BOR-7-07-CO:R:IT:C 111955 MLR
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
Carrier Rulings Branch