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HQ 111710


February 27, 1992

BOR-7-07-CO:R:P:C 111710 MAR

CATEGORY: CARRIER

Ms. Tamra George
Subaru-Isuzu Automotive Inc.
5500 State Road 38 East
P.O. Box 5689
Lafayette, Indiana 47903

RE: Instruments of International Traffic; Steel racks; 19 U.S.C. 1322(a); Invoice requirements; 19 CFR 10.41a; Entry

Dear Ms. George:

This is in response to your letter dated April 22, 1991, on behalf of Subaru-Isuzu Automotive Inc. requesting a ruling that certain steel rack floors are instruments of international traffic; and, if so, whether it is necessary to list such on the entry invoices. Our ruling is set forth below.

FACTS:

Subaru-Isuzu Automotive Inc., ("SAI") of Lafayette, Indiana, uses steel racks when importing automobile parts from Japan. These containers, imported normally through West Coast ports of entry (Los Angeles/Long Beach, Seattle, and Tacoma), are used to transport automotive parts inside an ocean container. The automotive parts arrive at SAI's plant in Lafayette, Indiana, inside these steel racks.

The steel racks consist of both floors and sides. It is estimated that an average of 80 percent of the 675 rack floors received per day are in acceptable condition for repeated use, with a possible maximum number of uses to be 3 trips. However, the sides of the racks are in unacceptable condition after one shipment and are subsequently scrapped.

ISSUE:

1.) Whether steel racks used to import certain automotive 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).

2.) Whether it is necessary to list instruments of international traffic on invoice descriptions of imported shipments.

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 requirement of reuse has not been met. Although 80 percent of the floors are capable of repeated use, with a maximum number of uses to be 3 trips, the sides are not reusable and capable of only 1 trip. When considering whether an article is an instrument of international traffic, we consider the article in its entirety and not by its component parts. The floors by themselves cannot be used as a container or holder and are rendered useless without the sides for the stated purpose of transporting automotive parts. Therefore, the uses of the steel racks beyond shipping them once from overseas to the United States are purely incidental. See Holly Stores, supra.

The second question, whether it is necessary to list instruments of international traffic on invoice descriptions of imported shipments, is moot since the steel racks are not designated as instruments of international traffic.

HOLDING:

Steel racks with floors incapable of sustained repeated use and nonreusable sides used to import certain automotive parts from Japan do not meet the requisite criteria for designation 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
Chief
Carrier Rulings Branch

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