BOR-07-OT:RR:BSTC:CCR H303169 TNA
Mr. Michael Unsworth
Global Transportation Management, LLC
34450 Industrial Road
Livonia, MI 48150
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1); HTSUS subheading 9803.00.50; CRRC Sifang America, Inc.; Rail Car Coverings.
Dear Mr. Unsworth:
This is in response to your ruling request submitted on January 17, 2019, on behalf of CRRC Sifang America, Inc. In your request, you inquire whether protection devices for rail car shells qualify as “Instruments of International Traffic” (“IITs”) within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Our ruling is set forth below.
FACTS
The following facts are from your ruling request and supplements thereto. CRRC Sifang America, Inc.’s Chinese branch (“CCRC China”) manufactures rail car shells which are assembled in the United States by the company’s Chicago branch (“CCRC Chicago”). CRRC China secures the transportation of rail car shells to CRRC Chicago using “rail car coats,” large swaths of cloth that covers the entire body of a rail car shells. These coverings protect the rail car shells from scratches, dust and rust. As such, they protect the rail car shells during transportation and loading/unloading operations. The rail car coats are made of tarpaulin, heavy-duty waterproof cloth.
The protection devices are made in China. They will have an estimated circulation of 16 to 20. In addition, they have a lifespan of two years, and they can be reused approximately five times. Once the rail car shells have been offloaded in the United States, CRRC Chicago returns the coats to CRRC China for reuse.
Below are images of the subject coverings:
ISSUE
Whether the protection devices described above qualify as “instruments of international traffic” (“IITs”) within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a?
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).
In HQ H282408, certain locking fixtures at issue attached to the cargo for stabilization during transport rather than attaching to any of the pallets, intermodal containers, or cases used to transport the cargo. As a result, the locking fixtures were found not to be IITs because they did not hold or contain the cargo. Similarly, in HQ H286142 (July 6, 2017) the engine hooks at issue were attached to the engines they helped transport, but they did not hold or contain those engines. Instead, those hooks were essentially tools necessary to lift and move the automobile engines. As a result, CBP found that these hooks were not IITs because they were not substantial holders or containers. In the present case, the subject rail car shell coverings do not serve as, and are not used as, containers or holders for the rail car shells. To the contrary, they are used to protect the subject rail car shells during transportation and during loading and unloading onto vessels. As such, they do not meet the first prong of the test for IITs.
HOLDING
The subject “rail car coats,” described in the FACTS section above, are not IITs within the meaning of 19 U.S.C. § 1322(a) or 19 C.F.R. § 10.41a(a)(1) insofar as they are not holders or containers.
Sincerely,
Lisa L. Burley, Chief
Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection