BOR-07-OT:RR:BSTC:CCR H321804 AFM
Michael Erfe
Sonoco Protective Solutions, Inc.
1 North Second Street
Hartsville, SC 29550
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a; 19 C.F.R. § 10.41b; container
Dear Mr. Erfe:
This is in response to your November 1, 2021, December 7, 2021, and January 20, 2022,
ruling requests on behalf of Sonoco Protective Solutions, Inc. (“Sonoco”). In your submission,
you request, in part, a ruling concerning whether a Sonoco product, the Orion containers, qualify
for designation as instruments of international traffic (“IITs”). Your ruling request also contains
a request for ruling regarding the classification of the subject merchandise under the Harmonized
Tariff Schedule of the United States. This inquiry will be addressed under separate cover by the
National Commodity Specialist Division. Our decision is below.
FACTS
The following facts are from your revised January 20, 2022, ruling request, and your December 15, 2021, response to our request for additional information. The subject merchandise are the Orion containers, re-usable containers for use in the international transportation of temperature-sensitive goods requiring the maintenance of specific temperature ranges between 2 and 8 degrees Celsius, 15 and 25 degrees Celsius, and less than 0 degrees Celsius. These containers will be produced by Sonoco’s ThermoSafe organization. Currently, the containers are assembled in Plainfield, Indiana. The containers consist of:
(1) the customer’s container, such as a corrugated, payload/core pack box which will hold whatever merchandise requires transport;
(2) reusable plastic bottles with refrigerant material (phase change material (“PCM”)) surrounding the customer’s container;
(3) Vacuum Insulated Panels (“VIP”) composed of reusable silica core material which is encased in a metalized or white polymer barrier film that provides thermo-protection and insulation;
(4) a reusable black box made of durable expanded polypropylene (“EPP”) plastic foam for additional thermal protection, insulation, and container strength and protection of the VIPs. The EPP box will contain a clear windowpane cutout with a separate EPP plastic foam insert permanently glued into the cutout, and a unique QR code and permanent container serial number adhered to a contrasting color insert which will be wrapped with protective adhesive see-through tape to make the QR code and serial number visible without opening the reusable black box; and
(5) the Orion container itself placed inside a corrugated, cardboard box on which the user may place postage and the delivery address. The cardboard box will also contain a serial number which matches the serial number of the reusable black box. Orion containers come in four different sizes, with the same components in each.
Orion containers are to be rented by ThermoSafe’s customers for an estimated 21 calendar days at a time, depending on the customer’s needs. The serial number, shown through the cutout windowpane of the container, made of EPP plastic foam, will be used by ThermoSafe to track the location of all Orion containers. If the QR code, wrapped with protective adhesive see-through tape, is lost or becomes illegible, Sonoco can trace the number through the serial number on the outside box. A damaged or destroyed container can be reported to CBP so that it may be withdrawn as an IIT.
Sonoco expects that each Orion container will make at least three or four international trips in a year, with each Orion container expected to have a lifespan between two and five years. Orion containers are to be used only for international shipments to many different countries across Europe and Asia, in addition to Mexico and Canada, which can be monitored by ThermoSafe.
The following are images of the Orion containers, taken from your January 20, 2022, ruling request attachments:
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ISSUE
Whether the subject Orion containers are IITs within the meaning of 19 C.F.R. § 10.41a and 19 C.F.R. § 10.41b.
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) and 19 C.F.R. § 10.41b. Title 19 C.F.R. § 10.41a(a)(1) 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, 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.
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). 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 used as a container or holder must be: (1) substantial, (2) suitable for and capable of repeated use, and (3) used in significant numbers in international traffic. See HQ H291037 (Jan. 9, 2018); 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).
The requirement that an article be “substantial” is not only a threshold requirement under 9803.00.50, but also a requirement for an article to be an instrument of international traffic pursuant to CBP decisions. The origin for the criterion found in CBP decisions that an article be “substantial” is found in Schedule 8, Item 808.00 of the Tariff Schedule of the United States (1963) (TSUS), the predecessor provision to 9803.00.50, HTSUS. Likewise, the criterion that an article be “suitable for and capable of repeated use” is found in Schedule 8, Item 808.00, TSUS, Headnote 6(b)(ii)(stating that the article must be capable of “reuse”). Although the requirement that an article be capable of reuse is no longer under subheading 9803.00.50, HTSUS (the successor provision to Item 808.00, TSUS), to receive duty-free treatment, “reuse” is still required, pursuant to CBP decisions, for an article to be considered an instrument of international traffic.
In HQ H310382 (June 25, 2020), CBP determined that temperature-controlled cold chain dry vapor shipping containers, the majority of which were to be used in international traffic, were IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Similarly, the Orion containers are temperature-controlled shipping containers to be used in international shipping. They are substantial as they are made of polypropylene plastic that has a life expectancy between two and five years. The containers are suitable for and capable of repeated use as they are meant to be used in a minimum of three or four international shipments per year, with a life expectancy between two and five years. The containers will also be used in significant numbers in international traffic as Sonoco intends to have 1,500 to 2,000 units on hand per year for use in international shipping at the launch of its international service. Therefore, the Orion containers are IITs pursuant to 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
19 C.F.R. § 10.41b provides in pertinent part:
(a) The holders and containers described in this section may be released without entry or the payment of duty, subject to the provisions of this section.
(b) Subject to the approval of a port director pursuant to the procedures described in this paragraph, certain foreign- or U.S.-made shipping devices arriving from Canada or Mexico, including racks, holders, pallets, totes, boxes and cans, need not be serially numbered or marked if they are always transported on or within either intermodal and similar containers or containers which are themselves vehicles or vehicle appurtenances and accessories such as twenty and forty foot containers of general use and “igloo” air freight containers. The following or similar notation shall appear on the vehicle or vessel manifest in relation to such shipping devices which are exempt from serial numbering or marking requirements pursuant to this paragraph: “The shipping devices transported herein, which are not serially numbered or marked, have been exempted from such requirement pursuant to an application approved under 19 CFR 10.41b(b).” Also, pallets and other solid wood shipping devices must be accompanied by an importer document, to the extent that this is required by the U.S. Department of Agriculture, Animal and Plant Health Inspection Service, attesting to the admissibility of such devices as regards plant pest risk, as provided for in 7 CFR 319.40-3.
In applying 19 C.F.R. § 10.41b(b) to determine whether the Orion containers are IITs, the Orion containers are used to transport items requiring a controlled temperature internationally. The Orion containers are both substantial and serially numbered as described above. Therefore, the Orion containers are IITs within the meaning of 19 C.F.R. § 10.41b(b).
HOLDING
The subject Orion containers are IITs within the meaning of 19 U.S.C. § 1322(a), 19 C.F.R. § 10.41a(a)(1), and 19 C.F.R. § 10.41b(b).
Sincerely,
W. Richmond Beevers
Chief, Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection