BOR-07-OT:RR:BSTC:CCR H303878 TNA
Ryan Supek
TE Connectivity Corporation
2800 Fulling Mill Road
Middletown, PA 17057
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1);
HTSUS subheading 9803.00.50; Plastic totes, lids, partitions, and pallets.
Dear Mr. Supek:
This is in response to your April 12, 2019, ruling request to the National Commodity Specialist Division (“NCSD”) on behalf of TE Connectivity Corporation. The NCSD forwarded your request to this office on May 9, 2019. In your submission, you request a ruling concerning whether certain plastic totes, lids, partitions, and pallets qualify as instruments of international traffic (IITs) 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 ruling request and your May 22, 2019 email, which contained further information that our office had requested. The subject merchandise consists of totes, lids, partitions, and pallets that are manufactured in the United States and are used together as an assembly shipping system for transporting automobile parts. These items are made of hard plastic and are shipped together as a single unit from U.S. automobile manufacturers in Ohio and Michigan to TE Connectivity’s manufacturing site in Hermosillo, Mexico. When they are shipped from the U.S. to Mexico, they are shipped empty- i.e., they contain no merchandise.
Once the subject totes, lids, partitions, and pallets arrive in Mexico, they are filled with connectors for the transmission valve body and oil auxiliary pump of automobiles, all of which are then imported back into the U.S. None of the totes, lids, partitions and pallets can be used independently of each other. They can only be used as an assembled unit, and are only disassembled in Mexico to be cleaned before the auto parts are placed in each unit. When the units are filled with auto parts, they are then imported into the U.S., and are sent to the U.S. auto manufacturers from whom they were exported.
The subject totes, lids, partitions, and pallets are used for the life of the manufacturing project, which typically lasts around seven years. They are shipped back and forth between the U.S. and Hermosillo throughout the year and are reused approximately 36 times a year. Approximately 750 of the subject totes, lids, partitions, and pallets are in circulation per month.
The following images were submitted with the technical specifications of the subject totes, lids, partitions, and pallets:
ISSUE
Whether the subject shipping assembly systems, consisting of totes, lids, partitions, and pallets, 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). 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 the present case, the subject totes, lids, partitions, and pallets are substantial inasmuch as they are made of hard plastic. They are suitable for and capable of reuse, in that they are reused 36 times a year and have a life expectancy of about seven years. 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). In addition, the subject totes, lids, partitions, and pallets are used in significant numbers in international traffic in that there are 750 of them currently in circulation per month. As such, the subject merchandise meets the definition of IITs.
Furthermore, CBP has previously classified shipping assembly systems for automotive parts as IITs. See, e.g. HQ H253872 (August 1, 2014), classifying plastic crates primarily used for transportation by the automotive industry and consisting of a pallet at the base, a sleeve (which makes up the sides), and a lid as a top to the container as IITs; HQ H044815 (December 18, 2008), classifying a shipping assembly system consisting of aluminum boxes, plastic isotope boxes, polypropylene beams, and plastic pallets, in which pipework and centrifuge parts for machines used in the process of enriching uranium were shipped, as IITs; HQ 224402 (May 27, 1993) holding that an assembly of wooden boxes for carrying designated automotive parts overseas were considered IITs. In the present case, the subject totes, lids, partitions, and pallets, like the items of HQ H253872, HQ H044815 and HQ 224402 are assembly shipping systems designed to transport auto parts. As a result, the subject totes, lids, partitions, and pallets qualify as IITs.
HOLDING
The subject shipping assembly systems, consisting of totes, lids, partitions, and pallets 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