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 > 1991 HQ Rulings > HQ 0111062 - HQ 0111250 > HQ 0111073

Previous Ruling Next Ruling



HQ 111073


August 16, 1990

BOR-7-07-CO:R:P:C 111073 GV

CATEGORY: CARRIER

Mr. Max Allway
Senior Manager
Sales and Material Control
Toyota Industrial Equipment Mfg., Inc.
5555 Inwood Drive
Post Office Box 2487
Columbus, Indiana 47202-2487

RE: Instruments of International Traffic; Shipping modules; 19 U.S.C. 1322

Dear Mr. Allway:

This is in response to your letter dated May 21, 1990, requesting a ruling that certain shipping modules are instruments of international traffic. Our ruling is set forth below.

FACTS:

Toyota Industrial Equipment Mfg., Inc. ("Toyota") uses returnable shipping modules when importing certain component parts from Japan. The modules (i.e., Japanese-manufactured steel racks and plastic boxes) are used only for the purpose of transporting subassembled components and various hardware items used to manufacture lift trucks. After unloading in the United States, the modules are collapsed and returned to Japan.

The route to be travelled by these modules is Nagoya, Japan (or Kobe, Japan) to Tacoma, Washington, to Chicago, Illinois, to Columbus, Indiana. The return route to Japan will be Columbus, Indiana, to Chicago, Illinois, to Tacoma, Washington, to Nagoya or Kobe, Japan. In addition, Toyota has submitted documentation describing the size of the modules (i.e., weight, dimensions, and capacity), the quantities of each particular module in circulation for a specific time period, and pictures of the various modules.

ISSUE:

Whether returnable shipping modules (i.e., steel racks and plastic boxes) used to import certain component parts of lift trucks from Japan may be designated as instruments of international traffic within the meaning of 19 U.S.C. 1322(a) and section 10.41a, Customs Regulations (19 CFR 10.41a).

LAW AND ANALYSIS:

Title 19, United States Code, section 1322(a) (19 U.S.C. 1322(a)), provides that "[v]ehicles and other instruments of international traffic, of any class specified by the Secretary of the Treasury, shall 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 or instructions of the Secretary of the Treasury."

The Customs Regulations issued under the authority of section 322(a) are contained in section 10.41a (19 CFR 10.41a). 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.

Section 10.41a(a)(1) also authorizes the Commissioner of Customs to designate other items as instruments of international traffic in decisions to be published in the weekly Customs Bulletin. Once designated as instruments of international traffic, these items may be released without entry or the payment of duty, subject to the provisions of section 10.41a.

To qualify as an "instrument of international traffic" within the meaning of 19 U.S.C. 1322(a) and the regulation promulgated pursuant thereto (19 CFR 10.41a 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 Schedules of the United States (HTSUS), 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 Holly Stores, supra, the court determined that "reuse" in the context of former General Headnote 6(b)(ii) "has been consistently interpreted to mean practical, commercial reuse, not incidental reuse." (Emphasis added). In that case, articles of
clothing were shipped into this country on wire or plastic coat hangers. Evidence showed that the hangers were designed to be, and were of fairly durable construction and that it would be physically possible to reuse them. However, the court found that only about one percent of the hangers were reused in any way at all, and that those uses were of a noncommercial nature. The court held that the uses of these hangers beyond shipping them once from overseas to the United States were purely incidental, and concluded that the hangers were "not designed for, or capable of, reuse". Subsequent Customs rulings on this matter have held that single use is not sufficient; reuse means more than twice (Headquarter rulings 105567 and 108658). Furthermore, it is our position that the burden of proof to establish reuse is on the applicant, even though the applicant may not be the party reusing the instrument.

Upon reviewing Toyota's request and the accompanying documentation, we are of the opinion the above requirements have been met. In addition, Customs has previously ruled that steel racks and plastic boxes of a similar use and construction as those under consideration qualify as instruments of international traffic pursuant to 19 U.S.C. 1322(a) and section 10.41a, Customs Regulations (see T.D.'s 70-236, 74-195, 76-203, 77-284, and 78-19).

HOLDING:

Returnable shipping modules (i.e., steel racks and plastic boxes) used to import certain component parts of lift trucks from Japan are designated as instruments of international traffic within the meaning of 19 U.S.C. 1322(a) and section 10.41a, Customs Regulations (19 CFR 10.41a).

Sincerely,

B. James Fritz

Previous Ruling Next Ruling

See also: