HQ 112415 - Instruments of International Traffic; Busses; Local Traffic; 19 U.S.C. 1322 - United States International Trade Commision Rulings

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HQ 112415

September 22, 1992

BOR-7-04-CO:R:IT:C 112415 GEV

CATEGORY: CARRIER

Peter Staff
International Stage Lines
4171 Vanguard Road
Richmond, B.C., Canada V6X 2P6

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

Dear Mr. Staff:

This is in response to your letter dated July 30, 1992, requesting a ruling regarding the operation of your charter bus company. Our ruling is set forth below.

FACTS:

International Stage Lines is a Canadian-owned and operated charter bus company located in Vancouver, B.C., Canada. A typical itinerary of their trips includes the embarkation of passengers in Seattle, Washington, for the purpose of proceeding on a chartered tour through the Canadian Rockies for several days with a return trip to Seattle. The points of embarkation and disembarkation within Seattle may differ.

ISSUE:

Whether there is a movement in "local traffic" in violation of 19 CFR 123.14(c)(1) when a Canadian-based bus operating pursuant to a charter tour boards passengers in Seattle, Washington, proceeds to various stops in Canada to tour the Canadian Rockies, and subsequently disembarks the passengers at the same or a different location within Seattle, without making a formal Customs entry.

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 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 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. For purposes of section 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.

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 therefor 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).

The Customs Simplification Act of 1953 (Pub. L. 67-243) added section 322 to the Tariff Act of 1930 (19 U.S.C. 1322) to grant to international traffic the generally recognized customary exceptions from Customs requirements. Although 19 U.S.C. 1322 does not define "customary exceptions," the legislative history is explicit in stating that the customary exceptions referred to are those mentioned in the "United States Import Duties" (1952), at page 269. Senate Report No. 632, 83rd Congress, 1st Session, page 12, states "It (19 U.S.C. 1322) does not change the customary exceptions as set out in...United States Import Duties (1952) p. 269." The intent of Congress is also apparent from House Report No. 760, 83rd Congress, 1st Session, page 13. These provisions now appear, essentially without change, in sections 10.41(d) and 123.14 referred to above.

It is noted that although Public Law 98-573, section 127(b) (effective October 30, 1984) amended 19 U.S.C. 1322(a) by substituting the words "shall be excepted" for "shall be granted the customary exceptions", the legislative history of this amendment clearly states that its purpose is to provide for the duty-free entry of repair parts, accessories and equipment of temporarily admitted containers thereby bringing United States treatment into conformity with the Customs Convention on Containers, 1972.

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.

In regard to the charter tour itinerary under consideration, it is apparent that unless the points of embarkation and disembarkation in Seattle are the same, the International Stage Lines busses would be transporting passengers whose intended destination is a second point in the United States albeit with intervening Canadian stops. The fact that a bus boards passengers in Seattle, then proceeds to Canada where the passengers have several overnight stays at one specific location and/or several different locations prior to arriving at their U.S. destination, cannot be construed as "taking out" to Canada within the meaning of section 123.14(a). Accordingly, the busses in question, unless embarking and disembarking passengers at the same location in Seattle, would not be engaged purely in international traffic as contemplated by section 123.14(a).

In the event the tour includes the transportation of passengers between United States points (i.e, different points within Seattle), the movement is unquestionably local traffic within the meaning of 19 CFR 123.14(c)(1) and is permitted provided it is incidental to a regularly scheduled international trip. It should be noted that the mere fact that this movement is a "charter tour" would indicate that it is operated on other than a regular schedule.

Accordingly, the International Stage Lines busses transporting passengers pursuant to the charter tour in question without making a formal Customs entry would be engaged in local traffic not within the permitted exception set forth in 19 CFR 123.14(c)(1) if the points of embarkation and disembarkation within Seattle are not the same. If such points do not differ no violation of the aforementioned Customs regulations would occur. To hold otherwise would be inconsistent with the intent of Congress to limit competition with domestic transportation by vehicles in international traffic. It would work to the detriment of domestic interests.

HOLDING:

A Canadian-based bus operating pursuant to a charter tour which boards passengers in Seattle, Washington, proceeds to various stops in Canada to tour the Canadian Rockies, and disembarks the passengers at their final destination in Seattle, without making a formal Customs entry, is engaged in "local traffic" not within the permitted exception in 19 CFR 123.14(c)(1) if the points of embarkation and disembarkation within Seattle are not the same.

B. James Fritz
Chief
Carrier Rulings Branch

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