H319586

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H319586 August 26, 2021 BOR-07-OT:RR:BSTC:CCR H319586 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 assemblies; accessories Dear Mr. Roberts: This is in response to your July 9, 2021 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 9, 2021, ruling request. The subject items are the steel assemblies called the SKD Assembly, which are used to efficiently store and secure semi- knock-down (SKD) or partially assembled vehicles in shipping containers. Specifically, these assemblies are used for the exportation of SKD vehicles from the United States. They consist of four vertical posts and a moveable wheeled dolly on which the vehicle chassis and/or body are mounted. Once inside the container, 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. The SKD Assemblies are manufactured in China. After CFR Rinkens purchases them, they are shipped from the manufacturing facility into the United States via the ports of Los Angeles/ Long Beach, Oakland or Tacoma/Seattle. When the racks are returned to the United States for repositioning after being used for exportation, they are brought in through Norfolk, New York, Houston, Miami, Charleston, Long Beach or Oakland. There are approximately 150 SKD Assemblies in circulation. They are used in over 11,000 shipments and average four 90-day circulations per year. They also have a lifespan of ten to fifteen years. The following are images of the SKD Assemblies, taken from your July 9, 2021, ruling request: 
 
 
 ISSUES Whether the subject SKD Assemblies are IITs within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1). Whether the subject SKD Assemblies 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 SKD Assemblies are substantial inasmuch they are made of steel and have a life expectancy of ten to fifteen years. These items are also suitable for and capable of reuse, in that they are reused four times a year for each year of their life expectancy. 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 addition, there are approximately 150 SKD Assemblies in circulation at any one time. These assemblies are used in 11,000 shipments per year. In HQ H282408 (April 12, 2017), locking fixtures 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 H303169 (April 26, 2019), CBP examined rail car coats, large swaths of heavy-duty waterproof cloth that covered the entire body of rail car shells to protect them during transportation and loading/unloading operations. There, CBP concluded that these coats were not containers because they did not hold the rail shells. See also HQ H286142 (July 6, 2017) (engine hooks that attached to the engines which secured them to the IIT during transport, but did not hold or contain those engines were not IITs because they were not substantial holders or containers; instead, the hooks were essentially tools necessary to lift and move the automobile engines). In the present case, the subject SKD Assemblies do not hold or contain merchandise independent of the shipping containers in which they are transported. Instead of holding or containing cargo, the SKD Assemblies are used to move auto parts into a shipping container and to secure these parts within the container. As a result, we find that the SKD Assemblies are not substantial holders or containers. As such, they cannot be classified as IIT

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