HQ 115465 - Instruments of International Traffic; Canadian-based Truck; 19 U.S.C. § 1322 - United States International Trade Commision Rulings

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HQ 115465

August 31, 2001

BOR-4-04-RR:IT:EC 115465 GEV

CATEGORY: CARRIER

Massimo Bergamini
Vice President, Public Affairs
Canadian Trucking Alliance
130 Slater Street, Suite 1025
Ottawa, Ontario, Canada K1P 6E2

RE: Instruments of International Traffic; Canadian-based Truck; 19 U.S.C. § 1322

Dear Mr. Bergamini:

This is in response to your fax of August 23, 2001, requesting a ruling regarding the transportation of merchandise in the United States by a Canadian-based truck. Our ruling on this matter is set forth below.

FACTS:

A loaded Canadian-based truck would proceed from Canada to a location in Texas where it will drop its load and pick up a second load at the same location. The loaded truck would then proceed to a second United States location north of this pick-up point. At this second United States location a third of the load would be dropped off. The truck would subsequently proceed north with the remainder of its load to its Canadian destination.

ISSUE:

Whether the use of a Canadian-based truck as described in the above scenario is violative of 19 CFR § 123.14(c).

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 equipment in question is 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), it is subject to entry and payment of any applicable duty if not specifically exempted by law and regulations.

Instruments of international traffic are exempt from Customs entry and payment of duty under the provisions of 19 U.S.C. § 1322. 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 for 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)). Furthermore, certain foreign-based vehicles engaged, in whole or in part, in the domestic carriage of merchandise that either originates from a location outside the United States or will be subsequently moved to a destination outside the United States, or such vehicles moving without a payload between two points in the same country, shall be considered as engaged in international traffic. (See Customs Bulletin of October 1, 1997, Vol. 31, No. 40, at pp. 7-13.)

With respect to the delivery of partial loads between two points in the United States, we note that the characterization of merchandise as either “local” or “international” for purposes of administering § 123.14 was discussed extensively in the above-cited publication. (See Customs Bulletin of October 1, 1997, Vol. 31, No. 40, at p. 11) In response to a comment that a foreign-based truck could circumvent § 123.14 if permitted to engage in multiple pick-ups and deliveries in the United States so long as it also carried international merchandise at the same time it carried local merchandise, Customs stated as follows:
the movement of a truck would be characterized as international if it were involved in any portion of a movement of merchandise in international traffic, not if any portion of the merchandise being transported in the truck were international in character. Thus, if any
portion of the merchandise being transported in the truck is local in nature, the movement of the truck would be characterized as local regardless of the fact that it is simultaneously transporting merchandise which is international in nature. Consequently, the multiple domestic pick-up and delivery scenario contemplated would in fact constitute unlawful local traffic. For purposes of this proposal “local traffic” will include the transportation of merchandise between two points in the United States when such merchandise has not had a prior movement from an origin (i.e., point of loading) outside the United States or will not be subsequently moved to a destination (i.e., delivery point) outside the United States) Id. (Emphasis added)

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, shall not engage in local traffic in the United States. The exception, set out in § 123.14(c)(1), states that such a vehicle “may carry merchandisebetween points in the United States if such carriage is incidental to the immediately prior or subsequent engagement of that vehicle in international traffic.” This regulatory provision further provides that, “[a]ny such carriage by the vehicle in the general direction of an export move or as part of the return of the vehicle to its base country shall be considered incidental to its engagement in international traffic.”

With respect to your inquiry, upon reviewing the scenario you pose, we note that the subject truck would qualify as an instrument of international traffic since it is arriving with merchandise destined to a point in the United States. (See 19 CFR § 123(a)) Upon dropping its original load and picking up its second load for partial delivery to another United States point and to Canada, the Canadian truck would be engaged in the simultaneous transportation of both local and international merchandise. As such, the movement of the truck would be characterized as local pursuant to Customs position as set forth in the Customs Bulletin of October 1, 1997, Vol. 31, No. 40, at p. 11.

However, given that the movement in question is considered to be local, and assuming, arguendo, that the entire load was to be delivered at the second United States destination located in a northerly direction, it would be a permissible movement in local traffic pursuant to § 123.14(c)(1) in view of the fact that it is immediately subsequent to the engagement of the vehicle in international traffic
and is part of the return of the vehicle to Canada. In consideration of these factors, and in view of the fact that this scenario does not include multiple pick-ups and deliveries in the United States with mixed local/international merchandise carried simultaneously as discussed above, the subject Canadian truck operating as described herein would not be in violation of § 123.14(c), Customs Regulations.

HOLDING:

The use of a Canadian-based truck as described in the above scenario is not violative of 19 CFR § 123.14(c).

Sincerely,

Larry L. Burton
Chief
Entry Procedures and Carriers Branch

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