1,000 sets will be in circulation.
CBP has held that temperature control containers used for shipping various articles for the pharmaceutical, biotech, and medical industries qualify as instruments of international traffic. See HQ H186596 (Nov. 2, 2011). Based on the foregoing, the subject temperature control 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 temperature control containers 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