H312157

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H312157 November 19, 2020 BOR-07-OT:RR:BSTC:CCR H312157 TNA CATEGORY: Carriers Cameron W. Roberts Roberts & Kehagiaris LLP Attorneys and Counselors at Law One World Trade Center, Suite 2350 Long Beach, CA 90831 RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. §§ 10.41a(a)(1), 10.41a(a)(2); HTSUS subheading 9803.00.50; CFR Rinkens, LLC; Steel Container Racks; accessories Dear Mr. Roberts: This is in response to your July 7, 2020 ruling request on behalf of CFR Rinkens, LLC. In your submission, you request a ruling concerning whether certain steel container racks 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 July 7, 2020 ruling request, your August 5, 2020 supplemental submission, and your August 17, 2020 email. The subject items are three types of collapsible steel racks used inside of shipping containers to keep the vehicles off the floor, increase storage space, and prevent the vehicles from moving. CFR purchases the racks at issue from Trans Rak International (“Trans Rak”). Trans Rak’s Chinese manufacturing facility ships the racks to Los Angeles, where CFR inspects them and arranges for them to be used for the export of vehicles from the United States to a foreign destination. When the racks are returned to the United States for repositioning, they are brought in through New York, Houston, Miami, Charleston, Long Beach or Oakland. The R-Rak, is designed to fit inside a nine foot, six inch high cube container. Each R-Rak consists of four vertical posts and two transverse frames. Each post is individually secured to the side of the container by the top side rail lashings and to the floor by either nailing/screwing or ratchet and webbing. In a 40-foot container, two R-Raks are used, consisting of a total of eight vertical posts that accommodate four vehicles. Once the four posts are fitted to the container the two wheel support frames are laid out in between them. A vehicle being transported is driven onto the frames and then lashed to them by ratchet straps that are placed over the wheels. The frames are then lifted by chain hoists into the position in which they will remain during transportation. In this raised position, the frames are bolted to the posts to make a rigid framework that supports the vehicle. Upon return to CFR’s base in the United States, the R-Raks are packed flat, bolted and strapped together into sixty sets and can be stacked into five-feet high, forty-foot containers. There are approximately 4900 R-Raks in circulation. The following are images of the R-racks, taken from CFR Rinken’s ruling request. The collapsible racks at issue are shown in blue in these images. 
 
 The second type racks, the El-Raks, is a system designed to allow vehicles to be loaded and secured on wheeled cassettes outside the shipping container, before the rack is moved into the container by a forklift. The El-Rak is then secured inside the container using straps, bolts and screws. The El-Rak can hold up to four vehicles inside a single forty-foot container. There are approximately 300 El-Raks in circulation. These racks are used in an average of 11,000 shipments per year. The following is an image of the El-Rak, taken from CFR Rinken’s ruling request: 
 The third type of rack, the SKD Assembly, is a derivative of the R-Rak that is used to secure partially disassembled vehicles within shipping containers. It consists of the same posts as the R-Rak but uses a moveable wheeled dolly instead of instead of a wheeled tray on which the vehicle frame or body is mounted. The SKD Assembly is used to transport partially assembled vehicles that would not otherwise fit into a container. There are approximately 10 SKD-Raks in circulation, and another 120 to 200 SKD-Raks are expected to be in circulation by the end of 2020. The following is an image of the SKD Assembly, taken from CFR Rinken’s ruling request: 
 Each rack is reused four times a year within a 90-day transportation cycle. These racks have a lifespan of ten years. ISSUES Whether the subject steel racks are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Whether the subject steel racks are accessories to IITs within the meaning of 19 C.F.R. § 10.41a(a)(2). 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. 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). 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 subject container racks are substantial inasmuch they are made of steel and have a life expectancy of ten year

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. 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 text