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HQ 112137


April 8, 1992

BOR-7-07-CO:R:IT:C 112137 MLR

CATEGORY: CARRIER

Mary Andrews
Priority Customs Brokers
5950 Beltway 8, Suite 404
Humble, TX 77396

RE: Eligibility of certain crawler transporters to be designated as instruments of international traffic (IIT)

Dear Ms. Andrews:

This is in reference to your letters dated March 18 and 31, 1992, requesting a ruling that certain crawler transporters be designated as instruments of international traffic (IIT).

FACTS:

Unocal intends to use two pairs of crawlers to transport two large pressure vessels, an ammonia converter and an urea reactor. The crawlers transporting the ammonia converter will be propelled by a diesel engine, have a total footprint area of 440 square feet, and together with the converter weigh 1,190,500 pounds (lbs.). The crawlers transporting the urea reactor are pulled by a tractor or bulldozer, have a total footprint area of 110 square feet, and together with the reactor weigh 438,800 lbs.

A foreign ship carrying the subject crawlers will depart from Houston, Texas, approximately April 15-20, 1992, and will arrive in Kobe, Japan, May 31-June 1, 1992, and in Muroran, Japan, June 5-7, 1992, where the pressure vessels will be laden. Then, the ship will depart for Kenai, Alaska, June 28-July 1, 1992, where the pressure vessels will be unladen for use at the Unocal plant. The beach conditions at Kenai, Alaska, and the size and weight of the pressure vessels necessitate the use of such crawlers. Unocal leased the subject crawlers from MARKS RMS and plans to use them only for this particular voyage, after which they will be returned to MARKS RMS.

ISSUE:

Whether crawler transporters used for the shipment of pressure vessels aboard a foreign ship may be designated as instruments of international traffic within the meaning of 19 U.S.C. 1322(a) and sections 10.41a and 10.41b, Customs Regulations.

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).

In Treasury Decision 82-150, it was held that barrels shipped to Europe and planned to be used only once in international traffic were not instruments of international traffic. 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. The record before us indicates that Unocal only plans to use the crawlers once; this does not meet the reuse criteria explained above.

Furthermore, it appears that the crawlers will not be exported from the United States. "Exportation" is defined in section 101.1(k), Customs Regulations {19 CFR 101.1(k)}, as "a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country." This provision explicitly provides that "[t]he shipment of merchandise abroad with the intention of returning it to the United States with a design to circumvent provisions of restriction or limitation in the tariff laws or to secure a benefit accruing to imported merchandise is not an exportation."

The applicant must also consider title 46, United States Code Appendix, section 883 (46 U.S.C. app. 883, the coastwise merchandise statute, often called the "Jones Act"). It provides, in pertinent part, that:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent or other person or persons so transporting or causing said merchandise to be transported), between points in the United States... embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any other vessel than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States ....

Therefore, if the provisoes of section 883 do not provide an exception, the transportion of the crawlers from Houston, Texas, to Kenai, Alaska, via Japan, constitutes a violation of the Jones Act.

HOLDING:

We find that the subject crawlers used to transport certain pressure vessels do not meet the criteria to qualify as instruments of international traffic within the meaning of 19 U.S.C. 1322(a), nor sections 10.41a and 10.41b, Customs Regulations.

Sincerely,

B. James Fritz

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