HQ 115635 - Instruments of International Traffic; Canadian-based Truck; 19 U.S.C. § 1322 - United States International Trade Commision Rulings

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HQ 115635

May 16, 2002

BOR-4-04-RR:IT:EC 115635 GEV

CATEGORY: CARRIER

Peter C. Baird
Baird & Associates
11 Echo Street West
Cayuga, Ontario, Canada N0A 1E0

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

Dear Mr. Baird:

This is in response to your letter dated March 13, 2002, with enclosures, requesting a ruling on a proposed transportation of merchandise by your company. Our ruling on this matter is set forth below.

FACTS:

Your company provides international and domestic trade facilitation services to various clients involved in the transportation of goods. You represent a number of motor carriers who transport a large volume of just-in-time (JIT) shipments for the automotive and other related industries.

Since the tragedy of September 11, 2001, and the resultant need for increased security at the Canada – United States borders, the JIT shipments have suffered delays in origin to destination transit times. As a result of this, the producers and consumers of these shipments are looking for ways to re-establish the speed and efficiency of their JIT shipments. The transportation scenario you propose is set forth below.

Shipper A, located in the U.S., calls Carrier B for a pick-up of a truckload of goods (Auto parts). The good are consigned to Shipper A in care of Carrier B,
and are to be transported to Carrier B’s Canada Customs Bonded Warehouse/Facility at Ingersoll, Ontario, pending further Direction from Shipper A, as to the ultimate consignee and destination.

While in-transit to, or shortly after arrival at, Carrier B’s facility in Ingersoll, Ontario, Shipper A determines the ultimate destination of the truckload of goods, (Auto- parts) to be Consignee C, at another point in the U.S.

The Shipper, Carrier and Consignee, for logistical reasons, wish to determine the most efficient procedure to accommodate this movement of goods from Origin to Ingersoll, and from Ingersoll to the ultimate destination.

You have been advised by the Canada Customs and Revenue Agency (CCRA), that the original shipment from Shipper A, (Shipper A in care of Carrier B at Carrier B’s facility in Ingersoll), can move from the entry point into Canada, on a Cargo Control Document (CCD) in-bond to Carrier B’s facility. Following the direction from Shipper A as to the ultimate destination, the shipment would then move on a new CCD, or other document, from Carrier B’s facility in Ingersoll to the exit point from Canada, to the ultimate destination in the U.S. In this case the second CCD would be referenced to the original in-bond CCD and would cancel the in-bond CCD. In this example, the goods would never be out of CCRA control while in Canada.

ISSUE:

Whether the use of Canadian-based trucks as described in the above scenario is violative of 19 CFR § 123.14(c)(1).

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), 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, 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.)

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.”

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 § 123.14(c), is subject to treatment as an importation of merchandise from a foreign country and a regular Customs entry therefore shall be made. Section 123.14(d), Customs Regulations provides that any vehicle used in violation of § 123.14, is subject to forfeiture under § 592, Tariff Act of 1930, as amended (19 U.S.C.

With respect to your inquiry, upon reviewing the scenario you pose, we reiterate that it is Customs position that whether the movement of foreign-based trucks is considered to be international or domestic for purposes of the administration of § 123.14 is dependent upon the origin and destination of the merchandise carried. Such vehicles engaged, in whole or in part, in the carriage of merchandise originating in one country and terminating in another country shall be considered to be engaged in international traffic. (See Customs Bulletin of October 1, 1997, Vol. 31, No. 40, at pp. 7-13). Your client’s vehicle(s) would be engaged in the carriage of merchandise originating in one country (USA) and terminating at another location in the same country (USA) that is the ultimate destination of the merchandise being carried, albeit with an intervening stop in a different country (Canada). As such, the vehicle(s) would not be considered to be engaged in international traffic and their use as proposed would be an engagement in “local traffic” in violation of 19 CFR § 123.14(c)(1).

HOLDING:

The use of a Canadian-based truck as described in the above scenario is violative of 19 CFR § 123.14(c)(1).

Sincerely,

Larry L. Burton

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