HQ 112559: Coastwise trade; 46 U.S.C. App. 883; Transportation of cattle; Hawaiian cattle transported to Canada; Open auction; Subsequent transportation to United States

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 112559

                        February 24, 1993


VES-3-06 CO:R:IT:C  112559 LLB

CATEGORY:  Carriers

Mr. Tom Mackay
Tom Mackay Livestock
P.O. Box 70
Hermiston, Oregon 97838

RE:  Coastwise trade; 46 U.S.C. App. 883; Transportation of cattle;
     Hawaiian cattle transported to Canada; Open auction;
     Subsequent transportation to United States

Dear Mr. Mackay:

     Reference is made to your letter of December 21, 1992, in
which you request that we rule on the transportation by non-
coastwise-qualified vessel of cattle from Hawaii to Canada under
circumstances which may involve the subsequent re-importation of
those same cattle into the United States.

FACTS:

     It is becoming an increasingly common occurrence that cattle
are transported from the State of Hawaii to British Columbia,
Canada, aboard non-coastwise-qualified vessels.  Customs does not
permit cattle so transported to be merely transshipped through
Canada and subsequently sent to points in the Continental United
States, whether by vessel or otherwise, without consequence under
the coastwise merchandise transportation statute, 46 U.S.C. App.
883, popularly known as the Jones Act.  The question now arises
whether any cattle so transported and entered, duty-paid under
Canadian law and sold at open auction, may be brought back into
the United States by third party purchasers without Jones Act
consequence.

ISSUE:

     Whether cattle transported by non-coastwise-qualified vessel
from Hawaii to Canada and entered duty-paid in that country may,
if sold at an open and free auction, be subsequently transported
to another United States location by a purchaser without incurring
a violation of 46 U.S.C. App. 883. 

LAW AND ANALYSIS:

     Section 27 of the Act of June 5, 1920, as amended (41 Stat.
999; 46 U.S.C. App. 883, often called the Jones Act), provides
that:

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          No merchandise shall be transported by water,          
           or by land and water, on penalty of
          forfeiture of the merchandise (or a monetary
          amount up to the value thereof...), between            
           points in the United States...embraced within the     
            coastwise laws, either directly or
          via a foreign port, or for any part of the
          transportation, in any other vessel than a 
          vessel built in and documented under the laws          
           of the United States and owned by persons who 
          are citizens of the United States....

     The plain meaning of the statute prohibits merchandise from
being transported on a non-coastwise-qualified vessel between
points in the United States.  The words "either directly or via a
foreign port" were inserted in the original statute (46 U.S.C. App.
883) by the Congress in 1893.  Congress, seeing how easily the
protection to American shipping would be vitiated by a simple
transshipment of the same cargo, inserted the words "either
directly or via a foreign port" to prohibit such transshipments.

     
     In determining whether merchandise which is transported from
one point in the United States to a point in a foreign country and
then to another point in the United States is subject to the
prohibition in section 883 by virtue of being transported between
coastwise points "via a foreign point," we have relied upon the
holding of the Supreme Court in The Bermuda, 70 U.S. 514 (1865). 
In that decision, the Supreme Court held that:

          A transportation from one coastwise point to another
          remains continuous, so long as intent remains           
          unchanged, no matter what stoppages or 
          transshipments intervene (70 U.S. at 553).  
          
The Supreme Court went on to reaffirm the longstanding rule that:

          ...[E]ven the landing of goods and payment of
          duties does not interrupt the continuity of
          the voyage of the cargo, unless there be an
          honest intention to bring them into the common
          stock of the country.  If there be an
          intention, either formed at time of original
          shipment, or afterwards, to send the goods
          forward to an unlawful destination, the
          continuity of the voyage will not be broken,
          as to the cargo, by any transactions at the
          intermediate port (70 U.S. at 554).
     



                              - 3 -


     The Attorney General of the United States relied upon The
Bermuda in his consideration of the applicability of section 883
to certain transportation.  In 34 Op. Atty. Gen. 335 (1924) (see
also, 32 Op. Atty. Gen. 350 [1920], concerning the transportation
of fish from Alaska to a United States point via Vancouver, British
Columbia, Canada), the Attorney General considered the
applicability of section 883 to the transportation of grain from
Chicago or Milwaukee to a Canadian port in non-coastwise-qualified
vessels.  The grain was unladen into an elevator where it remained
for an indefinite time until it was loaded into railroad cars for
transportation by rail to points in New England.  In some instances
the grain had already been sold for delivery at an American port
when it reached the Canadian port, while in other instances there
was an existing intent to ship the grain to the Canadian elevator
for storage in anticipation of demands for future deliveries for
domestic consumption in Canada, for export abroad, or for sale and
delivery in the United States.

