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HQ 221433

September 19, 1990

BOR-2-01 CO:R:C:E 221433 GG

CATEGORY: ENTRY LIQUIDATION

William H. Carey
A.N. Deringer, Inc./W.R. Filbin & Co., Inc. 1010 Niagara Street
Buffalo, New York 14213

RE: Transportation of merchandise through Canada; 19 U.S.C. 1554; 19 CFR 123.21; transshipment permitted; 19 CFR 123.26; merchandise may exit and enter United States at same port; in- transit manifest required; merchandise must be sealed; shippers' export declarations filed at final port of exportation.

Dear Mr. Carey:

This is in response to your letter dated April 28, 1989, which concerns the transshipment of containerized cargo through Canada. You request approval of an operation your client, the Norfolk & Western Corp., plans to undertake with respect to merchandise that will be transported into Canada for reloading purposes only.

FACTS:

The Norfolk & Western Corp. would like to truck containerized U.S. merchandise across the Canadian border to a special railroad loading facility, where the containers will be transferred to stack trains. The containers will be sealed when they enter Canada and will remain sealed while they are in Canada. After the completion of the loading process, the trains carrying the containers will then reenter the United States at the same port where the containers had originally exited to Canada. The trains will then proceed to various destinations on the U.S. West Coast, where the merchandise will be exported. The reason given for the shipment of the containers in this circuitous manner is that it is less expensive than trucking them directly across country.

ISSUE:

1) Whether containers of merchandise may be taken by truck into Canada, transshipped onto railroad stack cars, and then returned to the United States through the same port, without being treated as an importation?

2) Where should the Shippers Export Declaration be filed, if, after their transshipment in Canada, the containers then return by train to the United States and proceed to the West Coast for exportation overseas?

LAW AND ANALYSIS:

Section 554 of the Tariff Act of 1930, as amended (19 U.S.C. 1554), and section 123.21 of the Customs Regulations (19 CFR 123.21) allow domestic or previously imported, duty-paid or in bond merchandise to be transported from one port to another in the United States through contiguous countries, if the proper authorities consent to the procedure. The advantage of transporting merchandise in this manner is that it will not be treated as an importation when it is returned to the United States, and the requirement of an inward foreign manifest will be waived when an in-transit manifest is presented. In-transit merchandise returned to the United States will be treated as a regular importation from Canada or Mexico, if no in-transit manifest is furnished upon the merchandise's return, and if the seals affixed to the merchandise to ensure that it was not tampered with or diverted while outside of the United States were missing or had been broken without Customs' supervision.

It would be overly restrictive to interpret the language in 19 U.S.C. 1554 as precluding transactions where merchandise left the United States and then, at a later time, returned via the same port. As long as the conditions with respect to manifests and sealing have been complied with, a company can transship merchandise through contiguous countries via the same U.S. port, without the return being treated as an importation. Subject to these conditions, the Norfolk & Western Corp.'s containerized merchandise may both leave, and return to, the United States at Buffalo.

Section 123.26 of the Customs Regulations specifically provides for the transshipment of in-transit merchandise from one conveyance to another in foreign territory. The transferring of the containers from the trucks to the railroad stack cars would be allowed under this regulation. If the seals have to be broken during the transfer, a Customs officer would have to be there to supervise the operation.

The district office of Customs has expressed concern that the authorization of this procedure would result in an increase in paperwork and manpower requirements. However, we think some of these fears can be assuaged by stating that only one in- transit manifest, the United States-Canada Transit Manifest on Form 7512-B Canada 8-1/2, need be prepared for each container of merchandise. The use of this type of manifest should give the government adequate control over the merchandise, and will obviate the need, in this particular instance, for separate in- transit rail manifests.

In this type of operation, the shipper must present the shippers' export declarations at the final port of exportation, which the Norfolk & Western Corp. has indicated will be ports on the U.S. West Coast. See section 4.63 of the Customs Regulations (19 CFR 4.63).

HOLDING:

1) Containers of merchandise may be taken from the United States into Canada, transshipped from one conveyance to another, and then returned to the United States via the same port, without being treated as an importation, as long as the containers are sealed while in Canada and a Customs officer supervises any operations which require the seals to be broken, and an in- transit manifest is furnished upon the merchandise's return to the United States.

2) The proper place to file the shippers' export declarations is the final port of exportation, which under these particular facts would be various ports on the U.S. West Coast.

Sincerely,

John Durant, Director

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