BOR-4-07-RR-BSTC:CCI H058876 GOB
Lynne W. Wendt, Esq.
Wendt & Temples LLC
Westpark Pointe, Suite 200
401 Westpark Court
Peachtree City, GA 30269
RE: Instruments of international traffic; 19 U.S.C. 1322; 19 CFR 10.41a; Hangers
Dear Ms. Wendt:
This is in response to your ruling request of April 21, 2009 on behalf of Braiform, which is a division of Spotless Enterprises, Inc. Our ruling is set forth below.
FACTS:
You request a ruling that certain Braiform garment hangers in a “Re-Use Program” be designated as instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a.
Braiform is a manufacturer and provider of customized garment hanging and packaging solutions to niche and mass retailers and garment manufacturers. There are two Braiform facilities in the United States where previously-used hangers are received, inspected, sorted, cleaned, and packaged for shipment to foreign distribution centers.
You state that the subject hangers are molded from a resin that produces a premium garment hanger. There are approximately 40 Braiform styles, including hangers for adult, child, and pet garments. The styles include hangers for tops, coordinate bottom hangers (for ensembles, suits, etc.), bottom hangers, and jacket hangers. Some top and jacket hangers are padded, some have a non-slip application, and others are notched for hanging dresses and tops. One style is a heavyweight hanger for coats. The hangers are of various sizes. Certain styles have nail head wire hooks that swivel while others have a molded head construction. You have provided a complete list of the hangers, including product identification numbers, descriptions, and thumbnail photographs. You have also provided samples of almost all of the hangers.
You state that the hangers are of durable construction and that hangers in a Re-Use Program must be durable as they are expected to have multiple uses during their life spans. A Braiform hanger will be reused numerous times until it is rejected as defective.
Braiform enters into a program contract with an apparel manufacturer/retailer for the exclusive supply of customized hangers. Initially, new hangers are provided to the client’s manufacturing locations for hanging garments after manufacture. After production, the apparel is hung on the appropriate hangers for transportation to the U.S. After receipt in the U.S., the apparel is removed from its packaging while still hanging and moved to display racks on the retail floor. When a retail client selects the garment and takes it to the register for payment, the hanger is removed and placed in a hanger collection box at the register. The collection boxes are later taken to a central site where the contents are unloaded into a larger collection box called the “Hanger Big Box,” or HBB, that is provided by Braiform for this purpose. The HBBs are later transported to one of the two Braiform re-use facilities in the U.S. for re-use processing, which includes sorting, inspection and removal of the damaged hangers for regrinding, which involves melting the plastic to produce resin that will be used in the production of new hangers. After the final inspection, the hangers are packed into boxes and moved to finished inventory. The used hangers are then shipped to Braiform distribution centers in the U.S. and abroad. Approximately 12 percent of the hangers are shipped to the U.S. distribution center and approximately 88 percent are shipped to foreign distribution centers. You state that Braiform believes that certain of the hangers shipped to its U.S. distribution center will be shipped to foreign manufacturing locations for use in transporting foreign-origin apparel to the U.S.
You state that the hangers are substantial in construction and will all be reused, except for those removed from the program due to damage. You further state that they will be used in substantial numbers in international trade as the hangers are used exclusively by clients of Braiform to transport all of their foreign-manufactured garments to the U.S. You state that each of the hanger styles will be used in a quantity significantly exceeding 1,000 per style per year and that each hanger will be used between four and seven times before being discarded.
ISSUE:
The issue presented is whether the subject items may be designated as instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a.
LAW AND ANALYSIS:
Title 19, United States Code, section 1322(a) (19 U.S.C. § 1322(a)) provides in pertinent part, that “[v]ehicles and other instruments of international traffic … 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 …”
The CBP Regulations issued under the authority of 19 U.S.C. § 1322(a) are contained in 19 CFR § 10.41 et seq. Section 10.41a(a)(1), CBP Regulations (19 CFR § 10.41a(a)(1)) designates lift vans, cargo vans, shipping tanks, skids, pallets, caul boards, and cores for textile fabrics as instruments for international traffic.
