OT:RR:BSTC:CCR H303749 AMW
Mr. Michael E. Roll, Esq.
Pisani & Roll LLP
1875 Century Park East, Suite 300
Los Angeles, CA 90067
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1); HTSUS subheading 9803.00.50; Anheuser-Busch LLC; stainless steel kegs.
Dear Mr. Roll:
This is in response to your ruling request, dated April 19, 2019, and follow-up information submitted on May 3, 2019, and June 7, 2019, on behalf of Anheuser-Busch LLC (“AB”). In your submission, you request a ruling concerning whether certain stainless steel beer kegs, as described below, qualify as instruments of international traffic (“IIT”) and are therefore classifiable under subheading 9803.00.50 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Our decision follows.
FACTS
The subject articles are beer kegs constructed of stainless steel and used to transport beer into the United States. Your ruling request indicates that the subject kegs will be comprised of the following model names and sizes: (1) AB Half Barrel – D system valve; (2) AB Short Quarter Barrel – D system valve; (3) AB Domestic Sixth Barrel – D system valve; (4) AB Import/Export Sixth Barrel – D system valve; (5) AB Slim Quarter Barrel – D system valve; (6) Stella 50L – S system valve; (7) Leffe 30L – S system valve; (8) Hoegaarden 20L – A style valve; (9) Hoegaarden 50L – A style valve; (10) Boddington’s 50L – G style valve. You state that the subject kegs are of Chinese, U.S., Spanish, Mexican, and German origin and that AB anticipates using an initial amount of 160,000 sixth barrel kegs of Chinese origin.
AB will fill the subject kegs with beer outside the United States and will primarily import them through 22 U.S. ports listed in your supplemental information. AB will then deliver the kegs to AB’s customers or distributors, requiring these entities to pay a deposit to ensure each keg will be returned. The customer or distributor will then deliver each keg to an end user, such as a restaurant or bar. Once the end user has finished the contents of a keg, the keg will be returned to AB for cleaning and shipment abroad for reuse. This cycle will continue for the useful life of a keg, which can be up to 30 years. On average, you report that each keg will remain in the United States for approximately six months or less. You state that AB will transport millions of kegs per year in this manner.
You state that all of the keg models listed above, except for the sixth barrel model, will be used exclusively in the international movement of beer. To ensure that the subject kegs are not diverted to domestic traffic, you have provided evidence that AB will track the subject kegs throughout their life-cycle in the United States. Specifically, you state that AB will affix each keg with a bar code label, a time stamp, and a temporary red band to allow for manual sorting once the empty keg is returned to an AB facility in the United States. The bar code label will be scanned each time it is returned to AB and cross-referenced with the keg label to determine the container on which the keg arrived and the date of its arrival in the United States. Kegs destined for return abroad will be hand-loaded into a shipping container at the same Illinois location, and each unique keg ID will be recorded. You state that AB will file IIT diversion reports as necessary for any keg that is lost, stolen, or otherwise diverted in the United States.
ISSUE
Whether the subject stainless steel beer kegs 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), “[v]ehicles and other instruments of international traffic…shall be excepted from the application of the customs laws to such extent and subject to such terms and conditions as may be prescribed in regulations….” The relevant CBP regulations implementing this statute are found at 19 C.F.R. § 10.41a, which authorizes the CBP Commissioner to designate as IITs such additional articles not specifically noted in that section. Once designated as such, an IIT may be released without entry or payment of duty.
Subheading 9803.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”) provides, in pertinent part, 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.
Once again, the relevant CBP regulations implementing 19 U.S.C. § 1322(a) 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.
CBP has held in its published decisions that in order to qualify as an IIT pursuant to 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1), an article must be used as a container or holder in international traffic. See 19 C.F.R. 10.41a (“in use or to be used in the shipment of merchandise in international traffic”); see also, e.g., HQ H016491 (Oct. 1, 2007); HQ 114150 (Dec. 12, 1997); and HQ 107545 (May 7, 1985). Next, the article must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. See, e.g., 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). CBP has interpreted “reuse” in this context to mean practical, commercial reuse, not incidental reuse. See Holly Stores, Inc. v. United States, 697 F.2d 1387, 1388 (Fed. Cir. 1982), aff’g 534 F. Supp. 818 (Ct. Int’l Trade 1981). We have, furthermore, held that “repeated use” means “more than twice.” See, e.g., HQ 108658 (Nov. 21, 1986).
