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HQ 112816


October 8, 1993

BOR-7-07-CO:R:IT:C 112816 BEW

CATEGORY: CARRIER

Mr. Kazunori Endo
President
JS Technos Corporation
Post Office Box 1086
188 Earl Davis Drive
Russellville, Kentucky 42276

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

Dear Mr. Endo:

This is in reference to your letter dated July 12, 1993, requesting that certain plastic baskets be designated as instruments of international traffic (IIT).

FACTS:

You state that the plastic baskets will be used to import and export automobile Master cylinders and parts from the United States to Japan. You state that you will be using two kinds of baskets for different purposes. Specification (A) is a plastic basket with a partition, and the partition must move with each basket. Specification (B) is a plastic basket only. Each basket is made of polypropylene and steel and the partition for basket (A) is made of polypropylene. You indicated that there are 720 pieces in Specification (A), and it has a life span of 5 years. These baskets are marked with "JKC ~~~~ ~~~~~ #80", and the partitions are marked "JKC MADE IN JAPAN". There are 1,740 pieces in Specification (B), and it has a life span of 5 years. These baskets are also marked with "JKC ~~~~ ~~~~~ #80". The baskets will be transported in either 20 or 40 feet containers.

You state that you anticipate using Memphis or Nashville, Tennessee, for Customs clearance.

ISSUE:

Whether the described plastic baskets and partition used for the transportation of automotive parts may be treated as 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:

Section 322(a), Tariff Act of 1930, as amended (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 in section 10.41a (19 CFR 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.

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.

We find that the polypropylene and steel baskets with the polypropylene partitions, and the polypropylene and steel baskets under consideration are used as containers or holders, that they are substantial, suitable for and capable of repeated use, and that they will be used in significant numbers in international traffic. We further find that the baskets under consideration are similar to polyethylene starting trays designed to hold vehicle disc brakes which were designated as IIT's in Treasury Decision 77-284, and similar to stands or cases composed of steel, wood or steel mesh coated with fiberglass, used by Rolls Royce for transportation of parts of an aircraft engine which were designate as IIT's in Treasury Decision 74-195.

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 polypropylene and steel baskets with partitions, and the polypropylene and steel baskets 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,

Arthur P. Schifflin

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