CLA-2 RR:CR:TE 961938 SS
Trade Compliance Process Owner
U.S. Customs Service
4477 Woodson Road
St. Louis, MO 63134
RE: Decision on Request for Internal Advice No. 10/98, Concerning the Classification of Polypropylene Bags Used for Transporting Sand; 6305.32.0010, HTSUSA; General Rules of Interpretation 5(b); Packing Material and Packing Containers Presented with the Goods; Clearly Suitable for Repetitive Use
Dear Sir:
This is in response to your letter dated April 27, 1998, requesting Internal Advice regarding the classification under the Harmonized Tariff Schedule of the United States (HTSUS), of polypropylene bags used for transporting sand. One sample has been submitted. The Request for Internal Advice was initiated by Ablondi, Foster, Sobin & Davidow, P.C. on behalf of Toyota Tsusho America, Inc.
FACTS:
Toyota Tsusho America, Inc. (“Importer”) imports sand from Japan that is packed and transported in polypropylene woven bags. The bags are known as flexible intermediate bulk containers (“FIBC”). The sand is transported directly to Bodine Aluminum, Inc. (“Bodine”) where it is used in casting automobile engine components. When the sand bags arrive at Bodine, they are moved by forklift truck to a crane where they are hoisted and emptied into hoppers. Bodine states that the used bags are then disposed of, compacted with other solid waste and transported to a landfill. The Importer asserts that the bags are “single-trip” FIBC.
The bags are manufactured by Shibata Kogyo/Shibata Industrial Co., Ltd./Shibata Manufacturing, Ltd. (“Shibata”). The bags are composed of woven polypropylene with an inner liner of polypropylene sheet. The inner liner serves as a moisture barrier to keep the sand dry. The bags are cylindrical in shape and measure roughly 4 feet high by 4 feet wide by 4 feet deep.
The woven polypropylene fabric forming the bag is .4mm thick, and the plastic sheet forming the inner lining bag is .4mm thick. The bags have an opening at the top through which they are filled and an opening at the bottom through which they are emptied. The inner liners also have openings at top and bottom which are secured by ties. The outer bags have sturdy sewn-on straps that are used for lifting and handling the sand during transportation and at the foundry. Each bag can hold up to 500 kgs or 1100 lbs of sand.
The Importer has been importing sand for Bodine for several years. Until the fall of 1997, the sand was transported in reusable rubber bags which were returned to Japan after being emptied. The rubber bags cost approximately ¥30,000 (or $153.33). However, transportation and other costs associated with their return to Japan increased the overall cost of those bags to the point that when the Importer did a cost analysis, it determined that using single-trip, throw away polypropylene bags with liners that cost approximately ¥2,500 (or $20.83) each was more economical than using the reusable rubber bags.
U.S. Customs Service Port of St. Louis examined a sample of the polypropylene bag and concluded that it was a reusable item which should be classified separately from the sand under 6305, HTSUS, pursuant to GRI 5 (b). Bodine, however, submitted that when the bags are received, they frequently have structural damage and leak sand and that if the bags were reused, the company could incur a greater loss of sand than is currently experienced. This could be very expensive for the company from the cost of the lost sand to a potential shut down due to excessive sand loss.
On January 25, 1999, a meeting was held at Customs Headquarters with counsel and General Counsel/Assistant Vice President of Toyota Tsusho America, Inc. At that time, Customs pointed out the fact that the Importer had submitted European standards for “heavy duty reusable”, “standard reusable”, and “single trip” flexible intermediate bulk containers but had failed to show how the bags fit within those standards. Customs allowed the Importer to submit additional evidence to support its contention that the bags were “single-trip” containers. An additional submission was received February 24, 1999. The Importer provided a translation of a label sewn on every bag that states in Japanese that it is a “one way container”. The Importer also submitted a letter from the manufacturer that calls the bag a “one way flexible container bag.” The manufacturer states that the bag is only for one way use and only guarantees one use to Bodine.
Customs then requested that the Importer submit additional evidence showing specifically how the bags fit within the European standards. The Importer made an additional submission on April 28, 1999. Instead of having the bags tested per the European standards, the Importer submitted Shibata’s Performance Tests. The Performance Tests document sets forth the testing procedures and specifications used by Shibata in manufacturing “multi-trip” and “single-trip” containers. It appears that the specifications were made pursuant to the Japanese Ministry of International Trade standard for Flexible Containers. Although the specifications for “single-trip” containers are not identical to the European standards, they do appear to be similar. Under both standards, the bag is lifted 30 times with a load that weighs two times the safe working load. On the 31st load, the European standard pushes the load to 5 times the safe working load while the Japanese standard only pushes the load to 3 times the working load but requires that it be lifted for 5 minutes. Although there is no U.S. standard for FIBCs for nonhazardous substances, the Flexible Intermediate Bulk Container Association, has indicated that both standards are consistent with a “5 to 1 safety factor” standard for single trip FIBC pending before the International Standards Organization.
