HQ 0111285 - Instruments of International Traffic; Canadian-based Tractors; U.S.-based Trailers; 19 U.S.C. 1322 - 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 0111251 - HQ 0111381 > HQ 0111285

HQ 111285

October 22, 1990

BOR-7-04-CO:R:P:C 111285 GEV

CATEGORY: CARRIER

William J. Hirsch, Esq.
Hirsch & Sachs
69 Delaware Ave., Suite 603
Buffalo, New York 14202

RE: Instruments of International Traffic; Canadian-based Tractors; U.S.-based Trailers; 19 U.S.C. 1322

Dear Mr. Hirsch:

This is in response to your letter dated August 28, 1990 (your file 1366/1) on behalf of your client, a Canadian company, to Mr. Carlton Brainard, District Director of Customs, Buffalo, New York, regarding the limitations on the use of U.S.-based trailers in international traffic. Mr. Brainard has forwarded your letter to us for direct response. Our ruling is set forth below.

FACTS:

A Canadian company intends to purchase commercial trailers in the United States in the name of a new U.S. corporation, to be set up for the purpose of acquiring and licensing such U.S.- purchased trailers. The Canadian company does not intend to have situs of operations in the United States, but will maintain an "office" in one of the U.S. states, to receive mail and otherwise conduct the business of purchasing U.S. trailers for international use.

Once the above arrangement has been concluded, the Canadian carrier intends to engage in international traffic, utilizing Canadian-based tractors registered in Canada to combine with the allegedly U.S.-based trailers, acquired in the manner described above. With such combined tractor-trailer units, the carrier intends to engage in international traffic in both directions. That is, the carrier will pick up shipments originating in Canada, and destined for points in the United States, and will make the delivery of such shipments with the combined equipment described above. Alternatively, the carrier will pick up shipments in the United States for transportation to points in Canada. There will be occasions when the equipment will move empty in one direction or another, but the goal will be to fill
the equipment with northbound and southbound shipments to utilize the equipment in the most efficient manner. However, these shipments will always be international in character. The carrier is aware that it cannot use the aforementioned tractor-trailer units in local traffic within the United States.

There will be occasions when the allegedly U.S.-based trailers may be retained in Canada for lengthy periods, up to 6 months or more. The carrier is anxious to learn whether that lengthy detention will in any way impact on the characterization of the trailer as being "U.S.-based." The carrier is also anxious to learn if it will encounter any objections upon entering the United States from Canada, with the combination of equipment as described above.

ISSUES:

1. Whether a trailer which remains in Canada for lengthy periods of up to 6 months or more may be considered to be U.S.- based for purposes of 19 CFR 123.14.

2. Whether a Canadian-based tractor is prohibited by 19 CFR 123.14 from towing a U.S.-based trailer in the United States.

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 equipment 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 if not specifically exempted by law and regulations.

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 foreign-based 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 Canadian company which purchases truck trailers in the United States in the name of a U.S. corporation which has them licensed in the U.S. creates a rebuttable presumption that the trailers are based in the United States. We note, however, that the keeping of these trailers in Canada for periods of up to 6 months or more constitutes sufficient evidence to rebut the aforementioned presumption. This is so especially in view of the fact that it was previously stated that this equipment would be used in the most efficient manner which would indicate that these
trailers would not be sitting idle during the time they are in Canada, but would in fact be dispatched to various Canadian locations from a point in Canada. Consequently, these trailers would be considered to be Canadian-based during the lengthy periods of time they remain in Canada and as to section 123.14, the provisions therein would be applicable. We reiterate, however, that the tractor-trailer units in question would not be subject to formal Customs entry and payment of applicable duty as long as they remain in international traffic.

HOLDINGS:

1. In the absence of evidence to the contrary, a trailer which remains in Canada for lengthy periods of up to 6 months or more is presumed to be Canadian-based during that period for purposes of 19 CFR 123.14.

2. A Canadian-based tractor is not prohibited by 19 CFR 123.14 from towing a U.S.-based trailer in the United States provided the tractor-trailer unit remains in international traffic, or falls within the exception for local traffic set forth in 19 CFR 123.14(c)(1).

Sincerely,

B. James Fritz

Previous Ruling Next Ruling