According to Section 322 of the Tariff Act of 1930, all instruments of international traffic (IIT) and vehicles shall be exempted from the applications of customs laws subject to terms and conditions and to the extent of the law prescribed by the Secretary of the Treasury.
Section 322(a) of the Traffic Act of 1930 and section 10.41a of the Customs Border Protection (CBP) regulations as set out in (19 CFR §10.41a et seq.) designates the criteria for an article to qualify as an Instrument of International Traffic (IIT).
An article qualifies as an IIT if it can be shown that is capable and suitable for repeated use and is commonly used in international traffic. According to section 10.41 of the CBP regulations, IIT’s may include articles such as shipping tanks, lift vans and engine racks, empty racks and other articles that the Commissioner of Customs may designate and publish as an IIT.
Declaring IITs in ACE or ACI eManifest
Carriers need to report all Instruments of International Traffic on the ACE or ACI eManifest. Depending on where IITs are loaded the carrier may either set the status of the instrument of international traffic in the ACE or ACI eManifest in the trailer or truck. This will inform customs officials that the shipment has IITs on board. However, the driver may be required by customs to provide the IIT bond number or bills of lading.
Articles deemed IIT according to 19 CFR §10.41a are deemed to be used in international traffic either when they arrive as empty articles and are filled with goods for export or when they arrive with goods imported into the US. Once the article has been deemed qualified as an IIT, it will be processed through customs without having to pay any duty as set out in the regulations of 19 CFR §10.41a.
The Instruments of International Traffic Bond
It is critical that the carrier indicates whether the IITs on board are covered by the carrier or importer’s bond. They also need to report if the IITs along with any other regular shipments on the truck. While most IITs are covered by an importers bond, it is up to the carrier to make sure that the IIT they have onboard has an active bond. It is critical that they get the bond number from the importer and furnish the driver of the truck with it just in case it is required by the customs official.
The Advantage of Instruments of International Traffic Designation
The law allows importers and carriers to designate reusable articles such as skids, racks, and containers among other similar items as Instruments of International traffic in19 C.F.R. § 10.41a. The following are some of the advantages of IITs:
Items designated as IITs are exempted from many aspects of customs and will not be subject to the payment of duties. In the instance of repeated and frequent imports, this can be a huge cost-saving mechanism. For instance, an automobile company in Detroit that imports spare parts from Toronto several times a day using the same bins, pallets, and racks. The company will not have to go through compliance and pay duties for clearing the bins, racks, and pallets if they are deemed IITs and are exempted from duty and tax.
Exceptions to Instruments of International Traffic
- Any IIT that is improved through a manufacturing process while abroad and is then converted into point-to-point traffic within the US will become subject to the payment of applicable duties and entry requirements.
- If an IIT designation is granted and then the instrument is withdrawn, diverted, destroyed or abandoned, the person that had filed the application for the designation needs to file a report with CBP. The filing of the intention will be either electronic or at the port of entry after which all import taxes and duties on such an instrument will be paid according to the rates set for withdrawal or diversion.
- Any articles designated as Instruments of International Traffic only remain so as long as they exit the United States within 365 days of entry. If the IIT does not exit the US within the set out time, entry for consumption will have to be made with customs as the article will be deemed to have been withdrawn from international traffic (IIT) designation.