Based on an examination of the bag material and its construction, there has been speculation that what the Importer labels a “single-trip FIBC” at issue could be used more than once. The Importer does not dispute that possibility and explains that the Japanese and European standards require even the single-trip FIBC to be able to survive extreme handling and other rigorous tests while holding at a minimum twice the safe working load. If it is intact after the first trip, the bag can be reused. The Importer contends that its reuse would be fugitive in that the FIBC is not manufactured, tested or sold for multi-trip use. Bodine has stated that it would be willing to slit the bags after the sand is emptied to ensure that the bags are not reused if it would mean that the bags would not be classified separately. The Importer asserts that the bags should be entered as packing for the sand and classified with the sand under GRI 5(b). Under this scenario the bags would not require a textile visa.
ISSUE:
Whether the polypropylene bags used for transporting sand should be classified with the sand pursuant to GRI 5(b) or separately as a flexible intermediate bulk containers?
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (“GRIs”). GRI 1 provides that classification shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied. The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRI.
This case is governed by GRI 5 in that the resolution of the issue depends on the application, or nonapplication, of GRI 5(b). GRI 5(b) states as follows:
“(b) Subject to the provisions of Rule 5(a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if
they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.”
The general principal is that reusable containers are treated as separate articles and, if appropriate, dutied at the rate applicable to such container. There is no dispute as to the fact that the bags are packing containers of a kind normally used for packing sand. The sole issue in this case is whether or not the bags are “clearly suitable for repetitive use.” The fact that the Importer alleges that the bags are not being reused is immaterial. The matter must be reviewed on an objective basis. The application of GRI 5(b) is not subjective; it does not depend on how a particular importer uses a container. The focus is on the container itself and the question is whether that container is suitable for repetitive use.
Two Customs Service National Import Specialists reviewed the matter and found that the bags were fairly substantial and capable of reuse. The National Import Specialists also noted that the bags could have been registered as instruments of international traffic (“IIT”). The bags were also examined by various members of the Office of Regulations and Rulings, including the Entry Procedures & Carrier Rulings Branch and the Textiles Branch. We determined that the bags were clearly suitable for repetitive use and were of a class or kind previously designated as instruments of international traffic.
Section 322(a), Tariff Act of 1930, as amended (19 U.S.C. 1322(a)), provides that “[v]ehicles and other instruments of international traffic, of any class specified by the Secretary of Treasury, shall be granted the customary exceptions from the applications 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 found in section 10.41a (19 CFR 10.41a). Paragraph (a)(1) of section 10.41a designates as IIT certain named articles and states that other articles may be designated as IIT by the Commissioner of Customs. To qualify as an IIT, the article must be, inter alia, suitable and capable of repeated use. Woven polypropylene bags fitted with a polypropylene liner used for the transportation of dry chemicals have been described as suitable for and capable of repeated use and designated as IIT. Treasury Decision (T.D.) 76-171, dated June 11, 1976.
Customs has a well established precedent of designating similar woven polypropylene bags as IIT. In Headquarters Ruling Letter (HQ) 111429, dated March 20, 1991, Customs referenced T.D. 76-171 and designated bags made of polypropylene fabric used to transport dry clay as IIT. Customs noted that their sturdy construction allowed the bags to be used five or six times, the reclosable spout allowed the bags to be emptied and filled without damaging their structural integrity and that they could hold approximately one metric ton. In HQ 113407, dated April 25, 1995, Customs designated woven polypropylene bags that were reusable flexible intermediate bulk containers for shipping and handling dry, flowable, semi-bulk materials as IIT. The bags were capable of multiple uses, such as to transport foodstuffs, fertilizers, chemicals and clay polypropylene pellets. Customs found that the bags were of sufficient strength and durability to make repeat trips and conservatively estimated that the bags were capable of 8 to 10 trips. In HQ 113531, dated August 31, 1995, flexible intermediate bulk containers used to transport beans were designated as IIT. The bags were made of uncoated, woven, polypropylene, white opaque sewn fabric with polypropylene thread. The bags had a safe working load of 4200 pounds. In HQ 113916, dated July 2, 1997, Customs again designated certain flexible intermediate bulk containers, which were referred to as “bulk bags”, as IIT. The containers were 1 metric ton bags constructed of woven polypropylene material with top and bottom openings and lifting loops for movement by forklift or crane. The bags were principally used to transport agricultural products. Customs found that the bags were suitable for and capable of repeated use. Applying this long line of cases to the present matter, we cannot avoid the conclusion that the woven polypropylene bags under consideration are similar to woven polypropylene bags which have been previously designated as IIT. Accordingly, the subject woven polypropylene bags are capable of reuse.
