OT:RR:BSTC:CCR H251366 KLQ
Captain Jim Brasier
Director, Operations
Hapag-Lloyd USA, LLC
401 E. Jackson Street, Suite 3200
Tampa, FL 33602
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1) and (a)(2); Container Monitoring Devices; Accessories; Harmonized Tariff Schedule of the United States subheading 9803.00.50; Article 1, Customs Convention on Containers (1972).
Dear Captain Brasier:
This is in response to your March 12, 2014, ruling request. In your letter, you request a ruling concerning whether Emerson Remote Monitoring Modems+ (RMM) (“container monitoring devices”) to be used with reefer containers, qualify as an accessory for certain instruments of international traffic (IITs). Our decision follows.
FACTS
The following facts are from your ruling request and your e-mails to this office dated April 23, 2014, May 1, 2014, May 22, 2014, and June 3, 2014. The container monitoring devices are placed inside of United States (“U.S.”) military reefer containers in order to monitor the temperature inside the containers. The reefer containers are foreign made, measure 40’×8’×8.5”, and have a life expectancy of 15 years. The container monitoring devices are U.S. made, measure less than one square foot, and have a life expectancy of approximately one year. The number of reefer containers used per voyage ranges from 25 to 100 individual containers. The container monitoring devices will be placed in the reefer containers in the U.S., most likely in Norfolk, Virginia, for transportation to Antwerp, Belgium. Once in Belgium, the devices will be removed from the containers and placed on vessels returning to the U.S. as “hand-carried” cargo. Hapag-Lloyd states that the reefers and monitoring devices will only be used in international shipments. Below is an image of the subject container monitoring device.
An image of the subject reefer container can be found on the Hapag-Lloyd website.
ISSUES
Whether the subject reefer shipping containers for which the subject monitoring devices will be used are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
Whether the subject monitoring devices themselves may be considered accessories of the subject shipping containers under 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(2).
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, Harmonized Tariff Schedule of the United States (“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.
Hapag-Lloyd asserts that the monitoring devices are accessories to certain instruments of international traffic and therefore, may be imported into the U.S. without payment of duty. In order to address whether the subject monitoring devices are accessories as set forth in 19 C.F.R. § 10.41a(a)(2), it is necessary to determine whether the shipping containers the monitoring devices are to be used with are IITs within the meaning of 19 C.F.R. § 10.41a(a)(1).
Issue 1-Reefer Shipping Containers as IITs under 19 C.F.R. § 10.41a(a)(1)
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 addition, CBP has held that standard shipping containers as instruments of international traffic. See HQ H044900 (Dec. 18, 2008)(holding that “it is well settled that intermodal cargo containers qualify as ‘instruments of international traffic.’” citing HQ 113003
(Jan. 27, 1994)); see also HQ 116684 (Aug. 17, 2006) and HQ W116719 (Nov. 30, 2006) (holding that intermodal containers are IITs); see also HQ 113135 (June 21, 1994)(holding that permanently installed refrigeration units in certain containers were integral parts of those containers, which had already been designated as IITs.)
The reefer shipping containers are substantial inasmuch as they are made of metal, measure 40’×8’×8.5”, and have a life expectancy of 15 years. The subject shipping containers are suitable for and capable of reuse, insofar as Hapag-Lloyd will ship the containers at least eight to ten times 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). CBP has consistently held that single use is not sufficient; reuse means more than twice. See HQ 105567 and HQ 108658. The shipping containers are used in significant numbers in international traffic inasmuch as 25 to 100 reefer containers may arrive on each shipment.
Based on the foregoing, the reefer shipping 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.
Issue 2 -Monitoring Devices as Accessories under 19 C.F.R. § 10.41a(a)(2)
The CBP Regulations under 19 C.F.R. § 10.41a(a)(2) provides:
Repair components, accessories, and equipment for any container of foreign production which is an instrument of international traffic may be entered or withdrawn from warehouse for consumption without the deposit of duty if the person making the entry or withdrawal from warehouse files a declaration that the repair component was imported to be used in the repair of a container of foreign production which is an instrument of international traffic, or that the accessory or equipment is for a container of foreign production which is an instrument of international traffic. The port director must be satisfied that the importer of the repair component, accessory, or equipment had the declared intention at the time of importation.
(emphasis added).
The foregoing regulatory provision allows, in relevant part, accessories of foreign-produced IITs to be entered separately, without payment of duty, upon approval from the port director at the port of arrival that such accessories will be used with foreign-produced IITs.
Under 19 C.F.R. § 10.41a(a)(2), an accessory to a container may be imported into the U.S. without payment of duty if: the container is of foreign production; the container is an IIT pursuant to 19 C.F.R. § 10.41a(a)(1); and the accessory is imported into the U.S. separately from the IIT. In the instant case, the containers are foreign made. The reefer containers are IITs pursuant to 19 C.F.R. § 10.41a(a)(1) as discussed above. Finally, the monitoring devices will be imported into the U.S. separately from the reefer containers. Therefore, pursuant to 19 C.F.R. § 10.41a(a)(2) the subject monitoring devices may be imported into the U.S. as accessories to IITs without payment of duty. However, the port director must be satisfied that the importer of the subject accessory had the declared intention of using the accessory with the subject container of foreign production which is an instrument of international traffic, at the time of importation.
HOLDING
The subject reefer shipping containers for which the subject monitoring devices will be used are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
The subject monitoring devices themselves are accessories of the subject shipping containers under 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(2); however, the port director must be satisfied that the importer of the subject accessory had the declared intention of using the accessory with the subject container of foreign production which is an instrument of international traffic, at the time of importation.
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