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HQ 113157




August 4, 1994

BOR-7-07-CO:R:IT:C 113157 GEV

CATEGORY: CARRIER

Bruce N. Shulman, Esq.
Stein Shostak Shostak & O'Hara
1620 L Street, N.W.
Washington, D.C. 20036-5605

RE: Instruments of International Traffic; Skids; Totes; 19 U.S.C. ? 1322

Dear Mr. Shulman:

This is in response to your letter dated June 6, 1994, requesting that certain skids, and plastic and metal totes which your client uses to ship industrial control components, be designated as instruments of international traffic pursuant to 19 U.S.C. ? 1322 and 19 CFR ? 10.41a. Our ruling on this matter is set forth below.

FACTS:

Allen-Bradley Company ("Allen-Bradley") of Milwaukee, Wisconsin, uses certain skids, and plastic and metal totes to ship industrial control component parts, consisting of screws, nuts, washers, spacers and miscellaneous fabricated components made in its Milwaukee facility, to its subsidiary plants in Mexico and Canada. The subsidiaries use these components to build various subassemblies used in Allen-Bradley's industrial control products.

These completed subassemblies are then re-packaged in these various shipping containers and returned to Milwaukee, where they are incorporated into Allen-Bradley's industrial control products.

The skids, which have welded steel frames with hardwood panels inserted therein, measure 36" long, 30" wide, and 7" high. The metal totes measure approximately 19 1/2" long and 11 1/2" wide, and come in three different heights: 4 1/8"; 6", and; 7 15/16". The plastic totes measure approximately 20" long, 11" wide, and 5 1/2" high.

Further in regard to the plastic totes, it is stated that although they were originally manufactured in Canada, they are currently being manufactured in the United States. However, the original mold, which references the origin of the totes as being Canadian, is still being used.

Thousands of the aforementioned skids and totes have been produced and are currently in use. Approximately 100 skids per week are shipped between the United States, Canada and Mexico, with each skid containing 50 totes. Copies of drawings and specifications for these articles were enclosed with the ruling request.

ISSUE:

Whether the skids and totes under consideration which are used to ship industrial control components are instruments of international traffic within the meaning of 19 U.S.C. ? 1322(a) and ? 10.41a, Customs Regulations (19 CFR ? 10.41a).

LAW AND ANALYSIS:

Title 19, United States Code, ? 1322(a) (19 U.S.C. 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 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 ? 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 - 3 -
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 Allen-Bradley's request and the accompanying documentation, we have determined that the above requirements for designation as an instrument of international traffic have been met with respect to the skids, and plastic and metal totes in question.

Parenthetically, we note that notwithstanding our above determination, the plastic totes that are currently manufactured in the United States yet reference Canada as their country of origin are incorrectly marked pursuant to 15 U.S.C. ? 1125. As products of the United States these articles need no country of origin designation. Consequently, the "Made in Canada" legend appearing on them should be removed.

HOLDING:

The skids, and plastic and metal totes under consideration which are used to ship industrial control components are instruments of international traffic within the meaning of 19 U.S.C. ? 1322(a) and ? 10.41a, Customs Regulations (19 CFR

Sincerely,

Arthur P. Schifflin

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