HQ 111764: Instruments of International Traffic; Local Traffic; Trucks; 19 U.S.C. 1322

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 111764

                        October 25, 1991

BOR-7-04-CO:R:IT:C 111764 GEV

CATEGORY:  Carriers

Clifford A. Priest
Senior Consultant
Livingston Consulting Group
405 The West Mall
Toronto, Ontario, Canada M9C 5K7

RE:  Instruments of International Traffic; Local Traffic; Trucks;
     19 U.S.C. 1322

Dear Mr. Priest:

     This is in response to your letter dated June 13, 1991,
enclosing copies of regulations published by Revenue Canada,
Customs and Excise, regarding the possible use of Canadian trucks
in the United States.  Our ruling on this matter is set forth
below.

FACTS:

     Livingston Consulting Group represents a large Canadian
company which operates their own tractor-trailer units carrying
their own merchandise into the United States and in some
instances, return loads of their own merchandise to Canada.  This
company is interested in the position of the U.S. Customs Service
regarding various movements of Canadian trucks in the United
States.  Specifically, the company would like to operate under
the following four examples.

     1.  Loaded exiting Canada at Fort Erie/Buffalo for
     Cincinnati delivery.  Delivers Cincinnati and picks up
     company-owned product at Findlay, Ohio, for delivery to
     Detroit.  Delivers at Detroit and picks up merchandise for
     delivery to London, Ontario, Canada.

     In each part of this round trip the Canadian or U.S. parent
     company own the goods carried and pays transportation costs.

     2.  Loaded exiting Canada at Fort Erie/Buffalo and delivers
     load to Erie, Pa.  After delivery picks up load at Erie for
     delivery at Buffalo, N.Y., then picks up load at Buffalo for
     delivery to Toronto, Ontario, Canada.
                              - 2 -

     3.  Loaded exiting Canada at Fort Erie/Buffalo for delivery
     to Cincinnati, Ohio, picks up load at Cincinnati for
     delivery to Chicago, Il., picks up loads at Gary, Indiana,
     and Grand Rapids, Michigan, and enters Canada at Detroit/
     Windsor and delivers both part loads in Canada.

     4.  Loaded exiting Canada at Fort Erie/Buffalo, delivers
     load at Buffalo, goes empty to Cleveland, picks up for
     Buffalo delivery and then picks up at Buffalo for delivery
     in Canada.

ISSUE:

     Whether the movements of Canadian trucks in the United
States as described above constitute local traffic in violation
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 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 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)).

     Generally speaking, a foreign truck tractor which arrives in
the United States in international traffic towing a foreign
trailer, either empty or loaded, constitutes a foreign "truck" as
that term is used in 123.14(a), (b), and (c)(1), Customs
Regulations (19 CFR 123.14(a), (b), and (c)(1)).  It should be
noted, however, that in regard to truck tractors, whether they
stay connected to their respective trailers or separate, the same
restrictions set forth in the aforementioned regulatory authority
would nonetheless apply.

                              - 3 -

     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, while in use on a
regularly scheduled trip, may be used in local traffic that is
directly incidental to the international schedule.

     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.

     Section 123.14(c)(2), Customs Regulations, provides that a
foreign-based truck trailer admitted as an instrument of
international traffic may carry merchandise between points in the
United States on the return trip as provided by 123.12(a)(2)
which allows use for such transportation as is directly
incidental to its economical and prompt return to the country
from which it entered the United States.  Section 123.14(c)(2)
applies only to trailers and not to tractor-trailer units which,
as was stated earlier, are considered trucks as that term is used
in the Customs Regulations.

          Section 10.41(d), Customs Regulations, which 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. 1592).

     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.

     Upon reviewing the information provided, we note that
Examples 1-4 each involve the use of Canadian vehicles in
transporting merchandise between points within the United States
(i.e., Findlay, Ohio-Detroit; Erie-Buffalo; Cincinnati-Chicago;
Cleveland-Buffalo).  Assuming, arguendo, the applicability of 19
CFR 123.14 (the record is devoid of any evidence regarding the
vehicles' base of operations) such local traffic would be in
                              - 4 -

violation of 19 CFR 123.14(c)(1) unless it is directly incidental
to a regularly scheduled international trip.  Absent specific
evidence regarding the schedules and routes of the trucks in
question (none of which is provided in the requesting letter),
such local traffic would not be permitted.  The fact that the
vehicles in question would be carrying merchandise owned by the
same company that owns them is irrelevant for purposes of the
administration of 19 CFR 123.14.

     We further note that notwithstanding the transportation of
merchandise in local traffic, Example 4 also involves the
repositioning of an empty trailer from one U.S point to another
for loading and subsequent hauling back to Canada.  This activity
does not constitute a diversion of the vehicle from international
traffic to local traffic provided it occurs along the truck's
regularly scheduled international route.

     You are correct in your assumption that any questions
regarding the use of Canadian drivers are within the jurisdiction
of the U.S. Immigration and Naturalization Service.  We defer to
that agency regarding that matter.

HOLDING:

     Absent evidence to the contrary, the movements of Canadian
trucks in the United States as described above constitute local
traffic in violation of 19 CFR 123.14(c)(1).

                              Sincerely,




                              B. James Fritz
                              Chief
                              Carrier Rulings Branch