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HQ 220204


March 29, 1988

CON-2-03 CO:R:C:E 220204

CATEGORY: BONDS

Ben L. Irvin, Esq.
1330 Connecticut Avenue, N.W.
Suite 200
Washington, D.C. 20036

RE: Bond requirement for instruments of international traffic

Dear Mr. Irving:

Your letter of February 24, 1988, requests a ruling on whether the actual user of an instrument of international traffic (IIT) must be the principal on the IIT bond.

FACTS:

A company imports woven polypropylene bags called flexible intermediate bulk containers. It is stated that for a number of years the bags were classified under item 772.20, Tariff Schedules of the United States (TSUS), and free of duty under the Generalized System of Preferences (GSP). Recently, Customs at a port of entry concluded that the proper classification of the bags was in item 385.53 rather than item 772.20. This classification change, it is stated, caused the importer two immediate and serious problems. First, GSP is not applicable to item 385.53 making the bags dutiable at the rate of 9.5 percent ad valorem. Second, item 385.53 is subject to textile restraints, and a textile visa under category 669P is required as a condition for entry.

It is proposed that henceforth shipments of the woven polypropylene bags will be invoiced to the U.S. user or filler of the bags. A bond on Customs Form 301, containing the conditions set forth in section 113.66, Customs Regulations (19 CFR 113.66), and in the name of the U.S. user or filler of the bags, will be obtained and placed on file with Customs. Thus, when the shipment arrives for Customs clearance, the invoice and the bond will both be in the name of the U.S. user or filler. The invoice will contain a description of the bags and a statement that the bags are IITs. Attached to the invoice will be a copy of the ruling designating the bags as IITs, Headquarters letter 109370, March 7, 1988.

ISSUE:

Must the user or filler of woven polypropylene bags, designated as IITs, be the principal on the IIT bond.

LAW AND ANALYSIS:

Section 1322(a) of 19 U.S.C. provides in part that vehicles 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; and that any articles admitted under the authority of section 1322 and used otherwise than for a purpose expressed in section 1322, or not exported in such time and manner as prescribed in the regulations or instructions, shall be forfeited to the United States.

The applicable Customs regulation, section 10.41a (19 CFR 10.41a) relates to articles in use or to be used in international traffic and that have been designated as IITs by the Commissioner of Customs. If so designated, such instruments may be released without entry or the payment of duty, subject to the provisions of section 10.41a.

Section 10.41a(c), Customs Regulations, (19 CFR 10.41a(c)), provides in part that the instruments of international traffic designated in section 10.41a(a) may be released only after the applicant for release has filed a bond on Customs Form 301, containing the bond conditions in section 113.66, Customs Regulations (19 CFR 113.66).

Accordingly, the principal on the bond must be the applicant for release of the IIT. If the filler of the bags is also the user of the bags in international traffic it may be the applicant for release and the principal on the IIT bond.

HOLDING:

The principal on the IIT bond must be the applicant for release of the holder or container designated as an IIT.

Sincerely,

John A. Durant
Acting Director
Commercial Rulings Division

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