Based upon a review of the information you submitted, we find that the subject stainless steel beer kegs are used as containers in international traffic, are substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. The subject beer kegs are used as containers to the extent that they are imported carrying beer that was loaded outside the United States. The subject kegs are substantial inasmuch as they are made of stainless steel. The kegs are suitable for and capable of repeated use insofar as they can be used approximately twice a year for up to thirty years. Furthermore, the subject kegs are used in significant numbers in international traffic inasmuch as over one million will be in circulation. We also find that the subject beer kegs are similar to those designated as IITs in HQ 109634 (Aug. 11, 1988), in which we granted IIT status to kegs of “stainless steel construction” marked “with their own unique serial numbers” that were used to import beer from the Netherlands. See also, HQ 548257 (Mar. 19, 2003) (“reusable barrels” for beer).
Based on the foregoing, the subject stainless steel beer kegs 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.
We also provide the following information regarding the subject kegs’ tariff classification and potential duty implications for your reference. Imported steel kegs are designed for repetitive beverage transportation and distribution. You do not indicate all keg sizes, but they appear to range up to 50-liter capacity. The information provided also indicates that the valve configurations include D-system, as well as A-, S-, and G-system valves. Should the subject kegs enter domestic commerce, the applicable tariff classifications are as follows:
The applicable subheading for the steel kegs of a circular cross section with a capacity measuring specifically between 11.4 liters and 26.6 liters will be 7310.29.0025, HTSUS, which provides for Tanks, casks, drums, cans, boxes and similar containers, for any material (other than compressed or liquefied gas), of iron or steel, of a capacity not exceeding 300 liters, whether or not lined or heat insulated, but not fitted with mechanical or thermal equipment: Of a capacity of less than 50 liters: Other: Containers, of circular cross section, of a volume capacity between 11.4 liters and 26.6 liters, of a kind used for the conveyance of goods. The rate of duty will be free.
The applicable subheading for any other steel kegs of a capacity of less than 50 liters will be 7310.29.0050, HTSUS, which provides for Tanks, casks, drums, cans, boxes and similar containers, for any material (other than compressed or liquefied gas), of iron or steel, of a capacity not exceeding 300 liters, whether or not lined or heat insulated, but not fitted with mechanical or thermal equipment: Of a capacity of less than 50 liters: Other: Other. The rate of duty will be free.
The applicable subheading for steel kegs with a capacity of 50 liters or more will be 7310.10.0050, HTSUS, which provides for Tanks, casks, drums, cans, boxes and similar containers, for any material (other than compressed or liquefied gas), of iron or steel, of a capacity not exceeding 300 liters, whether or not lined or heat insulated, but not fitted with mechanical or thermal equipment: Of a capacity of 50 liters or more: Other. The rate of duty will be free.
Please note, however, that, effective July 6, 2018, the Office of the United States Trade Representative imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(e), HTSUS. For additional information see “Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” (June 20, 2018, 83 F.R. 28710). Products of China that are provided for in subheading 9903.88.03 and classified in one of the subheadings enumerated in U.S. note 20(e) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by subheading 9903.88.03. Products of China classified under subheading 7310.29.0025, 7310.29.0050, or 7310.10.0050, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 7310.29.0025, 7310.29.0050, or 7310.10.0050, HTSUS, listed above.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
Please also note that, should the instant goods enter domestic commerce, they may be subject to antidumping duties and countervailing duties (“AD/CVD”) for stainless steel kegs from Germany, Mexico, or China. Written decisions regarding the scope of AD/CVD orders are issued by the Enforcement and Compliance office in the International Trade Administration of the Department of Commerce and are separate from CBP tariff classification and origin rulings. You can contact them at http://trade.gov/enforcement/ (click on “Contact Us”). You can view a list of current AD/CVD cases at the United States International Trade Commission website at http://www.usitc.gov (click on “Antidumping and Countervailing Duty” under “Popular Topics” at the top of the screen), and you can search AD/CVD deposit and liquidation messages using CBP’s AD/CVD Search tool at http://addcvd.cbp.gov/.
HOLDING
The subject stainless steel beer kegs are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Should they enter the commerce of the United States, however, the subject kegs are dutiable as described above.
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