BOR-07-OT:RR:BSTC:CCR H302868 TNA
Michael Haley
SkyCell North America, Inc.
504 E 30th Avenue
Kansas City, MO 64116
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1);
HTSUS subheading 9803.00.50; SkyCell North America; Climate Controlled Transport Devices.
Dear Mr. Haley:
This is in response to your January 28, 2019, ruling request to the National Commodity Specialist Division (“NCSD”) on behalf of SkyCell North America (“SkyCell”). The NCSD forwarded your request to this office on February 15, 2019. In your submission, you request a ruling concerning whether certain climate controlled transport devices 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 March 18, 2019 email, which contained further information that our office had requested. There are four climate controlled transport devices at issue: the SkyCell 1500C; the SkyCell 1500CRT; the SkyCell 2500C; and the SkyCell 2500CRT. These devices are made in Switzerland. Skycell manufactures temperature controlled packaging for the pharmaceutical industry. The pharmaceutical industry uses this packaging to protect their products from temperature changes that occur during international transport, and the containers at issue are designed for both extreme heat and extreme cold. The exteriors of the subject transport devices are made from PVC plastic, and their insulation is composed of Polyvinyl chloride, a plastic. The insulation also contains a thin coating of aluminum, other trace metals, and SkyCell’s patented phase change material, which is used to store coolants. The subject transport devices are expected to last approximately five years. They can be used an infinite number of times and are generally leased continually during their five year lifespan. In addition, there are currently 1400 devices in circulation.
The SkyCell 1500C has exterior dimensions of 60.2 x 52.0 x 63.0 inches and interior dimensions of 48.6 x 41.0 x 48.0 inches. It weighs 1096 pounds. The SkyCell 1500C is used on SkyCell’s New York- Dubai- Johannesburg route.
The SkyCell 1500CRT has exterior dimensions of 60.2 x 52.0 x 63.0 inches and interior dimensions of 48.5 x 41.0 x 48.0 inches. It weighs 1096 lbs. The SkyCell 1500CRT is used on SkyCell’s Frankfurt- Miami- Sao Paulo route.
The SkyCell 2500C has exterior dimensions of 76.5 x 60.0 x 63.0 inches and interior dimensions of 65 x 48.8 x 48.0 inches. It weighs 1433 pounds. The SkyCell 2500C is used on SkyCell’s New York- Dubai- Johannesburg route.
The SkyCell 2500CRT has exterior dimensions of 76.5 x 60.0 x 63.0 inches and interior dimensions of 65.0 x 48.8 x 48.0 inches. It weighs 1433 pounds. The SkyCell 2500CRT is used on SkyCell’s Frankfurt- Miami- Sao Paulo route.
The following images were submitted with each of the technical specifications of the four containers:
ISSUE
Whether the subject SkyCell 1500C, SkyCell 1500CRT, SkyCell 2500C; and SkyCell 2500CRT transport devices 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 climate controlled transport devices are substantial inasmuch as they are made of steel and have a life expectancy of five years. They are suitable for and capable of reuse, in that they can be reused an infinite number of 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). In addition, the subject climate controlled transport devices are used in significant numbers in international traffic in that there are 1400 of them currently in circulation.
Furthermore, 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), both holding that temperature control containers used for shipping various articles for the pharmaceutical, biotech and genetic research industries are IITs. In the present case, the subject climate controlled transport devices share many of the same characteristics as the temperature-controlled cargo containers of HQ H225100, HQ H167475, and HQ H218509. As a result, the subject SkyCell 1500C, SkyCell 1500CRT, SkyCell 2500C and SkyCell 2500CRT qualify as IITs.
HOLDING
The subject SkyCell 1500C, SkyCell 1500CRT, SkyCell 2500C and SkyCell 2500CRT transport devices 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