BOR-4-07 RR:IT:EC 115816 RSD
Koh Akiyama
Vice President
Summit Minerals
400 Kelby Street
Fort Lee, New Jersey 07024
RE: Instruments of International Traffic; polypropylene bags; 19 U.S.C. § 1322(a); 19 CFR § 10.41a
Dear Mr. Akiyama: This is in response to your letter of September 30, 2002, requesting that we designate certain polypropylene bags as instruments of international traffic. A copy of a photograph of the bags was submitted for our consideration.
FACTS:
Summit Minerals LLC, (Summit) located in Fort Lee, New Jersey, exports U.S.-produced kaolin clay to the paper industry in Asia. Currently, Summit buys imported new and used polypropylene bulk bags to package the kaolin clay, which is in turn exported from the port of Savannah to Asia. All of the bags are preprinted with relevant information related to the kaolin clay contained in the bags. None of the bags are sold, bartered or otherwise transferred to another party within the United States for consumption.
Bulk bags are constructed of polypropylene material and measure approximately 37”X37”X50”. Summit will be using approximately 100,000 bags a year, and the bags can be used from 2 to 3 times.
Due to reorganization, the Inorganic Chemical Department of Sumitomo Corporation of America (Sumitomo) was newly-established under the name Summit Mineral LLC. However, the operations will remain unchanged. Sumitomo had been importing these bags as “Instruments of International Traffic” for approximately 10 years. The bags are entered at the port of Savannah from where they are subsequently exported to Asia. The inventory is kept at a minimum level. As such, you request that the subject polypropylene bags should be designated as instruments of international traffic for the use of Summit’s export operations.
ISSUE:
Whether the polypropylene bags used to transport kolin clay may be designated as instrument of international traffic.
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 322(a) are contained in section 10.41a of the Customs Regulations (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 regulations 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 (HTSUS), and former Headnote 6(b)(ii), Tariff Schedules of the United States (TSUS), 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 (Headquarters 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 the information provided, we are of the opinion that the polypropylene bags qualify as IIT’s provided they are used at least three times in accordance with Headquarters Rulings 105567 and 108658. This is because in several previous rulings, Customs has ruled that polypropylene bags qualify as ITT’s. (See, Treasury Decision (T.D.) 76-171; Headquarters Ruling 109696, dated September 12, 1988; Headquarters Ruling 113220 dated September 28,1994; Headquarters Ruling 113407, dated April 25, 1995, Headquarters Ruling 113916, dated July 2 1997; Headquarters Ruling 114418 dated September 23, 1998; and Headquarters Ruling 114238 dated October 23, 1998.)
HOLDING:
The subject polypropylene bags will qualify as instruments of international traffic provided they are used at least three times and may be released pursuant to 19 CFR § 10.41a.
Sincerely,
Gina Grier
Acting Chief
Entry Procedures and Carriers Branch