BOR-7-07-CO:R:IT:P 112474 GFM
Mr. Barry Davidson
Merit Steamship Agency, Inc.
Suite 1280
One World Trade Center
Long Beach CA 90831
RE: Instruments of International Traffic; Inflatable Airbags;
Dunnage; Heavy Gauge Paper; Voids; 19 C.F.R. 10.41a.
Dear Mr. Davidson:
This is in reference to your letter of September 23, 1992,
in which you request a ruling regarding the classification of
certain inflatable airbags manufactured from heavy-gauge paper to
be used as dunnage to fill voids between stowed pallets as
instruments of international traffic pursuant to 19 C.F.R.
10.41a.
FACTS:
The requestor states that the items in question are air bags
manufactured from heavy-gauge paper which are used as dunnage to
fill voids between stowed pallets. A single bag is placed into
an open area during the loading process and is then inflated to
hold the pallets in an upright position during the voyage. The
bags are subsequently deflated during unlading and stored on the
vessel for future use. It is stated that due to wear and tear,
the life span of each bag is, on average, four to five voyages.
Replacement bags would be held in stock at Los Angeles.
ISSUE:
Whether the described containers may be considered
instruments of international traffic within the meaning of 19
U.S.C. 1322(a) and section 10.41a of the Customs Regulations
(19 C.F.R. 10.41a).
LAW AND ANALYSIS:
Section 322(a), Tariff Act of 1930, as amended (19 U.S.C.
1322(a)), provides that "[v]ehicles and other IIT, of any class
specified by the Secretary of the Treasury, shall be granted the
customary exceptions from the application of the customs laws to
the 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 in section 10.41a (19 C.F.R. 10.41a).
Paragraph (a)(l) of section 10.41a designates as IIT lift vans,
cargo vans, shipping tanks and certain other named articles and
states that other articles may be designated as IIT by the
Commissioner of Customs 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.
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 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).
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 are of the opinion that the items under consideration may
be properly classified as instruments of international traffic as
they appear to satisfy the requirements for classification
thereunder.
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.
HOLDING:
The inflatable airbag items under consideration qualify for
treatment as instruments of international traffic and may be
released under the procedures set forth in section 10.41a,
Customs Regulations.
Sincerely,
Acting Chief
Carrier Rulings Branch