     The Attorney General's opinion was requested as to whether
the transportation of the grain in the manner described violated
section 883.  As to grain which had been consigned through the
Canadian port to a point in the United States or which had been
shipped with the intention that the grain should ultimately be
shipped to a point in the United States, it was the Attorney
General's opinion "that such transportation is without a doubt in
violation of [section 883]" (34 Op. Atty. Gen. at 357).  When there
was no intent by the shipper to transship the grain to a United
States port or place, it was the Attorney General's opinion that
"only general rules of law may be laid down" (34 Op. Atty. Gen. at
362).  The general rule of law given by the Attorney General in
this case was that "the intention of the shipper is the controlling
factor" (34 Op. Atty. Gen. at 363). 
 
     The Attorney General also stated that:

          ...[W]hether the facts presented in any particular
          case come within such rules must be determined by the
          officer charged with the administration of that Act 
          (34 Op. Atty. Gen. at 362).

     The Customs Service is the agency "charged with the
administration" of section 883.  We have issued a number of rulings
on the applicability of section 883 to the transportation of
merchandise between coastwise points via a foreign port.  In these
rulings, we have held, as did the Supreme Court in The Bermuda,
that an "honest intention to bring the goods [transported] into the
common stock of the [intermediate foreign] country" is required to
break the continuity of transportation between coastwise points via
a foreign point.  We have held that     an intent to export
merchandise after its transportation from the 

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United States to an intermediate foreign port is not, by itself,
sufficient to break the continuity of the transportation when the
merchandise is transported onward from the intermediate foreign
port to a second point in the United States.  We have also held
that when, at the time of shipment of merchandise from the United
States to an intermediate foreign port, there existed the
expectation that a substantial portion of the merchandise would
not be consumed in the country of the foreign port, entry through
the foreign country's customs and payment of duty is not considered
to break the continuity of the transportation when any of the
merchandise is transported onward to a second point in the United
States.

     Turning to the case at hand, there is no manufacturing or
processing of the cattle when first unladen in Canada which breaks
the continuity of the transportation under section 4.80b(a). 
Although section 4.80b(a) is inapplicable to the facts of this case
because the cattle will not be manufactured into a new and
different product in Canada prior to their shipment to the United
States, it should be noted that we have held that cattle
transported from Hawaii to Canada and fattened to almost twice
their original weight also do not result in a new and different
product pursuant to 19 CFR 4.80b(a).  Thus, any subsequent
transportation of such cattle from Canada to the United States
would result in a violation of 46 U.S.C. App. 883. (Headquarters
Ruling Letter 111035, July 25, 1990).  Conversely, cattle
transported from Hawaii to Canada where they will be slaughtered,
dressed or packed etc., will result in a new and different product
pursuant to 19 CFR 4.80b(a) and subsequent transportation thereof
from Canada to the United States would not result in a violation
of 46 U.S.C. App. 883 (Headquarters Ruling Letter 111035, supra).
     
     In the present case, it is possible that some cattle, after
being brought into Canada with the honest intention that they be
introduced into the common stock of that country, will nonetheless
be purchased by buyers in the U.S. who are intent on importing such
cattle into the U.S.  As stated, the determination as to whether
46 U.S.C. App. 883 will apply to such a case rests upon whether or
not the merchandise in question was intended to become part of the
common stock of goods of a foreign country.  If such a circumstance
can be shown, it will be enough to break the continuity of the
transportation.  In Headquarters Ruling Letter 112246 (June 23,
1992), it was established that certain evidence will constitute
acceptable proof that such merchandise was indeed intended to be
introduced into the common stock of a country.  Such acceptable
evidence includes, but is not limited to:  shipping manifests;
foreign country customs and duty receipts; lists containing names
of purchasers of merchandise from said vessels indicating type and
quantity of such merchandise; auction notices or similar
publication documentation     - 5 -


evidencing the fact that such goods will be offered on the foreign
country's market; and an affidavit from a foreign purchaser
testifying that the goods are indeed intended to be introduced into
the common stock of that country.

HOLDING:

     As to the case in question, provision of the above enumerated
evidence will be sufficient to validate such a transaction and
insulate it from penalty under 46 U.S.C. App. 883.  

     This ruling letter does not address any other transactions or
questions which are essentially hypothetical in nature.  See 19 CFR
177.7.  This letter addresses only those federal requirements that
are administered by the U.S. Customs Service.  Although we are
unaware of any other federal or state agency requirements that
might pertain to the undertaking you describe, it is possible that
such requirements exist.  

                                Sincerely,




                                Acting Chief
                                Carrier Rulings Branch