Tariff Classification of Returnable Steel Shipping Racks

HQ H025853 June 19, 2008 CLA-2 OT:RR:CTF:TCM H025853 RM CATEGORY: Classification TARIFF NO.: 7326.90.8587 RE: Tariff Classification of Returnable Steel Shipping Racks Ms. Laurie Peach American Honda Motor Co., Inc. 1919 Torrance Boulevard Torrance, California 90501-2746 Dear Ms. Peach: This is in response to your letter dated February 5, 2008, to United States Customs and Border Protection (“CBP”), in which you requested a binding ruling pertaining to the tariff classification of certain returnable steel shipping racks under the Harmonized Tariff Schedule of the United States (“HTSUS”). Previously, in Headquarters Ruling (“HQ”) H022952, dated April 3, 2008, CBP determined that the goods at issue are instruments of international traffic pursuant to 19 USC 1322(a) and 19 CFR 10.41 a(a)(1), and are not “containers” within the meaning of 19 USC 10.41a(g)(1). CBP also established that upright supports for the steel racks may be entered duty free as “repair components” pursuant to 19 CFR 10.41 a(a)(2) if certain requirements are met. The only remaining issue is the tariff classification of the subject racks. FACTS: American Honda Motor Co., Inc., (“Honda”) proposes to import returnable steel shipping racks designed to transport Honda work trucks (10 vehicles per trailer truck load). The racks are constructed of heavy gauge steel and have four collapsible posts (one at each corner) and an open top. They also have pockets on the bottom that are designed to facilitate movement by forklift truck. The racks have no sides or walls. Along with your request, you included pictures of loaded racks as well as schematic diagrams of the racks. ISSUE: What is the proper tariff classification of the steel racks under the HTSUS? LAW AND ANALYSIS: Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). The applicable HTSUS provisions are as follows: 7326 Other articles of iron or steel: 7326.90 Other: Other: Other: 7326.90.85 Other: 7326.90.8587 Other … 8609.00.0000 Containers (including containers for the transport of fluids) specially designed and equipped for carriage by one or more modes of transport … At issue is whether the subject steel racks are containers of heading 8609, HTSUS. The term "container" is not defined in the text of the HTSUS or in the Legal Notes. When a tariff term is not defined by the HTSUS or the legislative history, its correct meaning is its common, or commercial, meaning. See Rocknel Fastener, Inc. v. United States, 267 F.3d 1354, 1356 (Fed. Cir. 2001). "To ascertain the common meaning of a term, a court may consult 'dictionaries, scientific authorities, and other reliable information sources' and 'lexicographic and other materials.'" Id. (quoting C.J. Tower & Sons of Buffalo, Inc. v. United States, 673 F.2d 1268, 1271, 69 C.C.P.A. 128 (C.C.P.A. 1982); Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed. Cir. 1989)). Finally, the Explanatory Notes, while not binding law, offer guidance as to how tariff terms are to be interpreted. See Len-Ron Mfg. Co. v. United States, 334 F.3d 1304, 1309 (Fed. Cir. 2003) (noting explanatory notes are "intended to clarify the scope of HTSUS subheadings and to offer guidance in their interpretation"). In the past, CBP has defined the term “container” by its common meaning as "a holder or receptacle or something that receives and contains, with a capacity capable of being measured." See HQ 954859, dated November 4, 1993. Moreover, the ENs to heading 8609, HTSUS, provide in part: These containers (including lift vans) are packing receptacles specially designed and equipped for carriage by one or more modes of transport (e.g., road, rail, water or air). They are equipped with fittings (hooks, rings, castors, supports, etc.) to facilitate handling and securing on the transporting vehicle, aircraft or vessel. They are thus suitable for the "door-to-door" transport of goods without intermediate repacking and, being of robust construction, are intended to be used repeatedly. The more usual type, which may be of wood or metal, consists of a large box equipped with doors, or with removable sides. * * * Containers usually vary in size from 4 to 145 m³ capacity. Certain types are however smaller, but their capacity is not normally less than 1 m³. This heading excludes: (a) Cases, crates, etc., which though designed for the “door-to-door” transport of goods are not specially constructed as described above to be secured to the transporting vehicle, aircraft or vessel; these are classified according to their constituent material. The steel racks under consideration are especially designed and equipped for carriage by a mode of transport (i.e., by road). Moreover, they are suitable for the “door-to-door” transport of goods, are of a robust construction, and are intended to be used repeatedly. However, the racks lack sides or walls to enclose the cargo. The upright posts at each corner of the rack function only to facilitate the stacking of other racks; they do not “contain” the work trucks insofar as they are secured to the bottom of the rack by tire-sized grooves and tethered in the front and back. As mere platforms, therefore, the racks also lack a measurable cubic capacity. Based on the foregoing, we are of the opinion that the instant steel racks do not conform to the common meaning of the term “container,” or the description of the items included by the ENs in heading 8609, HTSUS. NY F89829, dated July 28, 2000, concerned a transmission pallet, an engine pallet, and a cylinder head pallet used for the transport of auto parts. The transmission and engine pallets were flat pallets with pillars on each corner that could be folded up to allow for the stacking of several pallets. CBP determined that the items were not containers because, as flat platforms, they “are not packing receptacles” and had “no measurable internal volume.” CBP added “the transmission and engine pallets are shipping devices onto which the goods are placed and secured. This is not the same as a container, into which things are put.” Similarly, in HQ 954859, dated November 4, 1993, CBP found that aluminum pallets designed for transporting air cargo (secured onto the pallet by nylon tie-down ropes and metal hooks and covered by a contoured net) were not containers. See also HQ 088741, dated April 25, 1991. The subject steel racks are similar to the pallets discussed above in that they are platforms without walls or sides onto which goods are secured, not contained. You cite NY N016749, dated September 10, 2007; NY N020462, dated December 7, 2007; and NY 885142, dated April 26, 1993, for the proposition that the instant racks are containers. However, unlike the racks at issue, the devices of NY N016749 and NY N020462 were enclosed by sides or walls and thus, had measurable internal volumes. As to NY 885142, we note that the ruling does not provide enough information to ascertain whether the merchandise possessed the particular features of containers. Furthermore, the file was stored in our former 6 World Trade Center office in New York City and was destroyed as a result of the terrorist attack of September 11, 2001. Because the ruling contains little information as to the exact construction of merchandise, we cannot determine whether it is distinguishable from the case at hand. It is therefore inconclusive and does not serve as authority in the instant case. See HQ 967974, dated February 17, 2006. In your submission, you indicate that the racks are made wholly of heavy gauge steel. As the merchandise does not fall under any other heading of the Nomenclature, it is classified according to its composition in heading 7326, HTSUS, which provides for other articles of iron or steel. See, e.g., HQ 088741, dated April 25, 1991; HQ 088740, dated April 25, 1991; and NY F89829, dated July 28, 2000. HOLDING: By application of GRI 1, the returnable steel racks are classified under heading 7326, specifically in subheading 7326.90.8587, HTSUS, which provides for “Other articles of iron or steel: Other: Other: Other: Other: Other.” The 2008 column one, general rate of duty is 2.9 percent ad valorem. Duty rates are provided for convenience only and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts/. Sincerely, Gail A. Hamill, Chief Tariff Classification and Marking Branch