HQ 0112708 - United-States owned trucks; Foreign repairs; Running repairs; Dutiability of repairs; Reportability of repairs; Retention of repair records; 19 U.S.C. 1322; 19 CFR 123.17 - United States International Trade Commision Rulings

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HQ 112708

June 25, 1993

BOR-7-04-CO:R:IT:C 112708 LLB

CATEGORY: CARRIER

Ms. Rebecca A. Raleigh
Fredrikson and Byron
1100 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402-3397

RE: United-States owned trucks; Foreign repairs; Running repairs; Dutiability of repairs; Reportability of repairs; Retention of repair records; 19 U.S.C. 1322; 19 CFR 123.17

Dear Ms. Raleigh:

Reference is made to your letter of April 22, 1993, in which you request that we rule on several issues concerning the operation and repair of truck tractors. The vehicles in question are owned by a United States company, and engage in the hauling of merchandise between the United States and Canada.

FACTS:

Truck tractors owned by a domestic concern engage in the hauling of merchandise between the United States and Canada. On occasion while in Canada, merchandise is hauled between points in that country. Additionally, the tractors are sometimes serviced or repaired while in Canada. While the incoming ruling request is silent on the point, it is assumed for the purposes of this ruling that the truck tractors in question are operating with the benefit of Instrument of International Traffic designation.

ISSUES:

1. Whether, upon re-entry into this country, there is any liability for duty on truck tractors which are United States-owned and which previously departed the United States to deliver merchandise in Canada.

2. Whether United States-owned truck tractors which depart this country to deliver merchandise in Canada, and which are serviced or repaired while abroad, are subject to duty in the United States on the value of the repairs obtained.

3. Whether records of any foreign repairs to United States-owned truck tractors must be retained or filed with an agency of the Federal Government.

LAW AND ANALYSIS:

Title 19, United States Code, section 1322(a), as amended (19 U.S.C. 1322(a)), provides, in pertinent part:

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 relevant implementing regulations promulgated under statutory authority appear in Parts 10 and 123 of the Customs Regulations (19 CFR Parts 10 and 123), and regulate the use and movement of designated instruments within the United States. The questions regarding use which are posed for our determination are directed to activities occurring in Canada. Actions taken with regard to truck tractor operations in Canada by officials of Canada Customs have no effect on the status of such vehicles at the time they enter or during the pendency of their operation inside the United States. Simply put, the fact that duty may have been assessed by the Government of Canada in connection with the use of a United States-owned vehicle in that country, does not subject that vehicle to our entry and duty requirements as a vehicle which has been diverted from international traffic under United States law.

Conversely, certain foreign repair operations effected upon United States-owned truck tractors are of interest to United States Customs and may result in duty consequences. Section 123.17(b), Customs Regulations (19 CFR 123.17(b)), provides, in pertinent part:

A report of the first arrival in the United States of domestic trucks...and their equipment after repairs have been made in a foreign country, other than those required to restore such vehicle or equipment to the condition in which it last left the United States ("running repairs"), shall be made by the driver or person in charge of the vehicle promptly, in writing, to the Customs officer at the port of reentry. The report shall state the time and place of arrival and the nature and value of the repairs. Each such vehicle or its equipment when withdrawn from international traffic shall be subject to duty upon the value of the repairs (other than "running repairs") made abroad at the
rate at which the repaired article would be dutiable if imported.

Customs interprets this regulation to mean that reports need be made only with respect to other than running repairs, and that no duty is assessed upon the value of running repairs. Further, repair receipts should be retained for presentation to United States Customs at such time that a vehicle is withdrawn from international traffic.

HOLDINGS:

1. No duty is owed to the United States upon reentry into this country of a domestic truck tractor operating as an instrument of international traffic, upon which duty has been assessed by Canada Customs in connection with the operation of that vehicle in Canada. In light of this finding, issues regarding any applicable foreign tax credit associated with double duty assessment are moot.

2. United States-owned truck tractors returning to this country after having been repaired or serviced while aborad, are assessed duty only upon the value of those repairs which are not "running repairs" as defined in 19 CFR 123.17(b).

3. Records of foreign repairs to domestic truck tractors should be retained for presentation to United States Customs at such time as those vehicles may be withdrawn from international traffic.

Sincerely,

Acting Chief

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