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HQ 115119




October 24, 2000

BOR 4-07 RR:IT:EC 115119 RSD

CATEGORY: CARRIER

Mr. John F. Jäger
Toyota Tsusho America, Inc.
702 Triport Road (CL960)
Georgetown, Kentucky 40324

RE: Instruments of International Traffic; Steel automotive pallets; Country of origin marking; 19 U.S.C. 1322; 19 C.F.R. 10.41(a); 19 U.S.C. 1304

Dear Mr. Jäger:

This is in response to your letter dated July 17, 2000, on behalf of Toyota Tsusho Inc. regarding whether steel automotive pallets should be designated as instruments of international traffic. Previously, the National Commodity Specialist Division issued ruling NY F89829, which concerned the classification of the automotive steel pallets. The National Commodity Specialist Division forwarded your letter to our office for a ruling to address whether the pallets may be designated as instruments of international traffic. Descriptive literature containing pictures of the automotive pallets was attached to your letter.

FACTS:

Toyota Tsusho uses the steel pallets to transport automotive parts. The steel pallets are suitable for repeated use. Their construction allows the pallets to be stacked to increase the efficiency of transportation and to use storage space more effectively. There are three different types of pallets, transmission pallets, engine pallets, and cylinder head pallets. The engine pallets can hold up to 3 engines per pallet. The transmission and engine pallets are flat pallets with a pillar fold-up system. The pillars are on each corner and may be folded up to allow one pallet to be stacked on top of another. The cylinder head pallet is shown as having a steel structure that encloses the cylinder head at the side and top.

ISSUE:

Whether the subject steel automotive pallets may be designated as instruments of international traffic within meaning of 19 U.S.C. §1322(a) and 19 C.F.R. §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 322(a) are contained in section 10.41a (19 C.F.R. §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.

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), 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 was 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 (Headquarters rulings 105567 and 108658).

In Headquarters Ruling 112393, dated August 12, 1992, we ruled that reusable plastic pallets used to import certain automotive struts from should be designated as instruments of international traffic within the meaning of 19 U.S.C. 1322(a) and section 10.41a, Customs Regulations. Similarly, in Headquarters Ruling 112303, dated August 14, 1992, we held that reusable collapsible steel packing crates used to import certain automobiles engines from Japan were designated as instruments within the meaning of 19 U.S.C. 1322(a). Upon review of information presented in your letter and accompanying photographs, we are of the opinion that the containers in question are substantial, suitable for and capable of repeated use and will be used in significant numbers in international traffic. Consequently, we find that the subject steel automotive pallets qualify as instruments international traffic pursuant to 19 U.S.C. § 1322(a).

We note that if the automotive pallets are diverted from international traffic and are used domestically, they will cease to be considered instruments of international traffic and the classifications under the Harmonized Tariff Schedule of the United States determined in NY F89829 will apply.

You also inquire regarding the country of origin marking requirements under 19 U.S.C. 1304 of the automotive pallets. The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Because the pallets will be designated as instruments of international traffic, they are not considered imported into the United States, and therefore they are not subject to the country of origin marking requirements of 19 U.S.C. 1304. (See Headquarters Ruling Letter 732621, dated February 5, 1990, tank trucks are instruments of international traffic and are not containers within the context of 19 C.F.R. Part 134; they are not required to marked with the country of origin of their contents.)

HOLDING:

The automotive pallets used to transport engines, transmission and cylinder heads are designated as instruments of international traffic within the meaning of 19 U.S.C. 1322(a) and section 10.41a. Customs Regulations (19 C.F.R.§ 10.41a).

Sincerely

Larry L Burton
Chief
Entry Procedures and Carriers Branch


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