In HQ 113531, mentioned above, the concept of reuse was discussed and Customs stated that the reuse contemplated for an IIT is for commercial shipping or transportation purposes. In Holly Stores, 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.” Holly Stores, Inc. v. United States, 697 F.2d 1387 (1983). In Holly Stores, articles of clothing were shipped into this country on wire or plastic hangers. The court found that only an insignificant number of the hangers were reused in any way at all, and that those uses were of a noncommercial nature. The few hangers that were reused were either given to customers, used to replace broken hangers or used to return goods to the warehouse. 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” within the meaning of the note. The subject bags can be distinguished in that they can readily be reused for commercial shipping and transportation purposes. Unlike a bag that could not be reused because it has to be cut open to discharge the contents, the openings at the top and bottom of the subject bag facilitate reuse. Additionally, the plastic and wire hangers are flimsy in comparison to the substantial woven polypropylene bags. Furthermore, we are not aware of any noncommercial uses of such bags. Accordingly, it appears that the bags are capable of reuse in terms of commercial shipping and transportation.
Based upon examination of the bag material and its construction, Customs is of the opinion that the bag can be reused. Although we find the Importer’s arguments persuasive, we find them to be against the weight of the prior rulings on polypropylene flexible intermediate bulk containers. By the Importer’s own admission, the sturdiness of the bag that protects the contents during its first voyage also makes it capable of reuse. The subject bag is not classifiable with the sand because the bag does not meet all of the criteria set out by GRI 5(b). Although the subject bag is of a kind normally used for packing sand, the sturdy construction makes it clearly suitable for repetitive use. Accordingly, the bag and sand are separately classified.
Subheading 6305.32.00, HTSUS provides for “Sacks and bags, of a kind used for the packing of goods: Of man-made textile materials: Flexible Intermediate Bulk Containers”. The EN to heading 6305, HTSUS state that the heading covers textile sacks and bags of a kind normally used for the packing of goods for transport, storage or sale. The EN specifically states that flexible intermediate bulk containers are included in the articles covered by heading 6305, HTSUS. The EN to subheading 6305.32, HTSUS, states as follows:
“Flexible intermediate bulk containers are usually made of polypropylene or polyethylene woven fabrics and generally have a capacity ranging from 250 kg to 3,000 kg. They may have lifting straps at the four top corners and may be fitted with openings at the top and bottom to facilitate loading and unloading. They are generally used for packing, storage, transport and handling of dry, flowable materials.”
Since the bag at issue fits this description, we find that the bags are classified under subheading 6305.32.00, HTSUS, the provision for flexible intermediate bulk containers of man-made textile materials.
Additionally, there are several rulings classifying similar bags under subheading 6305.32.0010, HTSUSA. In Port Ruling Letter (PD) B82698, dated March 24, 1997, Customs classified polypropylene flexible bulk containers under subheading 6305.32.0010, HTSUSA. The bags were made of polypropylene strip, made in various sizes and designed with capacities from 500 to 8,000 pounds. In New York Ruling Letter (NY) C88966, dated June 18, 1998, Customs classified intermediate bulk containers made from polypropylene woven fabric under subheading 6305.32.0010, HTSUSA. The bags were designed for the storage and transportation of dry flowable commodities such as grain, flour and chemicals and possessed lifting straps, top and bottom openings and were made from 100 percent polypropylene strip. In NY D83055, dated October 6, 1998, a polypropylene flexible intermediate bulk container was classified under subheading 6305.32.0010, HTSUSA. The bag was designed for the storage and transportation of dry flowable commodities and possessed lifting straps, top and bottom openings and were made from polypropylene strip. For other cases classifying similar polypropylene bags as FIBCs see HQ 088453, dated May 2, 1991; HQ 950360, dated November 13, 1991; HQ 951524, dated August 17, 1992; HQ 953307, dated April 9, 1993.
HOLDING:
As per the analysis discussed above, the bags are classifiable separately from the sand. The bags are classified under subheading 6305.32.0010, HTSUSA, textile category 669, the provision for “Sacks and bags, of a kind used for the packing of goods: Of man-made textile materials: Flexible intermediate bulk containers, weighing one kg or more.” The general column one rate of duty is 9.1 percent.
You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division