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HQ 111703


October 22, 1991

BOR-7-07-CO:R:P:C 111703 GEV

CATEGORY: CARRIER

Mr. Max Wang
ClearFreight
Post Office Box 92963
Los Angeles, California 90009

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

Dear Mr. Wang:

This is in response to your letter dated May 15, 1991, on behalf of Arvin Sango, Inc. requesting a ruling that certain collapsible containers are instruments of international traffic. Our ruling is set forth below.

FACTS:

Arvin Sango, Inc., ("Arvin") of Madison, Indiana, uses Japanese-built, collapsible, steel containers when importing automobile parts from Japan. These containers, imported through the Port of Los Angeles/Long Beach, are used to transport automobile parts inside an ocean container. The automobile parts arrive at Arvin's plant in Madison, Indiana, inside these collapsible containers which are suitable for long term and repetitive use. These containers are accumulated until a sufficient number of them is collected to fill up an ocean container at which time they are shipped back to Japan and re- used to transport automobile parts to the United States.

ISSUE:

Whether reusable, collapsible, steel containers used to import certain automobile parts 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 the information provided, 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, and Customs Ruling 111073).

HOLDING:

Reusable, collapsible, steel shipping containers used to import certain automobile parts 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

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