Try this
ItemHandlers::UseInField.add(:ITEM1,proc{|item|
state = ($game_switches[32]) ? "off" : "on"
Kernel.pbMessage(_INTL("{1} turned {2} {3}!",$Trainer.name,PBItems.getName(item),state))
$game_switches[32] = !$game_switches[32]
})
Chances are that you didn't add the UseFromBag...