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HQ 111955


October 31, 1991

BOR-7-07-CO:R:IT:C 111955 MLR

CATEGORY: CARRIER

Richard Carmona
Import/Export Department
BCI, Inc.
P.O. Box 3961
1009 E. Miracle Mile
McAllen, TX 78502-3961

RE: Eligibility of certain cotton bags and polyester bags to be designated as instruments of international traffic (IIT)

Dear Mr. Carmona:

This is in reference to your letters dated May 24, 1991 and July 29, 1991, requesting that certain cotton and polyester bags be designated as instruments of international traffic (IIT).

FACTS:

BCI, Inc. intends to use reusable 100 percent cotton and 100 percent polyester bags for transporting cut textile components and finished garments. The cotton and polyester bags measure 38" x 34", weigh .62 kilogram (kg) and .39 kg respectively, and have drawstring closures. You state that the bags, filled with cut textile components, will be exported to Mexico, emptied at their destination, and returned to your warehouse in McAllen, Texas with finished garments. You state that the bags, filled with finished garments, will be transported to another customer in Laredo, Texas from your warehouse. The customer will return the bags empty to you for reuse. The bags are manufactured in the United States.

ISSUES:

1. Whether 100 percent cotton bags used for the transportation of cut textile components or finished garments may be designated as instruments of international traffic.

2. Whether 100 percent polyester bags used for the transportation of cut textile components or finished garments may be designated as instruments of international traffic.

3. Whether the bags will remain in international traffic or will be used in local traffic in the United States. 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. 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 of merchandise moving in the foreign trade. 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 bags under consideration are 100 percent cotton and 100 percent polyester 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 bags under consideration are similar to woven polypropylene bags which were designated as instruments of international traffic in Treasury Decision 76-171 (woven polypropylene bags, and used for the transportation of dry chemicals), and Treasury Decision 68-4 (collapsible nylon container capable of holding zinc dust or similar material).

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.

For purposes of this ruling, we will assume that there is no diversion of the bags from a use in international traffic. More particularly, we will assume that those bags which are sent to Laredo from McAllen are consigned from Mexico to Laredo, and that they are not warehoused in McAllen to await possible future sale.

HOLDING:

The 100 percent cotton bags and 100 percent polyester bags under consideration, which are used more than once for the transportation of cut textile components or finished garments, qualify for treatment 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,

B. James Fritz
Chief

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