BOR-07-OT:RR:BSTC:CCR H310382 TNA
Herbert J. Lynch
Sullivan & Lynch, P.C.
Attorneys and Counselors at Law
800 Turnpike Street, Suite 300
North Andover, MA 08145
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1);
HTSUS subheading 9803.00.50; World Courier; DV4 and DV10 Dry Vapor Cold Chain Shipping Containers.
Dear Mr. Lynch:
This is in response to your March 6, 2020, ruling request on behalf of World Courier. You requested a ruling concerning whether certain cold chain dry vapor shipping containers 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 March 6, 2020, ruling request and your emails of May 11, 2020, and May 26, 2020. The subject merchandise consists of two types of cold chain dry vapor shipping containers, the DV4 and the DV10. World Courier specializes in logistics services to the pharmaceutical industry and companies that require a temperature-controlled supply chain. They are primarily constructed of double-walled aluminum, and contain a unique closure with integrated sensory and communications technology. This allows for constant temperature monitoring of the containers’ contents.
The subject DV4 container measures 160 millimeters by 56 millimeters by 295 millimeters, and has a 180 millimeter throat opening. Its weight by volume is 14.3 kilograms with its outer packaging, and 17 kilograms when charged. The subject DV10 container measures 160 millimeters by 102 millimeters by 292 millimeters and has a 215 millimeter throat opening. Its weight by volume is 28 kilograms with its outer packaging, and 37.5 kilograms when packaged charged. The lifespan of these containers is a minimum of one year. There are currently 165 of these containers currently in circulation, and they are used in approximately 2500 shipments a year. They will be reused at least fifteen times a year.
World Courier takes delivery of new containers at its headquarters in New York directly from the manufacturer, which is located in New Mexico. World Courier delivers the containers to its customers for loading, retrieves and transports the loaded containers, generally by air freight. World Courier arranges for the delivery of the containers to its customer’s consignee, retrieves the containers after unloading, cleans them and places them back into service inventory. In terms of World Courier’s logistics in the shipment of the subject containers and their importation into the United States, there are several scenarios currently in place. A container can be shipped empty to one of World Courier’s 130 overseas offices to bring merchandise back to the United States for an importer. In the second scenario, filled containers leave the United States for international delivery. In this scenario, the container could also be used for point-to-point international transportation before coming back into the United States, either with merchandise or empty to be positioned for the next job. The last possible scenario is that a container is used for point-to-point shipments within the United States. World Courier stated that while inventory of the DV4 and DV10 is not segregated for domestic or international use, the containers are barcoded and traceable.
The following images were submitted with the technical specifications of the subject cold chain dry vapor shipping containers:
ISSUE
Whether the subject cold chain dry vapor shipping 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
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:
(a) 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. …
(d) If an instrument of foreign origin, or of United States origin which has been increased in value or improved in condition by a process of manufacture or other means while abroad, is released under this section and is subsequently diverted to point-to-point local traffic within the United States, or is otherwise withdrawn in the United States from its use as an instrument of international traffic, it becomes subject to entry and the payment of any applicable duties. An instrument of United States origin which has not been increased in value or improved in condition by a process of manufacture or other means while abroad and which is released under this section shall not be subject to entry or the payment of duty if it is so diverted or otherwise withdrawn.
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 addition, CBP has previously ruled on whether temperature controlled cargo containers are IITs. In HQ H225100 (Sept. 17, 2012), for example, CBP held that temperature-controlled cargo containers used for transporting pharmaceuticals qualified as IITs within the meaning of 19 U.S.C. §1322(a) and 19 CFR § 10.41a. See also HQ H167475 (July 20, 2011) and HQ H218509 (July 30, 2012)( holding that temperature control containers used for shipping various articles for the pharmaceutical, biotech and genetic research industries are IITs). Lastly, in HQ H302868 (April 4, 2019), CBP held that four climate-controlled transport devices, used in the pharmaceutical industry to protect their products from temperature changes that occur during international transport, were IITs.
In the present case, the subject cold chain dry vapor shipping containers are substantial inasmuch as they have a life expectancy of at least one year. In addition, they are used in significant numbers in international traffic in that there are 165 of them currently in circulation and they are used in approximately 2500 shipments a year. 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 the present case, the subject cold chain dry vapor shipping containers are used for approximately 2500 shipments in a year, and are reused at least 15 times a year. As a result, the subject DV4 and DV10 cold chain shipping containers qualify as IITs.
We note that in a minority of cases, the DV4 and DV10 containers may be used for point-to-point shipments within the United States. The diversion of IITs into domestic use is governed by the terms of 19 C.F.R. § 10.41a(a)(1). In addition, in prior rulings, CBP has addressed instances where containers are used in both international and domestic traffic. In HQ H277751 (September 28, 2016), for example, plant racks used to hold and stack standard potted plants for transportation purposes were imported into the United States. After importation, theracks were rented to customer nurseries and plant growers in the United States and Canada who filled the racks with plants and shipped them to retailers. The importer used a system of bar codes and RFID chips to track the plant racks, which helped distinguish between articles used in domestic traffic and articles used in international traffic. There, CBP held the plant racks were IITs.
In HQ H300964 (April 4, 2019), by contrast, reusable plastic containers were imported into the United States without bar codes or other means of tracking the containers. The vast majority of these containers remained in the United States for their entire useful life, but a small percentage were shipped to Canada or Mexico and returned loaded with merchandise. There, CBP held that these containers were not IITs because they were shipped to the United States intended for use in domestic traffic. CBP declined to grant IIT status to the few containers that were shipped to Canada and Mexico because there was no way of tracking these containers, and as such, there was no way of being certain which containers were actually used as IITs.
The present case is akin to HQ H277751. The majority of the subject cold chain dry vapor containers will be used in international traffic, with only a few being diverted for point to point use. Furthermore, these containers have barcodes and are traceable, which helps distinguish between articles used in domestic traffic from those that are used in international traffic. As a result, the use of the subject DV4 and DV10 qualify them as IITs.
HOLDING
The subject cold chain dry vapor shipping 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