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HQ 110969


September 5, 1990

BOR-7-07-CO:R:P:C 110969 KVS

CATEGORY: CARRIER

Mr. Noa Kumagai
James J. Boyle & Co.
371 Allerton Avenue
San Francisco, CA 94080

RE: Instrument of international traffic; designation of; polyethylene pallet used to carry glass bottles

Dear Mr. Kumagai:

This is in response to your letter of August 1, 1990, which provides additional information in furtherance of your request for a ruling dated March 28, 1990, regarding the designation of pallets for carrying glass bottles as instruments of international traffic.

FACTS:

You state that the pallets are composed of high density polyethylene material and have an expected life span of approximately 15 years. As the photographs attached to your letter illustrate, each pallet is marked with the company name and logo (which you assert is permanently embossed). Each pallet also is painted with a four-digit number.

You state that each pallet will contain 12 tiers of glass bottles, for a total of 6,348 bottles. After loading, the entire load (bottom pallet, bottles, and top portion of pallet) will be shrink-wrapped for shipment.

You state that 6,300 sets of pallets are currently in use. The port of entry and departure for the pallets is Oakland, California, with shipments of bottles to Tokyo and Kobe, Japan.

ISSUE:

Whether high density polyethylene pallets used to carry glass bottles can be designated as instruments of international
traffic within the meaning of 19 U.S.C. 1322(a) and section 10.41a of the Customs Regulations (19 CFR 10.41a).

LAW AND ANALYSIS:

Section 322(a), Tariff Act of 1930, as amended (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 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 section 322(a), Tariff Act of 1930, as amended (19 U.S.C. 1322(a)), and the regulations issued thereunder (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 re-use 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 the term "re-use" in the context of former General Headnote 6(b)(ii) has been consistently interpreted to mean practical, commercial re- use and not incidental re-use. Under the facts in that case, articles of clothing were shipped into the United States on wire or plastic coat hangers. The evidence presented indicated that the hangers were designed to be, and were of fairly durable
construction such that it would be physically possible to re-use them. However, the court found that only about one percent of the hangers were re-used in any manner, and that those uses were of a non-commercial 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, re-use.

Subsequent Customs rulings on this matter have held that a single use is not sufficient; that the concept of "re-use" encompasses more than two uses (see Headquarters rulings 105567 and 108658). Furthermore, it is our position that the burden of proof to establish re-use is on the applicant, even though the applicant may not be the party re-using the instrument.

We find that the pallets under consideration do meet the above criteria. Each pallet is used as a container or holder for 6,348 glass bottles. Constructed of high density polyethylene material with an expected life span of 15 years, the pallets are substantial, suitable for and capable of repeated use. Finally, we find that 6,300 sets of pallets constitute significant use of the articles in international traffic.

HOLDING:

High density polyethylene pallets to be used for the shipments of glass bottles qualify for treatment as instruments of international traffic under 19 U.S.C. 1322(a) and 19 CFR 10.41a, and may be released under the procedures ser forth in section 10.41a of the Customs Regulations.

Sincerely,

B. James Fritz

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