HQ 112766: Instruments of International Traffic; Canadian-based Trucks; Local Traffic; 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 112766

                          July 8, 1993

VES-7-04-CO:R:IT:C 112766 GEV

CATEGORY:  Carriers

William H. Shawn, Esq.
Shawn, Mann & Niedermayer
1850 M Street, N.W. Suite 280
Washington, D.C. 20036

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

Dear Mr. Shawn:

     This is in response to your letter dated June 15, 1993, on
behalf of your client, Gershman Transport International Ltd.,
requesting a ruling concerning the proposed use of Canadian-based
trucks in the United States.  Your letter enclosed highway maps 
delineating the proposed use under consideration.  Our ruling on
this matter is set forth below.

FACTS:

     Gershman Transport International Ltd. ("Gershman") of
Winnipeg, Manitoba, Canada, conducts international transport
operations between the United States and Canada.  It holds
operating authority issued by the Interstate Commerce Commission
(ICC) and various Canadian provincial regulatory authorities.  It
provides scheduled and non-scheduled service between points in the
United States and Canada and presently conducts a number of
scheduled weekly international operations to and from various
points in the United States.  Presently, Gershman does not provide
any service for local traffic between points on these regularly
scheduled routes.  However, Gershman wishes to participate in
domestic U.S. traffic where such traffic is directly on the
currently existing international routes and where Gershman's
equipment transporting international merchandise shipments is
available for such limited participation.

     Gershman currently transports merchandise in international
traffic, in regularly scheduled weekly service, between Winnipeg,
Manitoba, Canada, and specified U.S. destinations on seven
specified routes.  The international origins and destinations of
those routes are as follows:


                              - 2 -

     Route No. 1:  Winnipeg, Manitoba - Oklahoma City, Okla.

     Route No. 2:  Winnipeg, Manitoba - Florida service
                   points (Apopka, Daytona Beach, Ft. Lauderdale,
                   Ft. Myers, Jacksonville, Miami, Orlando, 
                   Palm Beach, St. Petersburg, and Tampa)

     Route No. 3:  Winnipeg, Manitoba - Charlotte, N.C.

     Route No. 4:  Winnipeg, Manitoba - Sandersonville, Ga.

     Route No. 5:  Winnipeg, Manitoba - Los Angeles, Calif.

     Route No. 6:  Winnipeg, Manitoba - San Francisco and 
                   Sacramento, Calif.

     Route No. 7:  Winnipeg, Manitoba - Denver, Colo.

     Gershman's proposed local traffic would take place when their
trucks are engaged in the above scheduled weekly international
movements through locations on the current international routings. 
The proposed local traffic would include the following points on
the corresponding identified routes:

     Route No. 1:  Kansas City, Mo. - Omaha, Neb. - Sioux
                   City, Iowa - Fargo and Grand Forks,
                   N.D.

     Route No. 2:  Atlanta, Ga. - Nashville, Tenn. - Chicago,
                   Ill. - Milwaukee, Wisc. -  Minneapolis -
                   St. Paul, Minn.

     Route No. 3:  Charlotte, N.C. - Knoxville, Tenn. -  
                   Minneapolis - St. Paul, Minn. - Fargo, N.D.

     Route No. 4:  Atlanta, Ga. - Chattanooga, Tenn. -  
                   Nashville, Tenn. - Minneapolis - St. Paul,
                   Minn.

     Route No. 5:  Los Angeles, Calif. - Las Vegas, Nev. - 
                   Salt Lake City, Utah

     Route No. 6:  Oakland, Calif. - Reno, Nev. - Salt Lake
                   City, Utah

     Route No. 7:  Denver, Colo. - Grand Island, Lincoln and     
              Omaha, Neb. - Sioux City, Iowa 

     The domestic traffic points specified above which are located
on the existing, regularly scheduled routes are entirely dependent
upon the availability of scheduled international equipment
traversing such locations and available capacity on 

                              - 3 -

such trailers to handle any such domestic movements.  Domestic
freight is thus subject to equipment availability and capacity on
a "stand-by" basis.

     It is stated that customers located at such domestic points
are immediately adjacent to the present international routes
Gershman traverses.  Each such point includes existing
international traffic customers of Gershman.  Many such shipping
origins and destinations will involve international pick-ups or
deliveries to those same customers.

ISSUE:

     Whether the domestic movement of merchandise by Canadian-
based trucks as described above constitutes "local traffic"  within
the permitted exception set forth in 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, section
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 trucks in question are 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)).

     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
sections 123.14(a), (b), and (c)(1), Customs Regulations (19 CFR
123.14(a), (b), and (c)(1)).

     Section 123.14(c), Customs Regulations, states that with one
exception, a foreign-based truck, admitted as an instrument of
international traffic under section 123.14, shall not engage in  - 4 -

local traffic in the United States.  The exception, set out in
section 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 (19 CFR
123.14(c)(2)), 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 section 123.12(a)(2) which allows use for such transportation
as is directly incidental to its economical and prompt departure
for a foreign country.  Customs has interpreted this to mean in the
general direction of the country of origin, or to the home route
junction point, over a route which the equipment would otherwise
travel empty.  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 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 section 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 section
123.14, is subject to forfeiture under section 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 of 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. 

     It should be noted that the ICC licenses held by Gershman and
the applicable Customs regulations are easily reconciled.  The
former authorizes a carrier to transport general commodities
between points in the United States while the latter applies the
statutory requirements that govern such movements.



                              - 5 -

     In regard to the proposed local traffic under consideration,
we note that in all seven scenarios the domestic movement of
merchandise is pursuant to regularly scheduled (i.e., weekly)
international trips.  Furthermore, assuming arguendo, the lack of
any "backhauls" between domestic points during the itineraries
under consideration (which are not evident from the information
submitted), the proposed domestic routes as delineated on the
highway maps submitted indicate that the domestic movement of
merchandise would follow the same routes as the merchandise moving
in international traffic.  Accordingly, the local traffic in
question is in compliance with 19 CFR 123.14(c)(1).

HOLDING:

     The domestic movement of merchandise by Canadian-based trucks
as described above constitutes "local traffic" within the permitted
exception set forth in 19 CFR 123.14(c)(1).
     
                                   
                                   Sincerely,




                                   Acting Chief
                                   Carrier Rulings Branch