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HQ 112503


December 2, 1992

BOR-7-07-CO:R:IT:C 112503 GFM

CATEGORY: CARRIER

Mr. Francis J. Sweeney
General Counsel
TDK Electronics Corp.
12 Harbor Park Drive
Port Washington NY 11050

RE: Instruments of International Traffic; IIT; Wood; Metal; Steel; Cast Iron; Collapsible; Built-in pallet; Serial number; Reuse and re-export; 19 U.S.C. 1322; 19 CFR 10.41a.

Dear Mr. Sweeney:

This is in reference to your letter of October 26, 1992, in which you request a ruling regarding the classification of certain collapsible, hardwood containers as instruments of international traffic pursuant to 19 C.F.R. 10.41(a).

FACTS:

TDK (USA) Electronics Corporation (TDK) utilizes said containers for the transport and protection of large rolls of audio and visual magnetic tape known as "jumbo rolls." Said containers are constructed of hardwood and reinforced steel and/or cast iron panels. Said panels are self-collapsing and each unit may be unfolded for efficient storage and transport. TDK states that all such containers bear individual serial numbers and are re-exported after use.

ISSUE:

Whether the described collapsible 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 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 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.

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 TDK's request and accompanying documentation, we are of the opinion that each of the above requirements has indeed been met. That is, the containers in question appear to be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. In addition, Customs has previously ruled that shipping containers of similar use and construction as those presently 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, see also Headquarters Ruling Letter 109136, dated September 23, 1987).

HOLDING:

The collapsible hardwood and metal containers under consideration are hereby 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,

Harvey B. Fox

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