HQ 113333 - Instruments of International Traffic; Foreign-based Buses; 19 U.S.C. ? 1322 - United States International Trade Commision Rulings

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HQ 113333

March 23, 1995

BOR-7-04-CO:R:IT:C 113333 GEV

CATEGORY: CARRIER

Margarete Sched
16729 S.E. 352
Auburn, Washington 98092

RE: Instruments of International Traffic; Foreign-based Buses; 19 U.S.C. ? 1322

Dear Ms. Sched:

This is in response to your letter of February 1, 1995, regarding the Rotel bus used to transport passengers on trip no. 93. Our ruling on this matter is set forth below.

FACTS:

Rotel is a German-based company which operates special bus tours, uniquely designed for German tourists, all over the world. All tours are one-price package deals which begin and end in a German city, typically Frankfurt. One such tour is Rotel's trip no. 93 which begins in Frankfurt, Germany, where tourists board a flight to Los Angeles, California. After landing in Los Angeles the tourists board Rotel's bus which was previously brought into this country on a temporary basis for the purpose of transporting these passengers. The bus then proceeds northward on its tour route through the United States into Canada and ultimately back into the United States (i.e., Alaska) where the passengers leave the bus for their return flight to Germany. This particular tour has allegedly occurred four times a year for the last fifteen years.

ISSUE:

Whether Rotel's bus used on trip no. 93 as described above is entitled to admission pursuant to 19 CFR ? 123.14(a).

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 foreign-based busses in question are 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, busses having their principal base of operations in a foreign country must be arriving in the United States with passengers and/or merchandise destined for points in the United States, or arriving empty or loaded for the purpose of taking passengers and/or merchandise out of the United States (see 19 CFR ? 123.14(a)). Customs has long interpreted the phrase "taking out" as meaning destined to a foreign country and does not cover passengers and/or merchandise whose intended destination is a second point in the United States.

Section 123.14(c), Customs Regulations, states that with one exception, a foreign-based bus, 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. For purposes of ? 123.14, Customs interprets the term "local traffic in the United States" as referring to the transportation of passengers or merchandise between any two points in the United States.

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. Customs interpretation of this phrase is consistent with the legally recognized definition of the term "regularly" set forth below:

"At fixed and certain intervals, regular in point of time. In accordance with some consistent or periodical rule or practice." Black's Law Dictionary, Fifth Edition (1979).

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
regular Customs entry therefor shall be made. Section 123.14(d), Customs Regulations provides that any vehicle used in violation of ? 123.14, may result in liabilities being incurred 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 and/or passengers in international traffic is the key; the domestic movement of merchandise and/or passengers 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 and/or passengers moving in international traffic.

In regard to the use of the German-based bus in Rotel's trip no. 93, it is clear that the bus is being used to transport passengers between United States points (i.e., California to Alaska) via Canada. As such, this transportation of passengers cannot be construed as "taking out" within the meaning of ? 123.14(a). Customs has long-held that the transpiration of passengers between two United States points via Canada cannot be so construed. (See Customs Rulings 110691, dated March 22, 1990; 111223, dated November 1, 1990; and 112415, dated September 22, 1992).

Accordingly, the subject bus does not qualify as an instrument of international traffic entitled to admission without entry or payment of duty pursuant to ? 123.14(a).

Assuming, arguendo, the admission of these busses pursuant to ? 123.14(a), we note that although the passengers themselves ultimately begin and end their respective tours in Germany, traveling by both air and land transportation, "local traffic" for purposes of ? 123.14(c) is determined by the physical operation of the foreign-based equipment, not the nature of the commerce involved. (see Customs Ruling 109622, dated August 31, 1988) To disregard the points of boarding and leaving the busses (i.e., the land-based leg of the tour) for purposes of determining whether local traffic has occurred within the meaning of ? 123.14(c), effectively eliminates the provisions of that regulation. Customs has refused to adopt such an analysis which not only circumvents the intent of Congress in enacting 19 U.S.C. ? 1322 but also invites widespread abuse of the provisions of ? 123.14. (See Customs Ruling 110691, dated March 22, 1990) Accordingly, the use of a foreign-based bus for Rotel's trip no. 93 is an engagement in local traffic, not purely international traffic as contemplated by ? 123.14(a).

Parenthetically, we note that in regard to the carnets referenced in your letter of February 1, 1995 (Exhibits II and III), such documentation is not controlling as to the dutiability and Customs treatment of foreign-based busses that move passengers between United States points.

HOLDING:

Rotel's bus used on trip no. 93 as described above is not entitled to admission pursuant to 19 CFR 123.14(a).

Arthur P. Schifflin
Chief
Carrier Rulings Branch

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