BOR-4-07-OT:RR:BSTC:CCR H302819 TNA
Mr. Michael Unsworth
Global Transportation Management, LLC
34450 Industrial Road
Livonia, MI 48150
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a(a)(1); HTSUS subheading 9803.00.50; CRRC Sifang America, Inc.; Holding Devices for Rail Car Shells.
Dear Mr. Unsworth:
This is in response to your ruling request submitted on January 17, 2019, on behalf of CRRC Sifang America, Inc. In your request, you inquire whether holding devices for rail car shells qualify as “Instruments of International Traffic” (“IITs”) within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Our ruling is set forth below.
FACTS
The following facts are from your ruling request and supplements thereto. CRRC Sifang America, Inc.’s Chinese branch (“CCRC China”) manufactures rail car shells which are assembled in the United States by the company’s Chicago branch (“CCRC Chicago”). CRRC China secures the transportation of the rail car shells to CRRC Chicago using the subject holding devices. Following the importation of the rail car shells, CRRC Chicago returns the holding devices to CRRC China, and the cycle repeats.
The subject holding devices are steel reinforcing fixtures that are attached to the bottom of a rail car shell. The installation of these devices keeps the body of the shell from touching the ground as it is transported. In addition, the holding devices also act as the lashing/ securing point for transportation, as well as the lifting point for loading and unloading. As such, the holding devices protect the rail car shells from damage during transportation to the United States and ease the loading and unloading operations to the shells’ final destination within the United States. The holding devices are made in China. They will have an estimated circulation of 16 to 20. In addition, their lifespan is 39 months, and they can be reused approximately 50 times.
Below is an image of the subject holding devices:
In addition, the following are sketches of the subject holding devices as they will be used with the rail car shells that CRRC Sifang America Inc. manufactures. In both images, the holding devices are underneath the rail cars.
ISSUE
Whether the holding devices described above qualify as “instruments of international traffic” (“IITs”) within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a?
LAW AND ANALYSIS
Pursuant to 19 C.F.R. § 141.4(a), “[a]ll 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, 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 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 HQ H282408, certain locking fixtures at issue attached to the cargo for stabilization during transport rather than attaching to any of the pallets, intermodal containers, or cases used to transport the cargo. As a result, the locking fixtures were found not to be IITs because they did not hold or contain the cargo. Similarly, in HQ H286142 (July 6, 2017) the engine hooks at issue were attached to the engines they helped transport, but they did not hold or contain those engines. Instead, those hooks were essentially tools necessary to lift and move the automobile engines. As a result, CBP found that these hooks were not IITs because they were not substantial holders or containers.
In the present case, the subject holding devices do not hold or contain merchandise in the manner contemplated by prior rulings. To the contrary, the subject holding devices are used to keep the imported rail car shells from touching the ground as they are transported so as to avoid damage to the shells. Like the hooks of HQ H286142, the subject holding devices are also used to lift the rail car shells during loading and unloading. In addition, they are attached to the shells themselves rather than to any mode of transportation. As a result, we find that the subject holding devices are not substantial holders or containers.
The subject holding devices are substantial inasmuch as they are made of steel and have a life expectancy of 39 months. They are suitable for and capable of reuse, in that they can be reused 50 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 HQ 113041 (June 1, 1994), CBP held that certain piston/ram pans could not be designated as IITs because only 22 of them were in circulation. There, CBP found that the piston/ ram pans were not used in significant numbers in international traffic. Similarly, in HQ H282408 (April 12, 2017), CBP held that laser module cases were not used in significant numbers in international traffic because only 25 of them were in circulation. In the present case, only 16 to 20 of the subject holding devices will be in circulation. As such, these devices are not used in significant numbers in international traffic. As a result, we find that the subject holding devices are not IITs.
HOLDING
The subject holding devices, described in the FACTS section above, are not IITs within the meaning of 19 U.S.C. § 1322(a) or 19 C.F.R. § 10.41a(a)(1).
Sincerely,
Lisa L. Burley, Chief
Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection