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HQ 112474


February 22, 1993

BOR-7-07-CO:R:IT:P 112474 GFM

CATEGORY: CARRIER

Mr. Barry Davidson
Merit Steamship Agency, Inc.
Suite 1280
One World Trade Center
Long Beach CA 90831

RE: Instruments of International Traffic; Inflatable Airbags; Dunnage; Heavy Gauge Paper; Voids; 19 C.F.R. 10.41a.

Dear Mr. Davidson:

This is in reference to your letter of September 23, 1992, in which you request a ruling regarding the classification of certain inflatable airbags manufactured from heavy-gauge paper to be used as dunnage to fill voids between stowed pallets as instruments of international traffic pursuant to 19 C.F.R. 10.41a.

FACTS:

The requestor states that the items in question are air bags manufactured from heavy-gauge paper which are used as dunnage to fill voids between stowed pallets. A single bag is placed into an open area during the loading process and is then inflated to hold the pallets in an upright position during the voyage. The bags are subsequently deflated during unlading and stored on the vessel for future use. It is stated that due to wear and tear, the life span of each bag is, on average, four to five voyages. Replacement bags would be held in stock at Los Angeles.

ISSUE:

Whether the described containers may be considered instruments of international traffic within the meaning of 19 U.S.C. 1322(a) and section 10.41a of the Customs Regulations (19 C.F.R. 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 IIT, of any class specified by the Secretary of the Treasury, shall be granted the customary exceptions from the application of the customs laws to the 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 in section 10.41a (19 C.F.R. 10.41a). Paragraph (a)(l) of section 10.41a designates as IIT lift vans, cargo vans, shipping tanks and certain other named articles and states that other articles may be designated as IIT by the Commissioner of Customs 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.

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 C.F.R. 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).

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 are of the opinion that the items under consideration may be properly classified as instruments of international traffic as they appear to satisfy the requirements for classification thereunder.

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.

HOLDING:

The inflatable airbag items under consideration qualify for treatment as instruments of international traffic and may be released under the procedures set forth in section 10.41a, Customs Regulations.

Sincerely,


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