Section 10.41a(a)(1), CBP Regulations (19 CFR § 10.41a(a)(1)) also authorizes the Commissioner of CBP to designate as instruments of international traffic such additional articles or classes of articles as he shall find should be so designated. Instruments so designated may be released without entry or the payment of duty, subject to the provisions of 19 CFR § 10.41a.
To qualify as an instrument of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a, an article must be used as a container or holder. Further, the article must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. See, e.g., Headquarters rulings (“HQ”) 108084, 108658, 109665, and 109702.
In Holly Stores, Inc. v. U.S., 697 F.2d 1387, 1388 (Fed. Cir. 1982), aff’g 534 F. Supp. 818 (Ct. Int’l Trade 1981), the court stated with respect to former General Headnote 6(b):
“Reuse” in this context has been consistently interpreted to
mean practical, commercial reuse, not incidental reuse.
Fontana Hollywood Corp. v. United States, 64 Cust. Ct. 204,
C.D. 3981 (1970), relying on Tariff Classification Study,
Seventh Supplemental Report (Aug 14, 1963) at 99.
The court in Holly Stores rejected the concept of reuse with respect to the hangers at issue there based upon the lower court’s finding that only about one percent of the hangers were reused in any manner at all, and that those uses were noncommercial. The court did accept the facts that the hangers were of fairly durable construction and that it would be physically possible to reuse them.
Within the context of 19 CFR § 10.41a and instruments of international traffic, we have held that “repeated use” means “more than twice.” See, e.g., HQ 108658, dated November 21, 1986.
Our examination of the hangers submitted as samples reveals that they are of durable construction. We therefore conclude that they are physically capable of, and suitable for, reuse or repetitive use. You state that the hangers in each style will be used between four and seven times before being discarded.
The hangers will be used in significant numbers in international traffic – each hanger style will be used in a quantity significantly exceeding 1,000 per year.
The reuse which Braiform describes and proposes is a “commercial reuse,” i.e., the hangers will continue to be used in the commercial transportation of garments.
CBP has previously ruled on the instruments of international traffic status of hangers of similar material and purpose. In HQ 115684, dated August 5, 2002, CBP held that plastic garment hangers with wire swivel hooks that are used to package garments for exportation to the U.S. are substantial, suitable for repeated use, used in significant numbers in international traffic and therefore qualify as instruments of international traffic. Furthermore, CBP has previously held that hangers that are part of a hanger recovery program qualify as instruments of international traffic. See HQ 114360, dated June 18, 1998, which involved used clear plastic garment hangers that were acquired in the U.S. from clothing retailers, sorted, sanitized, packaged and exported to garment manufacturers worldwide and then were used in the packaging of garments to be exported to the U.S. See also HQ H042107, dated November 24, 2008, where CBP held that plastic garment hangers used in a hanger recovery program qualify as instruments of international traffic and H050604, dated March 18, 2009, where CBP held that plastic garments hangers designated as instruments of international traffic.
After a review of the information submitted, we determine that the subject hangers are used as holders, are substantial, are suitable for and capable of repeated use, and are used in significant numbers in international traffic. Thus, they meet the criteria for designation as instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a(a)(1) and are so designated. Because the subject items are designated as instruments of international traffic, they are not subject to entry or the payment of duty pursuant to the aforementioned statutory and regulatory authority. It should be noted that if the subject hangers are diverted from international traffic, they will cease to be considered instruments of international traffic and will therefore not receive the treatment accorded to such articles.
HOLDING:
The subject hangers are hereby designated as instruments of international traffic within the meaning of 19 U.S.C. 1322(a) and 19 CFR § 10.41a(a)(1) and are therefore not subject to entry or the payment of duty.
Sincerely,
Glen E. Vereb
Chief
Cargo Security, Carriers and Immigration Branch