BOR-7-07-CO:R:IT:C 112303 MLR
John F. McManus
C. Itoh Express (America) Inc.
335 Madison Avenue
New York, N.Y. 10017
RE: Instruments of International Traffic; 19 U.S.C. 1322(a);
Collapsible Steel Packing Crates
Dear Mr. McManus:
This is in reference to your letter dated August 3, 1992,
requesting that certain collapsible steel packing crates be
designated as instruments of international traffic (IIT).
FACTS:
Subaru-Isuzu Automotive, Inc. (S.I.A.) intends to use
collapsible steel packing crates to import automobile components
(V-6 engines). The crates will measure 1,500 millimeters (mm) by
2,245mm by 970mm, weigh 180 kilograms, and be marked with "ISUZU,
Isuzu Motors Limited, Type UC-625, Made in Japan". Isuzu Motors
Ltd, of Toyko, Japan, will manufacture approximately 1500 crates
which have an estimated life of 5 to 10 years.
The crates will be packed inside a forty-foot shipping
container. When the crate is extended and loaded, only three to
six of them will be loaded in each container. The crates will
arrive at the ports of Los Angeles (Long Beach), Seattle, and
Tacoma through Chicago for entry at S.I.A.'s Foreign Trade Sub-
zone in Lafayette (Port of Indianapolis). From there, S.I.A.
will assemble the engines into completed motor vehicles at its
Lafayette plant. The empty crates will then be returned to Japan
for re-use, with approximately 120 crates fitting into one
shipping container. C. Itoh Express (America) Inc. will act as
the traffic coordinator in the United States for S.I.A.
ISSUE:
Whether collapsible steel packing crates used for the
transportation of automobile components (V-6 engines) 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 (TSUS), 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 the information provided, we are of the
opinion the above requirements have been met. In addition,
Customs has previously ruled that collapsible steel packing
crates of a similar use 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 Customs
Ruling 110300).
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 crates from a use in international traffic.
More particularly, we will assume that the crates will not be
used for storing the engines, and that the use of the crates in
the manufacturing facility where the engines are needed and
unloaded, is not an incidental use.
HOLDING:
Reusable, collapsible steel packing crates used to import
certain automobile engines 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