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HQ 111979


December 18, 1991

BOR-7-07-CO:R:IT:C 111979 MLR

CATEGORY: CARRIER

John F. McManus
C. Itoh Express (America) Inc.
335 Madison Avenue
New York, N.Y. 10017

RE: Eligibility of certain stackable plastic containers to be designated as instruments of international traffic (IIT)

Dear Mr. McManus:

This is in reference to your letters dated October 18, 1991, and December 11, 1991, requesting that certain stackable plastic containers be designated as instruments of international traffic

FACTS:

Gecom Corporation (Gecom) intends to use stackable plastic containers to import dutiable Japanese automobile parts (small metal or plastic fittings for use in the latches of automobile doors manufactured in the United States). The plastic containers will measure 335 millimeters (mm) by 280 mm by 90 mm, be yellow in color, and be marked with "MMS, Made in Japan" ("MMS" are the initials of Gecom's parent company/supplier, the Mitsui Mining & Smelting Co., Ltd.). Sanko Co., Ltd., of Toyko, Japan, will manufacture the plastic containers, which have an estimated life of five years.

The plastic containers will be used inside certain steel packing crates, which were classified as IITs (Customs Headquarters Ruling 111475 RAH, dated March 30, 1991). The steel packing crates will be packed inside a forty-foot container. The ports of entry are expected to be Seattle, Washington, and Chicago, Illinois. From there, the plastic containers will be transported to the Gecom assembly plant in Greensburg, Indiana, where they will be placed adjacent to that area of the assembly line requiring the packed automobile part. After a sufficient number of the plastic containers are empty, they will be returned to Japan for reuse. C. Itoh Express (America) Inc. will act as the traffic coordinator in the United States for Gecom.

ISSUE:

Whether plastic containers used for the transportation of small automobile parts may be designated as instruments of international traffic.

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 1322(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. 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 of merchandise moving in the foreign trade. 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.

We find that the plastic containers under consideration meet the above criteria. Furthermore, we find that the plastic containers under consideration are similar in use and construction to the plastic trays designated as instruments of international traffic in Treasury Decision 68-56 (plastic trays, used for the transportation of parts of dashboards such as odometers).

The designation of a container or holder as an IIT becomes effective only when used as such upon its arrival in this country in foreign trade, either empty or with merchandise. If the holder or container is brought into the country by a party other than the one who is using it as an IIT, it is subject to entry as imported merchandise. The principal on the IIT bond is the party who is using the holder or container as an IIT.

For purposes of this ruling, we will assume that there is no diversion of the plastic containers from a use in international traffic. More particularly, we will assume that the plastic containers will not be used for storing the automobile parts, and that the placement of the plastic containers adjacent to the assembly line where the automobile parts are needed and unloaded, is not an incidental use.

HOLDING:

Stackable plastic containers used to import certain small 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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