HQ 227128 - Instruments of international traffic; 19 U.S.C. 1322; 19 CFR 123.14(c); Foreign- based trucks; Local traffic; Regularly scheduled trip; Directly incidental to international schedule - United States International Trade Commision Rulings

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HQ 227128

August 6, 1996

BOR-4-04-RR:IT:EC 227128 GOB

CATEGORY: CARRIER

Bruce Caputo, Esq.
Rockefeller Center
1270 Avenue of the Americas
Suite 1817
New York, N.Y. 10020-1701

RE: Instruments of international traffic; 19 U.S.C. 1322; 19 CFR 123.14(c); Foreign- based trucks; Local traffic; Regularly scheduled trip; Directly incidental to international schedule

Dear Mr. Caputo:

This is in response to your letter of July 24, 1996 on behalf of Ray Bourbonnais & Son, Inc. ("Trucker").

FACTS:

You state as follows:

Trucker respectfully requests that the Customs Service rule or otherwise determine on a permanent basis that the Montreal to Long Island to Brooklyn to Chateaugay to Montreal trips by Trucker described herein comply with requirements of 19 CFR 123.14(c)1 and as such are exempt from formal entry and payment of duty.

You describe the pertinent facts as follows:

To service Star [its client in Brooklyn, New York], trucker takes Route 40 from the Montreal, Canada area, to Route 15, to the U.S. border and thereafter takes Route 87 (the Northway, New York State Thruway) to New York City.

On this trip from Canada, Trucker is carrying wood chips and dried hay collected in Canada. On arriving in the New York City area with the wood chips, Trucker takes Route 95 over the Triboro Bridge to Route 295 (the Brooklyn-Queens Expressway) to Route 495 (the Long Island Expressway) to various stables and riding academies on Long Island where the wood chips and hay are delivered.

Thereafter, Trucker takes the now empty vehicle to 495, to 295, to Metropolitan Avenue, to Gardner Avenue, to Star's facility, where the wood fuel is loaded. Then Trucker takes Metropolitan Avenue to Route 295, to Route 95 over the Triboro Bridge, to Route 87, to Plattsburgh, New York, where Trucker takes Route 190 to Ellenberg and then Route 11 to Chateaugay where the wood fuel is unloaded.

Trucker returns empty to its base in Canada by taking Route 374 to the Canadian border.

This route is fixed with potential minor variations on Long Island near the wood chip and hay using stables and riding academies. But the travel route is planned and followed with regularity because Star must get the material off its facility and Chateaugay must receive the material for fuel.

ISSUE:

Whether vehicles may engage in the above-described traffic without the entry and payment of duty pursuant to 19 CFR 123.14.

LAW AND ANALYSIS:

19 CFR 141.4 provides, in pertinent part:

? 141.4 Entry required.

(a) General. All merchandise imported into the United States is required to be entered, unless specifically excepted.

(b) Exceptions. The following are the exceptions to the general rule:
(3) Instruments of international traffic described in ?10.41a of this chapter, under the conditions provided for in that section. See also Chapter 98, Subchapter III, U.S. Note 4, HTSUS.

19 U.S.C. 1322(a) states in 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.

19 CFR 10.41(d) provides:

?10.41 Instruments; exceptions.
(d) Any foreign-owned vehicle, aircraft, or undocumented boat brought into the United States for the purpose of carrying merchandise or passengers between points in the United States for hire or as an element of a commercial transaction, except as provided at ?123.14(c), is subject to treatment as an importation of merchandise from a foreign country and a regular entry therefor shall be made. The use of any such vehicle, aircraft, or boat without a proper entry having been made may result in liabilities being incurred under section 592, Tariff Act of 1930, as amended (19 U.S.C. 1592).

19 CFR 123.14 provides in pertinent part:

?123.14 Entry of foreign-based trucks, busses, and taxicabs in international traffic.

(a) Admission without entry or payment of duty. Trucks, busses, and taxicabs, however owned, which have their principal base of operations in a foreign country and which are engaged in international traffic, arriving with merchandise or passengers destined to points in the United States, or arriving empty or loaded for the purpose of taking out merchandise or passengers, may be admitted without formal entry or the payment of duty. Such vehicles shall not engage in local traffic except as provided in paragraph (c) of this section.
(c) Use in local traffic. Foreign-based trucks, busses, and taxicabs admitted under this section shall not engage in local traffic in the United States unless the vehicle comes within one of the following exceptions:

(1) The vehicle may carry merchandise or passengers between points in the United States while in use on a regularly scheduled trip if such carriage is directly incidental to the international schedule.

In Ruling 111556 dated April 16, 1991, which involved 19 CFR 123.14(c)(1), we stated:

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.
(Emphasis supplied.)

The same language, or substantially similar language, is found in other rulings, e.g., Ruling 111669 dated June 6, 1991.

Certain language in 19 CFR 123.14(c)(1) is key:
while in use on a regularly scheduled trip if such carriage is directly incidental to the international schedule. (Emphasis supplied.)

In Ruling 111669, we stated:

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.

