HQ 0111669 - Instruments of International Traffic; Canadian-based Trucks; 19 U.S.C. 1322 - United States International Trade Commision Rulings

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HQ 111669

June 6, 1991

BOR-7-04-CO:R:IT:C 111669 GEV

CATEGORY: CARRIER

William H. Shawn, Esq.
Shawn, Berger & Mann
1850 M Street, N.W.
Washington, D.C. 20036

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

Dear Mr. Shawn:

This is in response to your letter dated April 29, 1991, on behalf of your client, Tippet-Richardson Limited, requesting a ruling regarding the proposed use of Canadian-based trucks in the United States. Our ruling is set forth below.

FACTS:

Tippet-Richardson Limited ("Tippet-Richardson") is a Canadian-based motor contract carrier operating in the United States under the Interstate Commerce Commission authority of Allied Van Lines, Naperville, Illinois. It conducts scheduled and non-scheduled trips between the United States and Canada.

Tippet-Richardson operates a weekly "West Coast Schedule Run" on a set route from Toronto, Ontario, Canada to Tustin, California. The route originates in Toronto and loads/unloads in Calgary, Alberta; Kamloops, British Columbia; Vancouver, British Columbia and ultimately unloads in Tustin, California. This operation is conducted with specifically-designated drivers and equipment. Furthermore, the operation is run on a fixed weekly schedule over a designated route regardless of any load variations.

Tippet-Richardson proposes to add several United States stops on the Toronto-Tustin route. Specifically, it proposes to transport merchandise in local traffic on both the inbound and return trips between Seattle, Washington, Portland, Oregon, the San Francisco Bay Area, Fremont, California, and Tustin. - 2 -

ISSUE:

Whether there is a movement in local traffic in violation of 19 CFR 123.14(c)(1) when a Canadian-based tractor-trailer unit operating in international traffic on a weekly schedule between Toronto, Ontario, Canada and Tustin, California, transports merchandise on both the inbound and return trips between Seattle, Washington, Portland, Oregon, the San Francisco Bay Area, Fremont, California, and Tustin.

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 foreign- based 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), they are 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)).

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 (19 CFR

Section 123.14(c), Customs Regulations, states that with one exception, a foreign-based truck, 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 carrier may be considered as engaged in regularly scheduled service whether trips are scheduled hourly, daily, - 3 -
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 (19 CFR 123.14(c)(2)), 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, as was stated earlier, are considered trucks as that term is used in the Customs Regulations.

Section 10.41(d), Customs Regulations 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 section 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 section 123.14, is subject to forfeiture under section 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.

It should be noted that the aforementioned ICC authority - and the applicable Customs Regulations are easily reconciled. The former authorizes a carrier to transport general commodities or passengers between points in the United States, while the latter applies the statutory requirements that govern such movements.

In regard to the proposed domestic transportation, we note that although it would appear to occur pursuant to regularly scheduled international trips, it cannot be said to be directly incidental to the international schedule. Specifically, the record does not support a finding that the domestic movements between three of the United States points in question (Seattle, Portland, and Tustin) and the San Francisco Bay Area (a non- specific destination) and Fremont follow the same basic route as
the merchandise moving in international traffic (Canada-Tustin). Accordingly, these movements are local traffic not within the permitted exception set forth in section 123.14(c)(1).

HOLDING:

There is a movement in local traffic in violation of 19 CFR 123.14(c)(1) when a Canadian-based tractor-trailer unit transporting merchandise in international traffic on a weekly schedule between Toronto, Ontario, Canada and Tustin, California transports merchandise between Seattle, Washington, Portland, Oregon, the San Francisco Bay Area, Fremont, California and Tustin.

Sincerely,

B. James Fritz

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