HQ 224067: Drawback eligibility of merchandise designated as"instruments of international traffic" (IIT); 19 U.S.C.1313(j)(2); 19 CFR 191.141(h); 19 CFR 10.41a; C.S.D. 81-222.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 224067

                         January 4, 1993


DRA-4 CO:R:C:E 224067  TLS

CATEGORY: Entry

Mr. Matthew Chang
C. Itoh & Co. (America) Inc.
335 Madison Avenue
New York, New York  10017


RE: Drawback eligibility of merchandise designated as
"instruments of international traffic" (IIT); 19 U.S.C.
1313(j)(2); 19 CFR 191.141(h); 19 CFR 10.41a; C.S.D. 81-222.


Dear Mr. Chang:

     We have received your request for a ruling on the above-
referenced matter.  The issues raised in your letter dated July
10, 1992 have been considered and our decision follows.

FACTS:

     The importer is a manufacturer of textile yarns.  These
yarns are imported to U.S. purchasers of the yarns on aluminum
bobbins.  The yarns are wound around the bobbins and removed by
the purchaser upon receipt.  The bobbins are then exported back
to the importer, who retains ownership of them.

     A recent Customs headquarters ruling held that the bobbins
are properly designated as instruments of international traffic
(IIT).  Customs ruling HQ 110408 (October 6, 1989).  The importer
contends that a Customs port erroneously required it to pay duty
on the bobbins and not accord them IIT status.  The transaction
in question is said to have occurred in July 1988, before the
1989 ruling was issued.

     The importer seeks a ruling that will find the bobbins which
are entered as dutiable merchandise to be eligible for drawback.

ISSUE:

     Whether the bobbins are eligible for substitution same
condition drawback treatment when entered as dutiable
merchandise.

LAW AND ANALYSIS:

     Merchandise eligible for IIT designation must meet the
following tests:  1) it must be used as a container or holder of
merchandise moving in the foreign trade of the United States; 2)
the article must substantial, suitable for, and capable of reuse;
and 3) it must be used in significant numbers in international
traffic.  Customs ruling HQ 104766 (August 22, 1988).  The
subject merchandise has been designated as such, as noted above. 
HQ 110408, supra.

     Customs regulations require that IIT merchandise not be used
in point to point local traffic in the United States subsequent
to its importation.  19 CFR 10.41a.  If such is the case, then
the importer must file a Customs consumption entry and pay duties
on the merchandise.  The alternative to filing entry is to post a
bond on the merchandise.  Under bond, if the merchandise is
diverted to local traffic, then the bond is breached and the
importer is liable under the terms of the bond.  19 CFR
10.41a(c).

     In the present case, the importer has been informed by New
York Customs that the bobbins are not eligible for drawback.  If
the bobbins are imported as IIT merchandise, they are by
definition a container or holder (container in this case).  HQ
110408.  It is correctly noted that a Customs Service Decision
has ruled that containers are not eligible.  C.S.D. 81-222 (May
27, 1981).  It is further contended, however, that the decision
applies only to containers that are imported empty and then
filled in this country (the bobbins are full when imported and
then emptied in this country).  That reading of 81-222 is
incorrect.

     C.S.D. 81-222 reasoned that as containers, these types of
merchandise are being put to use for their intended purpose. 
Whether or not they are full or empty when imported is irrelevant
to that determination.  The statute governing drawback clearly
requires that merchandise eligible for drawback not be used
before exportation.  19 U.S.C. 1313(j).  Thus, to the extent that
the subject merchandise has been used as containers, it is not
eligible for drawback.  This finding is valid even in instances
when the containers were originally imported as IIT merchandise,
subsequently used in domestic commerce, and consequently entered
and had duties paid on them.  In such cases, the use of the
containers would also render them ineligible for drawback.  19
U.S.C. 1313(j).

HOLDING:

     The subject IIT merchandise is not eligible for drawback
under 19 U.S.C. 1313(j) as containers.  Subsequent use of the IIT




containers would also render them ineligible for drawback under
Customs laws and regulations.

                               Sincerely,




                               John Durant, Director