Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a

HQ H024922 April 30, 2008 BOR-4-07-OT:RR:BSTC:CCI H024922 JLB CATEGORY: Carriers Ms. Marcela B. Stras Baker & Hostetler LLP Washington Square, Suite 1100 1050 Connecticut Ave, NW Washington, DC 20036-5304 RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 C.F.R. § 10.41a Dear Ms. Stras: This is in response to your correspondence of March 12, 2008, on behalf of CHEP, in which you requested a ruling to classify plastic crates designed to hold automotive parts as “instruments of international traffic” pursuant to 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a. Our ruling on your request follows. FACTS CHEP issues, collects, conditions, and reissues more than 285 million pallets and containers from a global network of service centers, helping manufacturers transport their products to distributors and retailers. The returnable plastic containers in question are used by the automotive industry. They are durable, flexible, and stackable containers, specifically crates, of various sizes which are necessary for the automotive industry to deliver components to customers “just in time” for the assembly line. The collapsible, reusable and recyclable crates can be used by a single supplier, a specific plant location, a specific product program, program-specific containers or component-specific containers. These automotive crates can be imported into the United States from essentially anywhere in the world. Photographs and descriptions of the aforementioned crates were provided. CHEP USA Service Centers orders empty automotive crates from CHEP overseas locations. The aforementioned crates are then shipped from one of the overseas service centers, where they have already been inspected and cleaned, to the USA Service Center. Once the United States CHEP Service Center receives the crates they are shipped to an automotive component supplier in the U.S. who loads the containers and ships them to a foreign automotive manufacturer. The process is repeated when the foreign automotive manufacturer empties the containers, which are then collected by CHEP and sent to the closest CHEP overseas service center for inspection and cleaning. This process is repeated continuously. The thousands of automotive crates currently in use in international commerce are utilized repeatedly for the life of the container, which is estimated to be approximately seven years. ISSUE Whether the plastic automotive crates described above qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a? LAW AND ANALYSIS Pursuant to 19 U.S.C. § 1322(a), “vehicles and other instruments of international traffic, of any class specified by the Secretary of [Homeland Security], 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 of the Secretary…” Lift vans, cargo vans, shipping tanks, skids, pallets, caul boards, and cores for textile fabrics are explicitly classified as “instruments of international traffic.” See 19 C.F.R. § 10.41a(a)(1). Additionally, the Commissioner of U.S. Customs and Border Protection (“CBP”) is authorized to designate other items besides those mentioned as “instruments of international traffic.” Once designated as such, the instruments may be released without entry or payment of duty. To qualify as an “instrument of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a, 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 Headquarters Ruling Letter 109665, dated September 12, 1988; Headquarters Ruling Letter 109634, dated August 11, 1988; see also Headquarters Ruling Letter 113687, dated February 27, 1997. 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 (1982). Reuse has been held to mean using the containers more than twice. See Headquarters Ruling Letter 116032, dated October 30, 2003; Headquarters Ruling Letter 116391, dated February 16, 2005; Headquarters Ruling Letter 115754, dated August 19, 2002. It is well-settled that certain containers designed to hold automotive parts can qualify as “instruments of international traffic.” See, e.g., Headquarters Ruling Letter 115959, dated July 7, 2003 (collapsible steel crates used to transport automotive parts imported into the United States can be designated as “instruments of international traffic.”); Headquarters Ruling Letter 112303, dated August 14, 1992 (collapsible steel packing crates to import automobile components are “instruments of international traffic”); Headquarters Ruling Letter 109665, dated September 12, 1988 (collapsible wire mesh containers, made of iron or steel, used for the ocean freight shipment of automotive spare parts are “instruments of international traffic”); Headquarters Ruling Letter 111163, dated March 26, 1991 (collapsible steel packing crates for shipments of automobile components from Japan for assembly in the United States are “instruments of international traffic”). In Headquarters Ruling Letter 114506, dated October 29, 1998, CBP determined that collapsible plastic containers used to ship various small automobile replacement parts from Japan to the United States met the requirements necessary for designation as “instruments of international traffic.” See also Headquarters Ruling Letter 112534, dated January 25, 1993 (holding that reusable plastic boxes used to import automobile component parts qualified as “instruments of international traffic”); Headquarters Ruling Letter 116555, dated October 25, 2005 (designation of plastic tote bins used to transport automotive parts as “instruments of international traffic”). Upon reviewing the request and the accompanying documentation, the plastic automotive crates appear to be containers that are substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. The subject plastic crates are made of sufficiently durable plastic that allows them to be used repeatedly to transport merchandise in international traffic. They have a useful life of approximately seven years and since thousands of such crates are currently in international commerce, they will be used in significant numbers in international traffic. The subject plastic crates therefore qualify as “instruments of international traffic” and may be released without entry or payment of duty. Consequently, they are classifiable under subheading 9803.00.50, HTSUSA. HOLDING The plastic automotive crates described above qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a and may be released without entry or the payment of duty. Sincerely, Glen E. Vereb, Chief Cargo Security, Carriers and Immigration Branch