HQ 115644 - Instruments of International Traffic; Steel Pallets, 19 U.S.C. 1322; 19 C.F.R. 10.41a - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 2005 HQ Rulings > HQ 115080 - HQ 116218 > HQ 115644

Previous Ruling Next Ruling
HQ 115644

June 24, 2002

BOR-4-07-RR:IT:EC 115644 LLO

CATEGORY:

Michael E. Murphy
Baker & McKenzie
815 Connecticut Avenue, N.W.
Washington, D.C. 20006-4078

RE: Instruments of International Traffic; Steel Pallets, 19 U.S.C. 1322; 19 C.F.R. 10.41a

Dear Mr. Murphy:

We received your request for a ruling to designate specifically described steel pallets as instruments of international traffic under 19 U.S.C. §1322. Our ruling on the matter is set forth below.

FACTS:

The steel pallets at issue are designed to facilitate the international shipment of certain air compressor components. Each pallet is intended to carry two rotary air ends from a manufacturing facility in Mockville, N.C. to foreign affiliates in the People’s Republic of China, the United Kingdom and the Czech Republic. Once the air ends are removed at the foreign designation, the pallets will be returned to the U.S. for reuse in the international shipment of new air ends.

You describe the pallets as flat with permanently installed mounting points (pedestals) for securing the air ends. The pallets incorporate a folding pillar system at each corner that, when extended allow one pallet to be stacked on top of another. After the air ends are removed at the foreign facility, the pillars will be folded down and the pallets stacked for return shipment. When the pillar system is extended, the pallet configuration allows for 2 rows of 7 pallets stacked two high to fit in a forty-foot ocean freight container (i.e. 28 pallets per container). When the pillars are folded down, this configuration allows for 2 rows of 7 pallets stacked 7 high to fit in a forty-foot ocean freight container (i.e. 98 pallets per container). Approximately 400 pallets are expected to be used in this manner.

ISSUE:

Whether the described steel pallets may be considered instruments of international traffic within the meaning of title 19 U.S.C. §1322 and 19 C.F.R. §10.41a.

LAW AND ANALYSIS:

Title 19 U.S.C. §1322(a), provides that “vehicles and other Instruments of international traffic (hereafter IIT), of any class specified by the Secretary of Treasury, shall be granted the customary exceptions from the application of the Customs laws to the extent and subject to such terms and conditions as may be prescribed in regulations or instructions of the Secretary of Treasury.”

The Customs regulations issued under the authority of 19 U.S.C. §1322 are in title 19 C.F.R. §10.41a. Paragraph (a)(1) of section 10.41a designates as IIT certain named articles and states that other articles may be designated as IIT by the Commissioner of Customs in decisions to be published in the weekly Customs Bulletin. Such IIT may be released without entry of the payment of duty, subject to the provisions of section 10.41a

To qualify as an IIT within the meaning of 19 U.S.C. §1322(a), and the regulations issued thereunder an article must meet the following requirements:

-be used as a container or holder;
-substantial;
-suitable for and capable of repeated use; -and used in significant numbers in international traffic.

The term “repeated use,” as used above has been deemed applicable to commercial shipping or transportation purposes and not incidental uses. In Holly Stores, Inc. v. U.S., 697 F.2d 1387 (Fed. Circuit 1982) the court determined that “reuse” has been consistently interpreted to mean “practical, commercial reuse not incidental reuses.” Subsequent Customs rulings on this matter have held that a single use is not sufficient to constitute the “repeated use” requirement necessary to be deemed an instrument of international traffic; repeated use means more than two uses.

Upon review of the information presented in your letter and accompanying photographs, we are of the opinion that the steel pallets in question act as holders for air compressor components and therefore fit the first requirement that the item in question be used as a container or holder. The steel pallets in question are substantial, as well as suitable and capable of repeated use as outlined in the facts portion of this ruling and based upon the information provided. Finally, approximately 400 steel pallets will be used in the commercial shipment of the air compressor components abroad which constitutes a significant number of the holders being used in international traffic. Consequently, we find that the subject steel pallets qualify as instruments of international traffic pursuant to 19 U.S.C. §1322(a).

Since the pallets will be designated as instruments of international traffic, they are not considered imported into the U.S., and are therefore not subject to the country of origin marking requirements of 19 U.S.C. §1304. It should be noted that if the steel pallets are diverted from international traffic and are used domestically, they will cease to be considered instruments of international traffic.

HOLDING:

The subject steel pallets used to transport air compressor components are designated as instruments of international traffic within the meaning of 19 U.S.C. §1322(a) and 19 C.F.R. §10.41a.

Sincerely,

Jeremy Baskin
Acting Chief

Previous Ruling Next Ruling