HQ 114360

June 18, 1998

BOR-4-07/CLA-2-RR-IT-EC 114360 GOB

CATEGORY: Carriers

Lynne W. Wendt, Esq.

Wendt, Weinberg & Temples LLC

127 Peachtree Street, NE

Suite 1303

Atlanta, GA 30303-1800

RE: Hangers; subheading 9803.00.50, HTSUS; Classification

Dear Ms. Wendt:

This is in response to your recent letter on behalf of FRM

Services (\"FRM\") which we received on May 14, 1998.

FACTS:

FRM requests that certain hangers be classified under

subheading 9803.00.50, Harmonized Tariff Schedule of the United

States (\"HTSUS\").

FRM describes certain of the pertinent facts as follows:

The merchandise at issue is clear plastic garment

hangers that have previously been used. These hangers

will be acquired in the U.S. by FRM from clothing

retailers who have used them to transport and display

garments. FRM will sort, sanitize, package and export

the used hangers to various garment manufacturers

around the world in connection with the packaging of

garments to be exported to certain importers in the

U.S. The hangers at issue will then be imported into

the U.S. holding new garments\...

\...

FRM \... is the exclusive licensee of a patented

automated process for sorting clear plastic garment

hangers for subsequent reuse. FRM is in the process of

contracting with major U.S. retailers to acquire their

excess used garment hangers. FRM will then sort them

to eliminate damaged and defective hangers, sanitize

those selected, package them and ship the used hangers

to garment manufacturers on a global basis. The

garment manufacturers will in turn use the hangers in

preparing new garments for shipment to the retailer.

The hangers we are concerned with in this request will

be imported into the U.S. holding the garments by the

U.S. retailer or its agent.

FRM further states as follows. The hangers are durable and

capable of reuse. The importer of the garments and FRM will be

able to establish and document the reuse of the hangers which

will be used to transport different garments in international

commerce. Documentation is available to establish the U.S. or

foreign origin of the hangers.

The hangers will be owned by the importers of the garments.

FRM states that it will be the \"contract recycler\" of the

hangers. Once the hangers commence their use as described herein,

FRM will be able to keep track of the total hanger pool.

FRM has provided samples for the three most popular hanger

styles: #484 (17\" top hanger), #2012 (12\" bottom hanger), and

#4012 (12\" bottom hanger with soft pad). FRM states that these

three styles comprise 80 percent of the total hanger volume at

issue. Other style numbers are 479, 485, 498, 1200, 1203, 2008,

2010, 2014, 3328, 5245, and 5265.

ISSUE:

Whether the subject hangers are eligible for classification

under subheading 9803.00.50, HTSUS.

LAW AND ANALYSIS:

Subheading 9803.00.50, HTSUS, is a duty-free provision which

provides:

Substantial containers and holders, if products of the

United States (including shooks and staves of United

States production when returned as boxes or barrels

containing merchandise), or if of foreign production

and previously imported and duty (if any) thereon paid,

or if of a class specified by the Secretary 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\... \[Emphasis supplied.\]

Subheading 9803.00.50 is the only subheading in Subchapter

III, Chapter 98, HTSUS. U.S. Note 1(a) to Subchapter III,

Chapter 98, provides, in pertinent part:

This subchapter covers only the following:

\(a\) 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; \...

General Rule of Interpretation 5(b), HTSUS, provides:

Subject to the provisions of rule 5(a) above, packing

materials and packing containers entered with the goods

therein shall be classified with the goods if they are

of a kind normally used for packing such goods.

However, this provision is not binding when such

packing materials or packing containers are clearly

suitable for repetitive use.

\[Emphasis supplied.\]

FRM asserts that the second sentence of GRI 5(b) is

applicable in that the hangers are clearly suitable for

repetitive use. It states that its hangers are distinguishable

from other hangers in that FRM \"is able to prove that the hangers

will be reused to transport garments from their origin into the

United States and that the same pool of hangers will be

associated with the transportation of many different garments

during their useful life.\"

In Holly Stores, Inc. v. U.S., 697 F.2d 1387, 1388 (1983),

the Court of Appeals for the Federal Circuit 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.

In Ruling 084068 dated July 21, 1989, we stated:

The classification of the plastic hangers with the

garments with which they are imported in NYRL 837830

was based on the decision in Holly Stores, Inc. v. The

United States \... Although this decision involves the

interpretation of the meaning of \"reuse\" as it appears

in General Headnote 6(b) of the Tariff Schedules of the

United States (TSUS), we believe it is applicable in

understanding the meaning of \"repetitive use\" as it

appears in General Rule of Interpretation (GRI) 5(b) of

the Harmonized Tariff Schedule of the United States.

Each provision addresses the issue of when containers

imported with goods are classifiable with those goods

or classifiable separately.

\... If considered designed for, or capable of, reuse,

the hangers were to be treated as separate articles of

commerce; if not, they were to be treated as part of

the value of the clothing with which they were shipped

and dutied at the rate for the clothing,

Within the context of 19 CFR 10.41a and instruments of

international traffic, we have held that \"repeated use\" means

\"more than twice.\" See Ruling 108658.

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.

As stated above, FRM states that the hangers will be reused

and \"will be associated with the transportation of many different

garments during their useful life.\"

The reuse which FRM describes and proposes is a \"commercial

reuse,\" i.e., the hangers will continue to be used in the

commercial transportation of garments. Based upon these

assertions, we accept as a factual premise, and for the purpose

of this ruling we make a factual determination, that the subject

hangers are intended to be reused on a consistent basis.

Because the hangers are durable and capable of reuse, we

determine that they are \"substantial holders\" within the meaning

of subheading 9803.00.50, HTSUS.

We also find that the requirements of U.S. Note 1 to

Subchapter III, Chapter 98, HTSUS are met in that the hangers

will be imported holding articles and the hangers are not of a

kind normally sold with the articles which they hold. See U.S.

Note 1(a)(ii), Subchapter III, Chapter 98, supra.

FRM has also asserted that documentation is available to

establish the U.S. or foreign origin of the hangers. If the

hangers are of foreign origin, they will have been previously

imported and duty (if any) paid.

Based upon the facts and findings, as detailed supra, we

determine that the subject hangers are eligible for treatment

under subheading 9803.00.50, HTSUS.

HOLDING:

The subject hangers are eligible for treatment under

subheading 9803.00.50, HTSUS.

Sincerely,

Jerry Laderberg

Chief,

Entry Procedures and Carriers

Branch