BOR-7-07-CO:R:IT:C 112503 GFM
Mr. Francis J. Sweeney
General Counsel
TDK Electronics Corp.
12 Harbor Park Drive
Port Washington NY 11050
RE: Instruments of International Traffic; IIT; Wood; Metal;
Steel; Cast Iron; Collapsible; Built-in pallet; Serial
number; Reuse and re-export; 19 U.S.C. 1322; 19 CFR 10.41a.
Dear Mr. Sweeney:
This is in reference to your letter of October 26, 1992, in
which you request a ruling regarding the classification of
certain collapsible, hardwood containers as instruments of
international traffic pursuant to 19 C.F.R. 10.41(a).
FACTS:
TDK (USA) Electronics Corporation (TDK) utilizes said
containers for the transport and protection of large rolls of
audio and visual magnetic tape known as "jumbo rolls." Said
containers are constructed of hardwood and reinforced steel
and/or cast iron panels. Said panels are self-collapsing and
each unit may be unfolded for efficient storage and transport.
TDK states that all such containers bear individual serial
numbers and are re-exported after use.
ISSUE:
Whether the described collapsible 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 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 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.
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
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 TDK's request and accompanying documentation,
we are of the opinion that each of the above requirements has
indeed been met. That is, the containers in question appear to
be substantial, suitable for and capable of repeated use, and
used in significant numbers in international traffic. In
addition, Customs has previously ruled that shipping containers
of similar use and construction as those presently 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, see also Headquarters
Ruling Letter 109136, dated September 23, 1987).
HOLDING:
The collapsible hardwood and metal containers under
consideration are hereby 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,
Harvey B. Fox
Director
Office of Regulations & Rulings