Instruments of international traffic; 19 U.S.C. §1322; 19 CFR §10.41a; Plastic Cargo Containers

HQ H102988 April 29, 2010 BOR-4-07-RR-BSTC:CCI H102988 GOB CATEGORY: Carriers Christopher Smith Manager, Customs Coordination Center NA IKEA Distribution Services Inc. 100 Ikea Drive Westampton, NJ 08060 RE: Instruments of international traffic; 19 U.S.C. §1322; 19 CFR §10.41a; Plastic Cargo Containers Dear Mr. Smith: This is in response to your letter of April 19, 2010, in which you request a ruling that certain plastic cargo carriers be designated as instruments of international traffic within the meaning of 19 U.S.C. § 1322(a) and 19 CFR § 10.41a. Our ruling is set forth below. FACTS: IKEA Distribution Services Inc. (“IKEA”) exports its products to Canada by truck trailers. It uses polypropylene plastic cargo carriers to secure its merchandise (housewares and furniture) in the truck trailers. The plastic cargo carriers are comprised of four pieces – the top tray and bottom tray are 90 inches by 35 inches; the two side pieces are 128 inches by 36 inches or 128 inches by 30 inches. The plastic cargo carriers are designed for repetitive use – each of the plastic cargo carriers is expected to be used approximately 120 times in its useful life. There are approximately 4,600 plastic cargo carriers in use in international traffic at any one time. ISSUE: Whether the plastic cargo carriers 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 Customs and Border Protection (“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. The plastic cargo carriers are of durable construction. We therefore conclude that they are physically capable of, and suitable for, reuse or repetitive use. The plastic cargo carriers are of a type such that they will be used many times in significant numbers in international traffic. The reuse which IKEA describes and proposes is a “commercial reuse,” i.e., the plastic cargo carriers will continue to be used in the commercial transportation of Ikea products. It has previously been determined that plastic containers (Treasury Decision (“T.D.”) 75-265) and plastic trays (T.D.’s 78-19, 76-294, 74-281, and 68-56) similar to those under consideration are instruments of international traffic. After a review of the information submitted, we determine that the subject plastic cargo carriers are used as holders, are substantial, 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 plastic cargo carriers 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. We note, however, that if the subject plastic cargo containers 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 plastic cargo carriers 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). Sincerely, Glen E. Vereb Chief Cargo Security, Carriers and Immigration Branch