Ruling of the Week 6: Instruments of International Traffic

I'm enjoying the Ruling of the Week feature. One important benefit of this task is that I get to blog about some aspect of customs law that might not otherwise make it into the Court of International Trade or a Federal Register Notice. This week (really last week, but who's complaining?), the topic is Instruments of International Traffic, which is the subject of  HQ H255763 (Aug. 15, 2014). You should look at the Ruling because Customs and Border Protection included pictures, which are usually helpful.

The law allows importers to designate reusable containers, racks, skids, and similar fixtures as Instruments of International Traffic. The relevant regulation is 19 C.F.R. § 10.41a. The value of making this designation is that IIT's are not subject to duty and exempt from other aspects of the normal entry process. That can be a valuable cost-savings mechanism for frequent and repeated imports. Think about a car company in Detroit that gets the same parts from Windsor, Ontario multiple times a day using the same pallets, racks, and bins. The importer can avoid the cost and compliance effort of entering the pallets, racks, and bins if they are recognized as instruments of international transport and treated accordingly.

The way CBP looks at this, an IIT is something that is "a substantial container or holder." The article must also be capable of repeated use and used in significant numbers in international traffic. This rolls up into HTSUS item 9803.50.00, which provides for duty-free entry for products "of a class specified by the Secretary of the Treasury as instruments of international traffic." IIT's may be imported empty or containing the articles they are intended to transport.

In this ruling, CBP found that the containers were substantial (with a five to seven year service life)and reusable (about 1,500 times per year). Given those facts, the subject containers were found to be IIT's.

The ruling does not go into the details, which are always important. First of all, to do this, the importer has to have a corresponding bond to ensure that customs duties will be paid if the IIT's turn out to be dutiable for some reason. One reason that happens is that the container gets diverted from international traffic to domestic ("point-to-point") use or stays in the U.S. for a year or more. When that happens, the former IIT is subject to entry and duty if applicable. That means a compliant importer will have a process for tracking IIT's and reporting those that go astray. Also, there are specific rules regarding the serializing of containers and exceptions for traffic between the U.S. and Canada and Mexico. So, check the regs.

Comments

Post a Comment

Popular posts from this blog

Ruling of the Week 2015.8: Old Jersey and Pitcairn Island

Image
For today's ROTW, I set out looking for a ruling dealing with some far off and preferably warm location. Turns out that, with the exception of coastwise transit issues, there are no Customs and Border Protection rulings involving Pitcairn Island or any of several Pacific Ocean microstates including Tuvalu , Niue , and Kiribati . Pitcairn Island What I did find is an interesting question about the country of origin marking for products of the Bailiwick of Jersey Island, Channel Islands. The ruling is HQ 561938 (Mar. 18, 2002). For those of you who may not know, Jersey is an island off the coast of Normandy, France. It is an independent international actor and not part of the U.K. although the U.K. is responsible for its defense and external relations. Also, the Queen is the Head of State in her capacity as "the Crown in Right of Jersey." It is, according to the U.S. Department of State, a " Crown Dependency " along with the Isle of Man and the Bailiwick o...
Read more

CAFC Decision in Double Invoicing Case

The Federal Circuit has issued a decision on the merits in United States v. Inn Foods, Inc.  There had been a previous decision on jurisdiction, which was followed by a trial at the Court of International Trade and then this appeal on the substance. The initial issue is whether Inn Foods' invoicing practice amounts to fraud.  Inn Foods had been receiving an invoice from growers in Mexico that had a relatively low sales prices on it.  Subsequent to entry, Inn Foods created a second invoice at something more similar to market value, retaining the original invoice number, and paid at that higher amount.   Superficially, this looks like a standard-issue double-invoicing scheme.  But, in the age of reconciliation, is it really more like a provisional pricing mechanism?  It might have been possible to make that argument had Inn Foods adjusted its entries accordingly.  It didn't and the loss of revenue was approximately $624,000.  Based on testimony and evidence indicating both knowl...
Read more

Ninestar and UFLPA Exhaustion

Image
Exhaustion is a key doctrine in administrative law. When applicable, it requires that a party unhappy with an agency’s determination complete the administrative appeal process before turning to the courts for judicial review. Requiring exhaustion typically promotes judicial efficiency by ensuring that disputes are resolved at the agency and, if they are not, that there is a complete record of the agency process. Exhaustion also ensures that the judiciary respects the executive agencies and their expertise.  There are, on the other hand, times when the courts will find that exhaustion is not necessary or appropriate. Such is the case in  Ninestar Corporation et al. v. United States  et al., a decision of the U.S. Court of International Trade.  Ninestar is also interesting because it is one of the first cases in the CIT involving the Uyghur Forced Labor Prevention Act, known as UFLPA. In my hiatus from active blogging, I missed the rise of UFLPA as a major compliance t...
Read more