BOR-4-07:OT:RR:BSTC:CCI H183436 WRB
Mr. Jack Mosseri
JDM Sorting, LLC
73 Main Street
Woodbridge, NJ 07095
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 CFR 10.41a; Plastic Garment Hangers
Dear Mr. Mosseri:
This is in response to your correspondence, dated August 16, 2011, with accompanying samples, in which you requested a ruling on behalf of JDM Sorting, LLC, on whether certain plastic garment hangers qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a and may be released without entry or the payment of duty. Our ruling is set forth below.
FACTS:
In your letter, you indicate that JDM Sorting, LLC, processes over 200 million Voluntary Interindustry Commerce Standards (VICS) clothing hangers with metal hooks annually. These hangers are used to hang the garments that are packed into the containers entering the country. You estimate useful life of the subject hangers is five cycles and a single hanger will likely be used with various garments during its useful life. You state that most major retailers have reuse programs in place where they send their hangers back to companies like JDM to reuse their hangers. These retailers have decided to move to a more sustainable black colored hanger this year, replacing the clear plastic hangers currently in use, which indicates a significant need to purchase new hangers, such as the sample you provided. These hangers come back to one of JDM’s sorting facilities where they are checked for quality, and re-boxed to be sold to garment manufacturers. The hangers are shipped to various countries including, Vietnam, Jordan, Indonesia, Hong Kong, Mexico, and other Central and South American nations.
You provided a sample of the subject merchandise. The hangers in questions consist of a two part unit; “top” hangers made of black plastic, with a metal swivel hook and indented groove on each side of the hangers to allow garments with straps to be placed inside them; and, “bottom” hangers made of black plastic with a metal swivel hook and spring-loaded metal grips attached. These hangers are designed to hold pants, shorts, or other bottom garments.
ISSUE:
Whether the plastic garment hangers described above qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 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…” The CBP Regulations issued under the authority of § 1322(a) are contained in section 10.41 et seq. (19 CFR § 10.41a). Pursuant to 19 CFR 10.41a(a)(1), the Commissioner of Customs and Border Protection (CBP) is authorized to designate as IITs such additional articles not specifically noted in that section. Once designated as such, the instruments may be released without entry or payment of duty. To qualify as an IIT within the meaning of 19 U.S.C. § 1322(a) and the regulations promulgated pursuant thereto (19 CFR § 10.41 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 Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 9803.00.50; Tariff Schedule of the United States Headnote 6(b)(ii). See also CBP Rulings HQ 104766 and HQ 108084. The concept of reuse contemplated above is for commercial shipping or transportation purposes, and not incidental or fugitive uses. See Tariff Classification Study, Sixth Supplemental Report (May 23, 1963) at 99; Holly Stores, Inc. v. United States, 697 F.2d 1387 (Fed. Cir. 1982). CBP has consistently held that single use is not sufficient; reuse means more than twice. See, e.g., CBP Rulings HQ 105567 and HQ 108658.
Subheading 9803.50.00, HTSUS (2010) provides, in pertinent part, for the duty free treatment of:
Substantial containers and holders, if products of the United States . . . , or if of foreign production and previously imported and duty (if any) thereon paid, or if of a class specified by the Secretary of the Treasury as instruments of international traffic, repair components for containers of foreign production which are instruments of international traffic, and accessories and equipment for such containers, whether the accessories and equipment are imported with a container to be reexported separately or with another container, or imported separately to be reexported with a container . . . (footnote and emphasis supplied).
Subchapter 98 of the HTSUS only applies to:
(a) Substantial containers or holders which are subject to tariff treatment as imported articles and are:
(i) Imported empty and not within the purview of a provision which specifically exempts them from duty; or
(ii) Imported containing or holding articles, and which are not of a kind normally sold therewith or are entered separately therefrom; and
(b) Certain repair components, accessories and equipment.
See U.S. Note 1, et seq., Chapter 98, HTSUS.
You ask that the subject garment hangers be considered as Instruments of International Traffic. Pursuant to 19 U.S.C. § 1322(a), instruments of international traffic shall be excepted from the application of the Customs laws to the extent that such terms and conditions are prescribed in regulations or instructions. The Customs and Border Protection (CBP) regulations, promulgated under the authority of 19 U.S.C. § 1322(a), provide in pertinent part:
Lift vans, cargo vans, shipping tanks, skids, pallets, caul boards, and cores for textile fabrics, arriving (whether loaded or empty) in use or to be used in the shipment of merchandise in international traffic are hereby designated as
“instruments of international traffic” . . . The Commissioner of Customs [now CBP] is authorized to designate as instruments of international traffic, . . ., such additional articles or classes of articles as he shall find should be so designated. Such instruments may be released without entry or the payment of duty, subject to the provisions of this section. 19 C.F.R. § 10.41a(a)(1)(emphasis added).
To qualify for entry-free and duty-free treatment as instruments of international traffic under the aforementioned statutory and regulatory authority, the article must be a substantial container or holder. As stated above, CBP is authorized to designate as instruments of international traffic such additional articles not specifically noted in 19 C.F.R. § 10.41a(a)(1). Historically, CBP has held in its published decisions that in order to qualify as an instrument of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1), a container or holder must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. See HQ H016491 (Oct. 1, 2007); HQ 114150 (Dec. 12, 1997); HQ 107545 (May 7, 1985); Treas. Dec. 71-159, Cust. B. & Dec. 296 (June 18, 1971); 99 Treas. Dec. 533, No. 56247 (Aug. 26, 1964).
It is well settled that plastic garment hangers can qualify as “instruments of international traffic.” In Holly Stores, Inc. v. United States, 697 F.2d 1387 (Fed. Circuit 1982), the court classified plastic garment hangers as shipping holders fit to ship clothes on, and stated that such hangers were of considerable durability to constitute “instruments of international traffic.” The only reason that the court found that the hangers did not constitute “instruments of international traffic” was because only about one percent of the hangers were reused in any manner at all, and those uses were noncommercial; thus the court concluded that the hangers were “not designed for, or capable of, reuse.” We note that CBP has previously ruled on the “instruments of international traffic” status of hangers of similar material and purpose. In Headquarters Ruling Letter 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 constitute “instruments of international traffic.” See Headquarters Ruling Letter 114360, dated June 18, 1998 (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. constitute “instruments of international traffic”).
Upon reviewing the request, the subject plastic garment hangers appear to be substantial, suitable for and capable of repeated use, and will be used in significant numbers in international traffic. Furthermore, CBP has previously ruled that items of similar use and construction as the subject merchandise qualify as “instruments of international traffic” pursuant to 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a. Accordingly, the plastic garment hangers qualify as “instruments of international traffic.” The instruments may be released without entry or payment of duty and are eligible for treatment under subheading 9803.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”).
HOLDING:
The plastic garment hangers described above qualify as “instruments of international traffic” within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a and may be released without entry or the payment of duty.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Immigration Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection