HQ 114018 - Instruments of International Traffic; Canadian Based Trucks; 19 U.S.C. ?1322(a); 19 CFR ?123.14(a) - United States International Trade Commision Rulings

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HQ 114018

June 11, 1998

BOR-4-07-RR:IT:EC 114018 GG

CATEGORY: CARRIER

Michael A. Roybal, Esq.
Sandler, Travis & Rosenberg, P.A.
1341 G Street, N.W.
Washington, D.C. 20005-3105

RE: Instruments of International Traffic; Canadian Based Trucks; 19 U.S.C. ?1322(a); 19 CFR ?123.14(a)

Dear Mr. Roybal:

This is in response to your ruling request, dated July 7, 1997, made by you on behalf of your client, The Canam Manac Group Inc. ("Canam") of St.-Georges, Quebec, Canada.

FACTS:

Canam is a designer and manufacturer of structural steel components (e.g., steel joists, structural steel, steel deck, etc.) for the construction industry in North America. Canam maintains a fleet of tractors and Quebec-registered trailers and employs commercial drivers to transport the components to customers in the United States. Canam also engages independent contractors to make the deliveries.

The components are usually delivered to the construction sites in the United States, where they are immediately unloaded and the tractor and trailer are then driven back to Canada. Occasionally, however, the drivers of the tractors must drop-off and leave a loaded trailer at a construction site in the United States. Weather conditions, a lack of storage space, or crane breakdown are reasons why the components cannot be unloaded at the time of delivery. Once the dropped-off trailer is unloaded, it is subsequently picked up and hauled empty back to Canada. Usually this will occur within a week of drop-off, although circumstances may occasionally prolong this period. The driver may be a different driver from the one who made the intial delivery. Whenever possible, Canam tries to transport several trailers "piggyback" back to Canada.

The subject trailers, once unloaded, are not used for any purpose other than to be hauled empty back to Canada.

ISSUE:

Whether the dropping-off of a loaded Canadian trailer, and its subsequent pick-up and return empty to Canada by a different tractor driver, violate "local traffic" and other restrictions imposed by 19 CFR ?123.14?

LAW AND ANALYSIS:

Section 141.4(a) of the Customs Regulations (19 CFR States Code, Section 1484(a)), shall be made of all merchandise imported into the United States unless specifically excepted. Foreign-based trucks are not among those excepted items specifically listed in ?141.4(b), and would therefore be subject to entry and payment of any applicable duty unless otherwise exempted by law or regulations..

Instruments of international traffic may be entered without entry and the payment of duty under the provisions of 19 U.S.C. trucks having their principal base of operations in a foreign country must arrive in the United States with merchandise destined for points in the United States, or arrive empty or loaded for the purpose of taking merchandise out of the United States. See Section 123.14(a) of the Customs Regulations (19 CFR

Section 123.14(c), Customs Regulations, states that with one exception, a foreign-based truck admitted as an instrument of international traffic under ?123.14(a), shall not engage in local traffic in the United States. The exception, set out in regularly scheduled trip, may be used in local traffic that is directly incidental to the international schedule. For purposes of ?123.14(c), Customs interprets the term "local traffic" as referring to the transportation of passengers or merchandise between any two points in the United States.

The movements proposed by Canam, whereby a Canadian trailer loaded with merchandise will arrive in the United States, be unloaded and then returned to Canada, or altertnatively, be dropped-off loaded at the customer's location, and then picked up empty by another driver approximately one week later for direct return to Canada, fall within the parameters of 19 CFR used to transport merchandise destined for U.S. customers. Their movements do not involve any disqualifying local traffic for the simple reason that there is no transportation of passengers or merchandise between any two points in the United States. (For a review of Customs' position on what constitutes "local traffic", please see the General Notice entitled "Revocation of Customs Ruling Letters Relating to the Use of Foreign-Based Trucks in International Traffic", CUSTOMS BULLETIN, Volume 31, Number 40, dated October 1, 1997.) The fact that the trailers may remain in the United States for a short period, and may be driven back to Canada by a different driver, presents no problem. This is because Customs has previously approved Canadian-based tractors switching their trailers at the U.S. destination and then either proceeding alone or hauling different trailers back to Canada. See Headquarters Ruling Letter 112602, dated March 10, 1993. Consequently, Canam's tractors and trailers qualify as instruments of international traffic, and as such may be admitted without entry and payment of duty pursuant to 19 U.S.C. ?1322.

HOLDING:

The tractors and trailers described herein are instruments of international traffic excepted from entry and the payment of duty under 19 CFR ?123.14(a) and 19 U.S.C. ?1322.

Sincerely,

Jerry Laderberg
Chief

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