OT:RR:BSTC:CCR H329443 JLE
Jenn Park
Senior Manager
Flexport Customs, LLC
760 Market St., Floor 8
San Francisco, CA 94102
RE: Instruments of International Traffic; 19 U.S.C. § 1332(a); §§ 10.41a(a)(1), 10a(a)(2); N330179; Flexport LLC; Reusable Pallet Shipper
Dear Ms. Park:
This is in response to your January 10, 2023, ruling request on behalf of Doubleday Acquisitions LLC, dba CSafe (“CSafe”). In your request you inquire whether a certain reusable pallet shipper qualifies as an “instrument of international traffic” within the meaning of 19 U.S.C. § 1332(a). Our determination is set forth below.
Facts
The following facts are taken from your ruling request and supplements thereto. The subject container is the APS reusable pallet shipper (“APS” or “subject container”). CSafe leases their temperature-controlled containers to pharmaceutical and life-science companies to move perishable products such as insulin, vaccines, and cancer medications across the world via international airfreight. CSafe will either deliver their containers to their customer’s location or the customer will pick up CSafe’s containers at any of CSafe’s service centers or hub locations situated near airports around the world. CSafe’s customers will lease the containers for an average of 5 to 30 days and then return the containers to one of CSafe’s network locations or arrange for CSafe to pick-up the containers from a local airport/facility.
The subject APS is manufactured in Dongguan, China. The temperature-controlled container uses vacuum insulated panel (“VIP”) insulation with integrated internal phase change material (“PCM”) refrigerants to provide thermal protection. The subject container is offered in both single and double sizes, holding two standard US pallets and four standard US pallets respectively. Both sizes of the APS container have run times of 120 hours and the user is able to select a temperature ranging from –20°C to +25°C. The external dimensions of the single size container are 57.1 inches L x 58.8 inches W x 62 inches H and the payload volume is 63.57 cubic feet (1.78 cubic meters). The external dimensions of the double size container are 93.7 inches L x 58.8 inches W x 62 inches H and the payload volume is 115.12 cubic feet (3.26 cubic meters). Both sizes of the APS containers are suitable for use on all wide-body aircraft, with regulatory approval for use on both lower and upper decks. The APS container has a lifespan of 7-12 years and there are currently 225 containers in circulation around the world. The subject containers will be used approximately 14 times per year.
Issue
Whether the subject APS reusable pallet shipper qualifies for consideration as an Instrument of International Traffic within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
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 (“IIT”). 19 C.F.R. § 141.4(b)(3).
Subheading 9803.00.0, 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 such extent and subject to such terms and conditions as 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.
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).
U.S. Customs and Border Protection (“CBP”) has previously determined that similar thermal containers qualify for treatment as IIT. See HQ H276370 (Jul. 27, 2016). In HQ H276370, CBP examined thermal controlled containers that used dry ice to maintain temperature and determined the containers alone qualified as an IIT. Id. CBP has held that reusable means using the containers more than twice. See HQ 112627 (May 18, 1993); HQ 111073 (Aug. 16, 1990). CBP has previously determined that thermal control containers that are capable of reuse, have approximately 120 containers being used in international traffic and are serialized, qualified for treatment as IIT. See H218509 (Jul. 12, 2012).
Based upon review of the submission and information provided, the subject APS containers are substantial, capable of repeated use, and over two hundred of subject APS are to be used in international traffic. Based on the foregoing, the subject APS qualifies for designation as IITs. Therefore, they qualify for entry-free and duty-free treatment as IITs pursuant to 19 C.F.R. § 10.41a(a)(1).
Holding
The subject APS containers qualify as IIT within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1).
Sincerely yours,
W. Richmond Beevers, Chief
Cargo Security, Carriers, and Restricted Merchandise Branch