HQ 0111764 - Instruments of International Traffic; Local Traffic; Trucks; 19 U.S.C. 1322 - United States International Trade Commision Rulings

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HQ 111764

October 25, 1991

BOR-7-04-CO:R:IT:C 111764 GEV

CATEGORY: CARRIER

Clifford A. Priest
Senior Consultant
Livingston Consulting Group
405 The West Mall
Toronto, Ontario, Canada M9C 5K7

RE: Instruments of International Traffic; Local Traffic; Trucks; 19 U.S.C. 1322

Dear Mr. Priest:

This is in response to your letter dated June 13, 1991, enclosing copies of regulations published by Revenue Canada, Customs and Excise, regarding the possible use of Canadian trucks in the United States. Our ruling on this matter is set forth below.

FACTS:

Livingston Consulting Group represents a large Canadian company which operates their own tractor-trailer units carrying their own merchandise into the United States and in some instances, return loads of their own merchandise to Canada. This company is interested in the position of the U.S. Customs Service regarding various movements of Canadian trucks in the United States. Specifically, the company would like to operate under the following four examples.

1. Loaded exiting Canada at Fort Erie/Buffalo for Cincinnati delivery. Delivers Cincinnati and picks up company-owned product at Findlay, Ohio, for delivery to Detroit. Delivers at Detroit and picks up merchandise for delivery to London, Ontario, Canada.

In each part of this round trip the Canadian or U.S. parent company own the goods carried and pays transportation costs.

2. Loaded exiting Canada at Fort Erie/Buffalo and delivers load to Erie, Pa. After delivery picks up load at Erie for delivery at Buffalo, N.Y., then picks up load at Buffalo for delivery to Toronto, Ontario, Canada.

3. Loaded exiting Canada at Fort Erie/Buffalo for delivery to Cincinnati, Ohio, picks up load at Cincinnati for delivery to Chicago, Il., picks up loads at Gary, Indiana, and Grand Rapids, Michigan, and enters Canada at Detroit/ Windsor and delivers both part loads in Canada.

4. Loaded exiting Canada at Fort Erie/Buffalo, delivers load at Buffalo, goes empty to Cleveland, picks up for Buffalo delivery and then picks up at Buffalo for delivery in Canada.

ISSUE:

Whether the movements of Canadian trucks in the United States as described above constitute local traffic in violation of 19 CFR 123.14(c)(1).

LAW AND ANALYSIS:

Section 141.4, Customs Regulations (19 CFR 141.4), provides that entry as required by title 19, United States Code, 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 within the definition of intangibles as shown in General Note 4, Harmonized Tariff Schedule of the United States (HTSUS; 19 U.S.C. 1202, as amended), it is subject to entry and payment of any applicable duty if not specifically exempted by law and regulations.

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

Generally speaking, 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 123.14(a), (b), and (c)(1), Customs Regulations (19 CFR 123.14(a), (b), and (c)(1)). It should be noted, however, that in regard to truck tractors, whether they stay connected to their respective trailers or separate, the same restrictions set forth in the aforementioned regulatory authority would nonetheless apply.

Section 123.14(c), Customs Regulations, states that with one exception, a foreign-based truck, admitted as an instrument of international traffic under 123.14, shall not engage in local traffic in the United States. The exception, set out in 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 carrier may be considered as engaged in regularly scheduled service whether trips are scheduled hourly, daily, weekly, etc., provided the trips are regular, not varied, and are over an established route. Trips made if and when a load is available do not qualify.

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 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, as was stated earlier, are considered trucks as that term is used in the Customs Regulations.

Section 10.41(d), Customs Regulations, which provides, in part, that any foreign-owned vehicle brought into the United States for the purpose of carrying merchandise between points in the United States for hire or as an element of a commercial transaction, except as provided for in 123.14(c), is subject to treatment as an importation of merchandise from a foreign country and a regular Customs entry therefore shall be made. Section 123.14(d), Customs Regulations, provides that any vehicle used in violation of 123.14, is subject to forfeiture under 592, Tariff Act of 1930, as amended (19 U.S.C. 1592).

Whether the use of an instrument of international traffic constitutes a diversion from international traffic is based on the facts in each case. The transportation of merchandise in international traffic is the key; the domestic movement of merchandise must be secondary to the international movement and meet other criteria. There must be a regular international schedule and the domestic movement must follow the same basic route as the merchandise moving in international traffic.

Upon reviewing the information provided, we note that Examples 1-4 each involve the use of Canadian vehicles in transporting merchandise between points within the United States (i.e., Findlay, Ohio-Detroit; Erie-Buffalo; Cincinnati-Chicago; Cleveland-Buffalo). Assuming, arguendo, the applicability of 19 CFR 123.14 (the record is devoid of any evidence regarding the vehicles' base of operations) such local traffic would be in
violation of 19 CFR 123.14(c)(1) unless it is directly incidental to a regularly scheduled international trip. Absent specific evidence regarding the schedules and routes of the trucks in question (none of which is provided in the requesting letter), such local traffic would not be permitted. The fact that the vehicles in question would be carrying merchandise owned by the same company that owns them is irrelevant for purposes of the administration of 19 CFR 123.14.

We further note that notwithstanding the transportation of merchandise in local traffic, Example 4 also involves the repositioning of an empty trailer from one U.S point to another for loading and subsequent hauling back to Canada. This activity does not constitute a diversion of the vehicle from international traffic to local traffic provided it occurs along the truck's regularly scheduled international route.

You are correct in your assumption that any questions regarding the use of Canadian drivers are within the jurisdiction of the U.S. Immigration and Naturalization Service. We defer to that agency regarding that matter.

HOLDING:

Absent evidence to the contrary, the movements of Canadian trucks in the United States as described above constitute local traffic in violation of 19 CFR 123.14(c)(1).

Sincerely,

B. James Fritz

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