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HQ H004997




January 23, 2007

BOR-4-07-RR:BSTC:CCI H004997 IDL

CATEGORY: CARRIER

Edmond N. Scott, Jr.
Nippon Express USA, Inc.
250 Utah Avenue
South San Francisco, California 94080

RE: Instruments of International Traffic; Collapsible Steel Pallets/Racks; Subheading 9803.00.50, HTSUSA; 19 U.S.C. § 1322; 19 CFR § 10.41a

Dear Mr. Scott:

This is in response to your submission on behalf of your client, Enclos Corp., dated December 17, 2006, to the Director, National Commodity Specialist Division (NCSD), U.S. Customs and Border Protection (CBP). The NCSD has forwarded to this office for our review your request for a binding ruling on designation of “collapsible steel pallets/racks” (“racks”) used for transporting window units, as instruments of international traffic. Our ruling on this matter is set forth below.

FACTS:

Enclos Corp. expects to import assembled window units from China. YKK AP China will secure the window units in racks and transport them to San Francisco, where a construction project is currently underway. The racks will be packed inside containers and utilized on a regular basis for transporting window units from China to the United States. After arrival in the United States, the window units will be unloaded off the racks, and the racks disassembled and returned to China.

The racks, made in China, are expected to be used for approximately 40 to 60 round trips between China and the United States in 2007 alone, and have a life expectancy of fifteen years or more. The racks are the property of YKK AP, and have been in use since September 2005. Currently, there are over two hundred racks in use. You attached images of the racks with your submission.

ISSUE:

Whether the collapsible steel pallets/racks described above may be designated as instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a, U.S. Customs and Border Protection (CBP) Regulations (19 CFR 10.41a), and therefore, are classifiable under subheading 9803.00.50, HTSUSA?

LAW AND ANALYSIS:

Title 19, United States Code, section 1322(a) (19 U.S.C. 1322(a)), provides in pertinent part that “[v]ehicles and other instruments of international trafficshall 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.” The CBP Regulations issued under the authority of section 1322(a) are contained in section 10.41 et seq. (19 CFR 10.41 et seq.). 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 (IITs).

Section 10.41a(a)(1) also authorizes the Commissioner of CBP to designate other items as IITs. Once designated as IITs, these items may be released without entry or 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 promulgated pursuant thereto (19 CFR 10.41 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 Schedule of the United States (TSUS), 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 previous rulings, we designated as IITs metal racks used for transporting flat glass. HQ 112371 (December 9, 1992). We also designated as IITs collapsible metal containers or racks used for transporting auto parts. HQ 113687 (February 27, 1997).

In the instant case, we find that, based on the information provided, the racks are used to hold window units during transportation to the United States; they are substantial, suitable for and capable of repeated use; and they are used in significant numbers in international traffic. Accordingly, the racks meet the requisite criteria to qualify as IITs pursuant to section 1322(a).

HOLDING:

The collapsible steel pallets/racks are designated as instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a, and therefore, are classifiable under subheading 9803.00.50, HTSUSA.

Sincerely,

Glen E. Vereb
Chief

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