BOR-7-07-CO:R:P:C 111073 GV
Mr. Max Allway
Senior Manager
Sales and Material Control
Toyota Industrial Equipment Mfg., Inc.
5555 Inwood Drive
Post Office Box 2487
Columbus, Indiana 47202-2487
RE: Instruments of International Traffic; Shipping modules;
19 U.S.C. 1322
Dear Mr. Allway:
This is in response to your letter dated May 21, 1990,
requesting a ruling that certain shipping modules are instruments
of international traffic. Our ruling is set forth below.
FACTS:
Toyota Industrial Equipment Mfg., Inc. ("Toyota") uses
returnable shipping modules when importing certain component
parts from Japan. The modules (i.e., Japanese-manufactured steel
racks and plastic boxes) are used only for the purpose of
transporting subassembled components and various hardware items
used to manufacture lift trucks. After unloading in the United
States, the modules are collapsed and returned to Japan.
The route to be travelled by these modules is Nagoya, Japan
(or Kobe, Japan) to Tacoma, Washington, to Chicago, Illinois, to
Columbus, Indiana. The return route to Japan will be Columbus,
Indiana, to Chicago, Illinois, to Tacoma, Washington, to Nagoya
or Kobe, Japan. In addition, Toyota has submitted documentation
describing the size of the modules (i.e., weight, dimensions, and
capacity), the quantities of each particular module in
circulation for a specific time period, and pictures of the
various modules.
- 2 -
ISSUE:
Whether returnable shipping modules (i.e., steel racks and
plastic boxes) used to import certain component parts of lift
trucks from Japan may be 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).
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 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
- 3 -
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 Toyota's request and the accompanying
documentation, we are of the opinion the above requirements have
been met. In addition, Customs has previously ruled that steel
racks and plastic boxes of a similar use and construction as
those 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, 76-203,
77-284, and 78-19).
HOLDING:
Returnable shipping modules (i.e., steel racks and plastic
boxes) used to import certain component parts of lift trucks from
Japan are 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,
B. James Fritz
Chief
Carrier Rulings Branch