HQ 226705 - Instruments of International Traffic; Canadian-based Trucks; Local Traffic; Positioning of Trailers; Backhauls/ Lateral Movements; 19 U.S.C. 1322(a); 19 U.S.C. 1484(a); 19 CFR 123.12; 19 CFR 123.14; 19 CFR 141.4; HQ 111548 - United States International Trade Commision Rulings

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HQ 226705

August 21, 1996

BOR-7-04-RR:IT:EC 226705 LTO

CATEGORY: CARRIER

Mr. Edward J. Kiley
Grove, Jaskiewicz and Cobert
1730 M Street, N.W.
Suite 400
Washington, D.C. 20036-4579

RE: Instruments of International Traffic; Canadian-based Trucks; Local Traffic; Positioning of Trailers; Backhauls/ Lateral Movements; 19 U.S.C. 1322(a); 19 U.S.C. 1484(a); 19 CFR 123.12; 19 CFR 123.14; 19 CFR 141.4; HQ 111548

Dear Mr. Kiley:

This is in response to your letter of December 27, 1995, requesting, on behalf of Gorski Bulk Transport, Inc., clarification of the status of certain operations of Gorski when handling international shipments between points within the United States.

FACTS:

A Canadian-based driver, operating a Canadian-based tractor and Canadian-based trailer enters the United States from Canada with a load to deliver at Quincy, Illinois. After the tank trailer is unloaded, the driver proceeds northeast to Summit, Illinois, a near-suburb of Chicago, where a tank cleaning facility is located. Gorski has a contract with this facility to provide tank cleaning services and allow for equipment staging. Upon arrival at Summit, the first driver drops the trailer to be cleaned, hooks to another Canadian-based trailer already cleaned, and proceeds to Joliet, Illinois, a short distance southwest of Summit. At Joliet, the driver loads this second tank trailer with a load destined for Canada. The bill of lading issued at - 2 -
the time of this loading shows Joliet as the origin and a through movement to the Canadian destination.

The driver takes that now-loaded trailer back to Summit, drops it, picks up the first trailer which is now clean and returns to Joliet to load that trailer with a shipment destined for Canada. The first driver then proceeds directly from Joliet with that load and delivers it to the Canadian destination. A second driver will, under similar circumstances, after delivery of an international load, pick up the trailer position at Summit and proceed to deliver that load to its Canadian destination.

You state that all of these movements are arranged and scheduled by Gorski, on a regular basis, with all such arrangement and scheduling taking place prior to the departure by the first driver from the Canadian origin of the initial load. You have not provided any evidence substantiating this claim.

ISSUE:

Whether the movements between Summit and Joliet, Illinois, are "directly incidental to the international schedule."

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 requirements of entry. Since the foreign-based equipment in question is not within the definition of intangibles (see 19 U.S.C. 1202), it is subject to entry and payment of any applicable duty if not specifically exempted by law or regulations.

Instruments of international traffic may be entered without formal entry and the payment of duty under the provisions of 19 U.S.C. 1322(a). 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 to 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)).

19 CFR 123.14(a) provides that foreign-based trucks, which include a foreign tractor towing a foreign trailer, "shall not
engage in local traffic except as provided in paragraph (c) of this subsection." 19 CFR 123.14(c)(1) permits the use of a foreign-based truck in local traffic "while in use on a regularly scheduled trip if such carriage is directly incidental to the international schedule."

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. Furthermore, it should be noted that 19 CFR 123.14(c)(2), regarding local traffic permitted on a foreign-based trailer, references 19 CFR 123.12(a)(2), pertaining to local traffic of foreign railroad equipment. Section 123.12(a)(2) states that such local traffic is permitted if it is "reasonably incidental to its economical prompt departure for a foreign country." Customs has interpreted this to mean in the general direction of the country of origin, or to the home route junction point, over a route which the equipment would otherwise travel empty. Accordingly, "backhauls" or "lateral" movements would not be considered incidental to the international route for purposes of section 123.14(c). See HQ 111548, dated September 3, 1991.

In the present case, a Canadian-based tractor and Canadian-based trailer arrive in the United States with merchandise destined for Quincy, Illinois. After the merchandise is unloaded in Quincy, the tractor travels northeast and drops off the trailer in Summit, Illinois, where it is cleaned. The tractor picks up another cleaned trailer and travels southwest to Joliet, Illinois, where that trailer is loaded. The driver takes that now-loaded trailer back to Summit, drops it, picks up the first trailer and returns to Joliet to load that trailer with a shipment destined for Canada.

Even assuming that the vehicle is in fact operating pursuant to a regularly scheduled international trip, the movements of the tractor with the first and second trailer between Summit and Joliet are not "incidental" to this regularly scheduled route. The southwest movement, or "backhaul," of the equipment from Summit and Joliet constitutes unlawful "local traffic." Accordingly, such a movement is in violation of 19 CFR

HOLDING:

The Canadian-based tractor and Canadian-based trailer are operating in local traffic in violation of 19 CFR 123.14(c)(1).

Sincerely,

Director, International Trade

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