HQ 0110785 - Entry requirements for foreign-owned, U.S.-leased and U.S.- registered tractor trailers - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1991 HQ Rulings > HQ 0110362 - HQ 0110803 > HQ 0110785

HQ 110785

October 12, 1990

BOR-7-04-CO:R:P:C 110785 GV

CATEGORY: CARRIER

Emery W. Ingalls
District Director
U.S. Customs Service
312 Fore Street
Post Office Box 4688

RE: Entry requirements for foreign-owned, U.S.-leased and U.S.- registered tractor trailers

Dear Mr. Ingalls:

This is in reference to your memorandum dated January 12, 1990 (your ref: 89-0106-00063) seeking advice on the interpretation of the applicable Customs Regulations regarding the entry requirements for foreign-owned, U.S. leased and U.S. registered tractor trailers. Our advice is set forth below.

FACTS:

Gemini Transportation (Gemini) of Greensburg, Pennsylvania, leases a Canadian-made tractor trailer from C.M. Trucking Ltd. of Shubenacadie, Nova Scotia, Canada. Gemini registers the tractor trailer in Pennsylvania and it carries Pennsylvania plates. C.M. Trucking Ltd. is owned by Carl McNea, the driver, who resides in Shubenacadie, Nova Scotia, Canada.

ISSUES:

Whether a foreign-owned, U.S.-leased and U.S.-registered tractor trailer is considered to have its "principal base of operations in a foreign country" within the meaning of 19 CFR 123.14(a).

LAW AND ANALYSIS:

Section 141.4, Customs Regulations (19 CFR 141.4) provides that entry as required by title 19, United States Code, section 1484(a) (19 U.S.C. 1484(a)), shall be made of every importation whether free or dutiable and regardless of value, except for intangibles and articles specifically exempted by law or regulations from the requirements for entry. Since the tractor trailer in question is not subject to one of the exemptions
listed under General Note 4, Harmonized Tariff Schedule of the United States (HTSUS; Pub. L. 100-418, effective January 1, 1989), it is subject to entry and payment of any applicable duty.

Instruments of international traffic enter the United States without the filing of a Customs entry and free of duty under the provisions of 19 U.S.C. 1322. To qualify as instruments of international traffic, vehicles having their "principal base of operations in a foreign country" must be arriving in the United States with merchandise or passengers destined for points in the United States, or arriving empty or loaded for the purpose of taking merchandise or passengers out of the United States (see section 123.14(a), Customs Regulations (19 CFR 123.14(a)).

Customs' determination as to a vehicle's base of operations is based on the evidence in each case. If an operator has the demonstrated intention to establish his base of operations and operate out of a certain location, and presents sufficient evidence to support this intention, Customs will generally determine that point to be his base of operations.

Section 123.14(c), Customs Regulations, states that with one exception, a foreign-based truck, bus, and taxicab admitted as an instrument of international traffic under section 123.14, shall not engage in local traffic in the United States. The exception, set out in section 123.14(c)(1), states that such a vehicle, while in use on a regularly scheduled trip, may be used in local traffic that is directly incidental to the international schedule.

A foreign truck tractor which arrives in the United States in international traffic towing a foreign trailer, either empty or loaded, constitutes a foreign "truck" as that term is used in sections 123.14(a), (b), and (c)(1), Customs Regulations.

In regard to trailers, it is Customs view that they remain in international traffic until they reach the point of complete unlading on the inward trip. They may not, however, be used to carry merchandise between points on the inward trip unless they are in use on a regularly scheduled international trip. Section 123.14(c)(2), Customs Regulations, provides that a foreign-based truck trailer admitted as an instrument of international traffic may carry merchandise between points in the United States on the return trip as provided by section 123.12(a)(2) which allows use for such transportation as is directly incidental to its economical and prompt return to the country from which it entered the United States. Section 123.14(c)(2) applies only to trailers and not to tractor-trailer units which are considered trucks as that term is used in the Customs Regulation.

Section 10.41(d), Customs Regulations (19 CFR 10.41(d)), provides, in pertinent part, that any foreign-owned vehicle
brought into the United States for the purpose of carrying merchandise or passengers between points in the United States for hire or as an element of a commercial transaction, except as provided for in section 123.14(c), is subject to treatment as an importation of merchandise from a foreign country and a regular Customs entry therefor shall be made.

In regard to the facts under consideration, it is our opinion that a Pennsylvania corporation which leases, controls, and registers a Canadian-built tractor trailer in Pennsylvania, creates a rebuttable presumption that it is based in the United States. Absent evidence to the contrary, we so hold. Consequently, as to section 123.14, the provisions therein would be inapplicable. The tractor trailer would not be subject to formal Customs entry and payment of applicable duty provided its use is restricted solely to international traffic.

It should be noted, however, that notwithstanding the inapplicability of section 123.14, in view of the fact that the tractor trailer is Canadian-owned, it may be in violation of section 10.41(d) if it carries merchandise between points in the United States for hire or as an element of a commercial transaction without having made a formal Customs entry. Failure to make entry in this situation, just as failure to enter a foreign-based vehicle before use in local traffic in violation of section 123.14(c), is subject to penalty under 19 U.S.C. 1592 (See sections 10.41(d) and 123.14(d)).

Furthermore, if a vehicle is considered to be U.S.-based thereby rendering section 123.14 inapplicable, and if such a vehicle is not in violation of section 10.41, failure to comply with the report of arrival requirements set forth in 19 U.S.C. 1433(b), would result in the assessment of penalties pursuant to 19 U.S.C 1436, as amended.

We note that section 123.16 applies not only to vehicles of foreign origin which were entered when first imported prior to their sale and registration in the United States, but also to any vehicle operating in international traffic.

HOLDING:

Absent evidence to the contrary, the fact that a tractor trailer is foreign-owned, U.S.-leased and U.S.-registered creates a rebuttable presumption that its principal base of operations is in the United States thereby rendering inapplicable the provisions of 19 CFR 123.14. The tractor trailer would not be subject to formal Customs entry and payment of applicable duty provided its use is restricted solely to international traffic.

Notwithstanding the inapplicability of section 123.14, pursuant to section 10.41(d), any foreign-owned vehicle brought
into the United States for the purpose of carrying merchandise or passengers between points in the United States for hire or as an element of a commercial transaction, is subject to treatment as an importation of merchandise from a foreign country and a regular Customs entry therefor shall be made. Failure to so enter may result in penalties being incurred under 19 U.S.C. 1592.

Sincerely,

B.James Fritz

Previous Ruling Next Ruling