BOR-7-07-CO:R:IT:P 111163 BEW
Ms. Kate Shrank
Customs Group Leader
Subaru-Isuzu Automotive Inc.
Post Office Box 5689
Lafayette, indiana 47903
RE: Collapsible steel packing crates as instruments of
international traffic
Dear Ms. Shrank:
This is in reference to your letter of May 24, 1990,
addressed to the District Director of Customs, Cleveland, Ohio,
and your letter of March 13, 1991, in which you asked that we
classify certain collapsible steel crates as instruments of
international traffic (IIT).
FACTS:
You state that you intend to use collapsible steel packing
crates (crates) for shipments of automobile components (engines)
from Fuji Heavy Industries in Tokyo, Japan, for assembly in the
United States. You state that the crate will be packed inside
ocean going shipping containers and will make the journey between
Tokyo and Lafayette, Indiana. The racks when loaded will be
packed inside containers and utilized on a regular basis in
shipments between the United States and Japan. The racks may be
collapsed when not in use. The racks are made of steel and are
valued at approximately $150 each and have a life expectancy of
between 15 and 20 years. You state that the racks will be used
four (4) to five (5) times (round trip - form Japan to USA and
back to Japan) per year. The racks are the property of Fuji
Heavy Industries and are not sold.
You state that the crates will be manufactured in Japan and
shipped to S.I.A. (Subaru-Isuzu Automotive) Inc., in Lafayette,
Indiana. You state that the goods will normally be entered only
at West Coast ports, ie. Long Beach, Los Angeles, and Seattle,
and that Chicago and Indianapolis will be used as a port of entry
for air shipments.
You state that such crates will each bear an label showing
the name "FUJI HEAVY INDUSTRIES LTD.", a logo, TYPE NO. and
country of origin information.
ISSUE:
Whether the described collapsible steel packing crates used
for the transportation of automobile components (engines) may be
treated as 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:
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 CFR 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 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.
We find that the crates under consideration are used as
containers or holders, that they are substantial, suitable for
and capable of repeated use, and that they will be used in
significant numbers in international traffic. We further find
that the crates under consideration are similar to crates which
were designated as IIT's in Treasury Decision 70-236 (steel frame
platforms, with steel mesh sides, used to carry snowmobiles
parts), and similar to stands or cases composed of steel, wood or
steel mesh coated with fiberglass, used by Rolls Royce for
transportation of parts of an aircraft engine which were
designate as IIt in Treasury Decision 74-195.
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 collapsible steel packing crates 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,
B. James Fritz
Chief
Carrier Rulings Branch