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HQ 116446




May 9, 2005

BOR-4-07:RR:IT:EC 116446 TLS

CATEGORY: CARRIER

Mr. Juan Marcaida
Director of Customs-LMO
Lear Corporation
950 Loma Verde
El Paso, Texas 79936

RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 CFR 10.41a(a)(1); Metal Horses; Harmonized Tariff Schedule of the United States Annotated (HTSUSA) heading 9803.00.50.

Dear Mr. Marcaida:

This is in response to your letter dated April 12, 2005, with photographs and drawings enclosed, requesting a ruling concerning whether metal horses as you describe them qualify as instruments of international traffic (IITs) under 19 U.S.C. §1322(a) and 19 CFR 10.41a(a)(1) and therefore qualify for duty-free treatment under subheading 9803.00.50, HTSUSA. Our response is set forth below.

FACTS:

As you state, the metal horses will function as holders of leather hides while being transported internationally. You describe them as consisting of a base measuring 42 inches by 85 inches and made of galvanized steel tubing. The base rests on four caster wheels, each of which is approximately eight inches in diameter. A galvanized steel frame of eight steel tubes, four across from one another, is welded on top of the base. The frame, which is trapezoidal in shape, has a 1/16 inch galvanized steel sheet attached to each side that covers the length of each side and extends to the top of the side tubes. The sheets are curved at the top to avoid damaging the leather hides as they are draped across the metal horse. Attached to the top of the frame are two half-moon-shaped galvanized steel pieces, one at each end, with three inch by eight inch rectangular openings in them. You state that the openings act as handles to allow the metal horse to be moved about. The frame is 43 inches in height from the base. You state that the average price of the a metal horse is $544.00 and it is manufactured in Mexico and El Paso, Texas.

The horses are transported by truck between Lear’s facilities in Mexico and the company’s locations in El Paso. From El Paso, they are forwarded to a leather supplier in New York who, in turn, loads their hides onto the horses and ships them back to Lear in El Paso. The hides are subsequently sent to Mexico for processing at Lear’s production facilities. Although the horses are commonly shipped to the U.S. without leather hides, they may occasionally be loaded in Mexico when returning rejected hides to the U.S. supplier.

Deliveries of leather hides to Lear’s facilities in Mexico occur approximately each week. Each shipment consists of two truck or trailer loads that include a total of 140 metal horses loaded with leather hides. Annually, the horses cross the border into the U.S. approximately 6,720 times. The horses will be used repeatedly in carrying the leather hides between the U.S. and Mexico for an indefinite number of times before disposal.

ISSUE:

Whether the metal horses described above may be designated as instruments of international traffic under 19 U.S.C. § 1322(a) and 19 CFR 10.41a(a)(1).

LAW AND ANALYSIS:

Pursuant to 19 U.S.C. § 1322(a), instruments of international traffic shall be excepted from the application of the U.S. Customs and Border Protection laws to the extent that such terms and conditions are prescribed in regulations or instructions. Pursuant to 19 CFR 10.41a(a)(1), the Commissioner of U.S. Customs and Border Protection (CBP) is authorized to designate as IITs such additional articles not specifically noted in that section. Such instruments may be released without entry or payment of duty.

To qualify as an "instrument of international traffic" within the meaning of 19 U.S.C. § 1322(a) and 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 HTSUSA subheading 9803.00.50; former Tariff Schedules of the United States Headnote 6(b)(ii); and CBP Ruling HQ 112303 (August 14, 1992).

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 (Fed. Cir. 1982). In Holly Stores, 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.” 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 CBP rulings on this matter have held that single use is not sufficient; reuse means more than twice. See, e.g., CBP Rulings HQ 105567 and HQ 108658.

Upon reviewing your submission in light of the above-referenced authority, we find that the metal horses under consideration are metal racks capable of being used as a container or holder, that they are substantial, suitable for and capable of repeated use, and that they will be used in significant numbers in international traffic. They have therefore met the requisite criteria to be designated as IITs. We further find that the metal horses are similar to certain racks composed of metal that we have previously found to be IITs. See, e.g., CBP Rulings HQ 116047 and HQ 113687.

You also seek guidance as to whether the subject metal horses must be serially marked/numbered. We have held that the containers do not need to be marked with serial numbers or identifying numbers in order to qualify as IITs. However, the CBP regulations do provide for the serial numbering/marking of holders or containers that are IITs for purposes of CBP clearance of such articles. See 19 CFR 10.41b(d). Furthermore, CBP has long-held that IITs, whether empty or containing cargo, must be listed on a carrier’s cargo manifest. See CBP Ruling HQ 102960 (September 30, 1977), citing T.D. 55624(4). In regard to your inquiry regarding the timeliness of the applicable bond, such bond must be filed with CBP prior to the release of the IITs in question. See 19 CFR 10.41a(c).

HOLDING:

The metal horses, as described above, are hereby designated as instruments of international traffic within the meaning of 19 U.S.C. §1322(a) and pursuant to 19 CFR 10.41a(a)(1).

Sincerely,

Glen E. Vereb
Chief

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