You state that the trips from Brooklyn, New York to Chateaugay, New York are scheduled every Wednesday and Friday morning between 8:00 a.m. and 10:00 a.m. You make no statement with respect to the scheduling of the trips to Long Island. The international part of the trip is from Montreal to Long Island. Thus, we are unable to conclude that there is a "regular international schedule." See Ruling 111556, excerpted supra. Pursuant to 19 CFR 123.14(c)(1), it is the international carriage which must be regularly scheduled, not the domestic carriage.

Additionally, we are unable to conclude that the domestic carriage (from Brooklyn, New York to Chateaugay, New York) is directly incidental to the international schedule, as required by 19 CFR 123.14(c)(1). (Ruling 111556 stated that the "domestic movement of merchandise must be secondary to the international movement.") In making this determination, we focus on the word "incidental."

The Random House Dictionary of the English Language (1973 ed., unabridged) defines the adjective "incidental" as follows:
incidental ... 1. happening or likely to happen in fortuitous or subordinate conjunction with something else. 2. likely to happen or naturally appertaining ... 3. incurred casually and in addition to the regular or main amount: incidental expenses.
-Syn. 1. casual, chance, fortuitous, contingent. -Ant. 1. fundamental.

Webster's Third New International Dictionary (1968 ed., unabridged) defines the adjective "incidental" as follows:
incidental ... 1: subordinate, nonessential, or attendant in position or significance: as a: occurring merely by chance or without intention or calculation : occurring as a minor concomitant ... 2: met or encountered casually or by accident : chance...

Black's Law Dictionary (fifth ed., 1979) defines "incidental" as follows:

Incidental. Depending upon or appertaining to something else as primary; something necessary, appertaining to, or depending upon another which is termed the principal; something incidental to the main purpose. The Robin Goodfellow, D.C. Wash., 20 F. 2d 924, 925.

Courts (other than the court in The Robin Goodfellow, supra) have interpreted the word "incidental" consistent with the above definitions:

"Incidental" has much the same meaning as "accessory" and "subordinate" and is used to convey the idea of a thing being subordinate to, dependent on, and pertaining to another thing which is the principal one. Lowry v. City of Mankato, 42 N.W.2d 553, 556, 559, 231 Minn. 108.

In Kantor v. U.S., D.C. Tex., 154 F. Supp. 58, 61, 62, the court quoted the definition from 42 C.J.S. 520:

Incidental. An adjective which has reference to something which is subordinate to, and dependent on, and follows the existence of another and principal thing, ... incident to the main purpose of the main business...

The facts in this case clearly do not support a determination that the domestic carriage is directly incidental to the international carriage. Pursuant to 19 CFR 123.14(c)(1), the international carriage must be regularly scheduled (as stated supra, there is no evidence that the international trip is regularly scheduled) and the domestic carriage must be directly incidental to the international carriage. Ruling 111556 stated that "the domestic movement of merchandise must be secondary to the international movement..." (Emphasis supplied.)

The facts here indicate that the domestic carriage is regularly scheduled, and that it is far from incidental. To the contrary of being incidental, the ruling request states: "Trucker's failure to adhere to this schedule would jeopardize its business relationship with Star [its client] which requires regular, reliable outshipment service to comply with local law, retain its waste processing permits and preserve its access to the Chateaugay incinerator...Each party must keep the schedule."

Using some of the language from the definitions of incidental, supra, the domestic carriage is not subordinate to the international carriage, nor is it casual, chance, fortuitous, contingent, nonessential, or without intention or calculation. The domestic carriage appears to be the "main purpose of the main business." Kantor v. U.S., supra.

The domestic carriage is essential to its business relationship with Star Recycling. It must occur within a specific two hour time frame twice a week, i.e., between 8:00 a.m. and 10:00 a.m. every Wednesday and Friday. The focus of the total trip appears to be the domestic movement from Brooklyn to Chateaugay, rather than the international movement of the wood chips and hay from Montreal to Long Island. As stated supra, there is no evidence that the international carriage is regularly scheduled. Further, there is no indication that the international carriage is of more commercial importance to the Trucker than the domestic carriage.

Based upon all of these facts, we conclude that the domestic carriage is not incidental.

Thus, the domestic carriage is not directly incidental to the international carriage.

In Ruling 112164 dated April 6, 1992, Customs held that in order to move domestic cargo between two points without being in violation of the international traffic exception, the domestic movement must follow the same basic route as the merchandise moving in international traffic. That concept was also applied in Ruling 111556 dated April 16, 1991, where Customs held that points not on the direct route were not within the exception of 19 CFR 123.14(c)(1). In Ruling 111556, Customs held that points off of the direct route, even though those points would not exceed a 35-mile deviation from the direct route, were outside of the exception of 19 CFR 123.14(c)(1). Here, Chateaugay is likewise a departure from the direct route back to Montreal, and the proposed domestic movement would not be incidental to the international movement based on the plain meaning of the regulation on purely geographical grounds.

HOLDING:

Vehicles may not engage in the above-described traffic without the entry and payment of duty pursuant to 19 CFR 10.41(d). The vehicles do not come within the exception for local traffic in 19 CFR 123.14(c)(1). There is no evidence that the international traffic is regularly scheduled. The domestic traffic is not directly incidental to the international traffic. The domestic carriage does not follow the same basic route as the merchandise moving in international traffic.

Sincerely,

Director,
International Trade Compliance

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