BOR-7-07-CO:R:IT:C 112134 BEW
Mr. Patrick K. McCooey
Mitsubishi International Corp.
520 Madison Avenue
New York, New York 10022
RE: Eligibility of certain flex tanks to be designated as
instruments of international traffic (IIT)
Dear Mr. McCooey:
This is in reference to your letter dated April 28, 1992,
requesting that certain flex tanks be designated as instruments
of international traffic (IIT).
FACTS:
You state that you anticipate bringing flex tanks into the
United States to be used for transporting frozen concentrate.
These tanks will arrive from Japan empty, be filled with frozen
juice concentrate and returned to Japan. You state that the flex
tanks's dimensions and weight are as follows:
Empty (folded) 1050 X 1050 X 730mm, 100kg
Loaded 1050 X 1050 X 1320mm.
The flex tanks have a steel frame, a polyvinyl chloride plastic
outer surface, and the inner bag (which is disposable) is made of
polyethylene plastic. The flex tanks will be imported empty into
the United States through the port of Seattle/Tacoma, Washington.
You state that repeated use of the tanks is anticipated.
ISSUE:
Whether the described flex tanks used for the transportation
of liquid commodities and transportation and storage of grain,
chilled beef, cocoa butter, etc., 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.
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 flex tanks under consideration are steel
tanks capable of being used as a container or holder, 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 flex tanks under consideration
are similar to certain tanks used for the transportation of apple
juice which were designated as instruments of international
traffic in Treasury Decision 78-212.
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 flex tanks 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