HQ 0112260 - Instruments of International Traffic; Containers; 19 U.S.C. 1322 - United States International Trade Commision Rulings

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HQ 112260

September 4, 1992

BOR-7-07-CO:R:IT:C 112260 MLR

CATEGORY: CARRIER

James D. Harris
Manager Customs Services
CP Rail System
P.O. Box 6042, Station A
Montreal, Quebec, Canada H3C 3E4

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

Dear Mr. Harris:

This is reference to your facsimile dated May 28, 1992 (your file no. F-620.06-G), requesting a ruling regarding the use of containers.

FACTS:

The proposed movement of the Canadian-based containers in question is as follows: Romar Transportation System (Romar), a division of Trailer Train, will handle the drayage of empty containers from Montreal, Quebec, Canada, to Massena, New York. At Massena, the containers will be loaded with aluminum ingots and returned to Montreal, where Cast Shipping Lines will move the containers by rail to Chicago, Illinois, through the Port of Detroit. On arrival in Chicago, Romar will handle the drayage of the containers to Milwaukee, Wisconsin, where the aluminum ingots are unloaded.

Romar will return the empty containers to Chicago, where export cargo is loaded. The containers will again be moved by Cast Shipping Lines by rail from Chicago, to Canada.

ISSUE:

Whether the proposed movement of containers as described above constitutes their use as instruments of international traffic in compliance with section 10.41a(f), Customs Regulations {19 CFR 10.41a(f)}.

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 containers in question are not within the definition of intangibles as shown in General Note 4, Harmonized Tariff Schedule of the United States Annotated (HTSUSA; 19 U.S.C. 1202, as amended), they are subject to entry and payment of any applicable duty if not specifically exempted by law and regulations.

Instruments of international traffic (IIT) may be entered without entry and payment of duty under the provisions of 19 U.S.C. 1322 which provides in pertinent part that:

Vehicles and other instruments of international traffic, of any class specified by the Secretary of the Treasury, shall be excepted from the application of the customs laws to such extent and subject to such terms and conditions as may be prescribed in regulations or instructions of the Secretary of the Treasury. The authority delegated to the Secretary by this subsection shall not extend to communications satellites and components and parts thereof.

In regard to the use of containers as IIT, regulations have been promulgated by Customs to administer section 1322, and they do provide some latitude in the use of designated instruments of international traffic. Section 10.41a(f), Customs Regulations, provides that the following are permitted:

1. The use of an IIT container at intervening points while it is in use between its port of arrival and the destination point for its imported cargo.

2. The use of an IIT container at intervening points between the point of destination for its imported cargo and a point where export cargo is to be loaded, or from there to its departure port.

3. The use of an IIT container at intervening points, which arrived in the U.S. empty and is being taken to the point where export cargo is to be loaded or from there to its port of departure from the U.S.

All three of these uses are allowed only on condition that they be reasonably direct and incidental to the efficient and economical utilization of the IIT container in the course of its use in international traffic.

Upon reviewing the proposal under consideration, the containers in question arrive empty in the United States at Massena where they are loaded. They are then transported from their port of arrival (Massena) to Milwaukee, Wisconsin, via Canada. In view of the fact that this movement between Massena and Milwaukee, via Canada, is not "incidental to the efficient and economical utilization of the instrument in the course of its use in international traffic" (in that the containers are returned back to Montreal) the containers have not met the criteria set forth in section 10.41a(f), Customs Regulations and are considered to have been diverted to unpermitted point-to point local traffic in the United States.

HOLDING:

The proposed movement of Canadian-based containers which enter the United States empty at Massena, New York, where they are subsequently loaded, transported back to Canada, then shipped via rail to Chicago, Illinois, for transport by truck to Milwaukee, Wisconsin, are engaged in local traffic in violation of section 10.41a(f), Customs Regulations.

Sincerely,

B. James Fritz

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