BOR-7-07-CO:R:IT:C 111979 MLR
John F. McManus
C. Itoh Express (America) Inc.
335 Madison Avenue
New York, N.Y. 10017
RE: Eligibility of certain stackable plastic containers to be
designated as instruments of international traffic (IIT)
Dear Mr. McManus:
This is in reference to your letters dated October 18, 1991,
and December 11, 1991, requesting that certain stackable plastic
containers be designated as instruments of international traffic
(IIT).
FACTS:
Gecom Corporation (Gecom) intends to use stackable plastic
containers to import dutiable Japanese automobile parts (small
metal or plastic fittings for use in the latches of automobile
doors manufactured in the United States). The plastic containers
will measure 335 millimeters (mm) by 280 mm by 90 mm, be yellow
in color, and be marked with "MMS, Made in Japan" ("MMS" are the
initials of Gecom's parent company/supplier, the Mitsui Mining &
Smelting Co., Ltd.). Sanko Co., Ltd., of Toyko, Japan, will
manufacture the plastic containers, which have an estimated life
of five years.
The plastic containers will be used inside certain steel
packing crates, which were classified as IITs (Customs
Headquarters Ruling 111475 RAH, dated March 30, 1991). The steel
packing crates will be packed inside a forty-foot container. The
ports of entry are expected to be Seattle, Washington, and
Chicago, Illinois. From there, the plastic containers will be
transported to the Gecom assembly plant in Greensburg, Indiana,
where they will be placed adjacent to that area of the assembly
line requiring the packed automobile part. After a sufficient
number of the plastic containers are empty, they will be returned
to Japan for reuse. C. Itoh Express (America) Inc. will act as
the traffic coordinator in the United States for Gecom.
ISSUE:
Whether plastic containers used for the transportation of
small automobile parts may be designated as instruments of
international traffic.
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 1322(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. 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 of merchandise moving in
the foreign trade. 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 plastic containers under consideration meet
the above criteria. Furthermore, we find that the plastic
containers under consideration are similar in use and
construction to the plastic trays designated as instruments of
international traffic in Treasury Decision 68-56 (plastic trays,
used for the transportation of parts of dashboards such as
odometers).
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.
For purposes of this ruling, we will assume that there is no
diversion of the plastic containers from a use in international
traffic. More particularly, we will assume that the plastic
containers will not be used for storing the automobile parts, and
that the placement of the plastic containers adjacent to the
assembly line where the automobile parts are needed and unloaded,
is not an incidental use.
HOLDING:
Stackable plastic containers used to import certain small
automobile parts 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