Reusable plastic pallets as instruments of international traffic; 19 CFR §10.41a; 19 U.S.C. §1322(a)

HQ 116425 May 2, 2005 BOR-4-07 RR:IT:EC 116425 CK CATEGORY: Carriers Greg Kodama Vice President James J. Boyle & Co. 1200 Corporate Center Drive, #350 Monterey Park, CA 91754 RE: Reusable plastic pallets as instruments of international traffic; 19 CFR §10.41a; 19 U.S.C. §1322(a) Dear Mr. Kodama: This is in response to your ruling request dated February 21, 2005, on behalf of your client CG Roxanne. You request a ruling designating certain reusable plastic pallets as instruments of international traffic. FACTS: CG Roxane will act as the importer of record of reusable plastic pallets that will be used to hold mineral water during transport within ocean containers for shipments from the United States to Japan. The plastic pallets will be shipped back empty to the United States once the mineral water has been unloaded in Japan. The anticipated life cycle of the pallets is “an annual usage of ten times.” The dimensions of the reusable plastic pallets are 47.24” (L) x 41.73” (W) x 4.72” (H). Approximately 30,000 units will be placed in circulation per year. The pallets will not contain serial numbers. You have attached a drawing of the product as “Exhibit A.” ISSUE: Whether the plastic pallets described above may be designated as instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and § 10.41a, U.S. Customs and Border Protection (CBP) regulations (19 CFR § 10.41a). LAW AND ANALYSIS: Title 19, United States Code, § 1322(a) (19 U.S.C. § 1322(a)), provides in pertinent part, that "[v]ehicles and other instruments of international traffic, .…, shall be excepted from the application of the customs laws to such extent and subject to such terms and conditions as may be prescribed in regulations or instructions …." The CBP regulations issued under the authority of § 322(a) are contained in section 10.41a (19 CFR § 10.41a). Section 10.41a(a)(1) specifically designates lift vans, cargo vans, shipping tanks, skids, pallets, caul boards, and cores for textile fabrics as instruments of international traffic. Section 10.41a(a)(1) also authorizes the Commissioner of CBP to designate other items as instruments of international traffic. Once designated as instruments of international traffic, these items may be released without entry or the payment of duty, subject to the provisions of § 10.41a. To qualify as an "instrument of international traffic" within the meaning of 19 U.S.C. § 1322(a) and the regulation promulgated pursuant thereto (19 CFR § 10.41a et seq.), an article must be used as a container or holder. The article must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. (See subheading 9803.00.50, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), and former Headnote 6(b)(ii), Tariff Schedules of the United States (HTSUS), as well as Headquarters Decisions 104766; 108084; 108658; 109665; and 109702). The concept of reuse contemplated above is for commercial shipping or transportation purposes, and not incidental or fugitive uses. Tariff Classification Study, Sixth Supplemental Report (May 23, 1963) at 99. See, Holly Stores, Inc. v. United States, 697 F.2d 1387 (Federal Circuit, 1982). In HQ 114506, dated October 29, 1998, CBP determined that containers made of plastic known as totes that were used to ship various small automobile replacement parts from Japan to United States met the requirements necessary for designation as instruments of international traffic. In HQ 112534, dated January 25, 1993, CBP found that reusable plastic boxes designed to transport automotive strut components qualified as instruments of international traffic. Finally, in HQ 548257, dated March 19, 2003, CBP stated that reusable barrels and pallets used in shipping beer to the United States qualified as instruments of international traffic. See also, HQ 109634, dated August 11, 1988. In this case, the plastic pallets have a useful life of about a year. They should be used about 10 times in international trade over the course of that year, and over 30,000 will be constructed, and put in circulation a year. Based on the above-described criteria, precedents, and the designs submitted showing the packaging is substantial and durable, the plastic pallets possess the requisite criteria to qualify as IITs pursuant to 19 U.S.C. § 1322(a). You also inquire as to what constitutes an acceptable inventory methodology for the plastic pallets, and whether the containers must be marked with serial numbers. We have held that the containers do not need to be marked with serial numbers or identifying numbers in order to qualify as instruments of international traffic. See, HQ 548257, supra. However, the CBP regulations do provide for the serial numbering/marking of holders or containers that are instruments of international traffic for purposes of CBP clearance of such articles. (See, 19 CFR §10.41b(d)). Furthermore, CBP has long-held that instruments of international traffic, whether empty or containing cargo, must be listed on a vessel’s cargo manifest. HQ 102960, dated September 30, 1977, citing T.D. 55624(4). HOLDING: The plastic pallets described above qualify as instruments of international traffic within the meaning of 19 U.S.C. §1322(a) and may be released pursuant to 19 CFR § 10.41a.  Sincerely, Glen E. Vereb Chief Entry Procedures and Carriers Branch