HQ 111556: Canadian-based Trucks; Instruments of International 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 111556

                         April 16, 1991


BOR-7-04-CO:R:IT:C 111556 GEV

CATEGORY:  Carriers

K. Wayne McIntosh
President
Pacific Northwest Carriers, Inc.
#210 - 13060 - 80th Ave.
Surrey, B.C., Canada V3W 3B2

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

Dear Mr. McIntosh:

     This is in response to your letter dated February 20, 1991,
requesting a ruling regarding certain movements of your company's
tractor-trailer units.  Our ruling on this matter is set forth
below.

FACTS:

     Pacific Northwest Carriers, Inc., ("Pacific") a trucking
firm located in Surrey, British Columbia, Canada, provides a
service of transporting freight between Vancouver, British
Columbia, and Los Angeles, California.  After the southbound
freight is unloaded, the empty trailers are taken to a terminal
where they are reloaded and then subsequently hauled back to
Burnaby, B.C., a suburb of Vancouver.  Approximately 6-10 trailer
loads are transported from Los Angeles to Burnaby every Friday.

     Due to various factors, including changing market
conditions, free trade, and an unstable economy, Pacific is now
running as high as five empty southbound trucks per week to Los
Angeles.  During the month of January, 1991, the total empty
trailers were as follows:  Vancouver to Los Angeles, 9 empty
trailers, 1242 empty miles each; Portland, Oregon, to Los
Angeles, 9 empty trailers, 922 empty miles; San Francisco to Los
Angeles, 3 empty trailers, 380 empty miles.  In order to offset
lost revenues, and in view of the fact that its trailers are sent
loaded or empty on a scheduled service, Pacific requests a ruling
permitting their trailers to be loaded in the U.S. on the
southbound direct route, or within 35 miles thereof, for the
transportation of freight to other U.S. points on that route.
                              - 2 -

ISSUE:

     Whether there is a movement in "local traffic" not within
the permitted exceptions of 19 CFR 123.14(c)(1) when, during the
course of a regularly scheduled international trip, a Canadian-
based tractor-trailer unit transports merchandise loaded at one
U.S. point either on the direct southbound route, or within 35
miles thereof, to another U.S. point on that route.

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 vehicles 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 passengers and/or merchandise
destined for points in the United States, or arriving empty or
loaded for the purpose of taking passengers and/or 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.

     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
local traffic in the United States.  The exception, set out in
section 123.14(c)(1), states that such a vehicle, while in use in
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.


                              - 3 -

     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 provided by section 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 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 therefor 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 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.

     In regard to the facts under consideration, it is apparent
that Pacific's Vancouver-Los Angeles service is regularly
scheduled  within the meaning of section 123.14(c)(1). 
Accordingly, Pacific trailers will be permitted to load on the
direct southbound route for the purpose of transporting
merchandise to other U.S. points on that route. (emphasis added) 
The loading of these trailers at points not on the direct route
(e.g., at a point within 35 miles of the direct route as
suggested by Pacific) and their subsequent transportation to
other U.S. points constitutes local traffic not within the
permitted exceptions set forth in sections 123.14(c)(1) and (2).

HOLDING:

     There is a movement in "local traffic" within the permitted
exception of 19 CFR 123.14(c)(1) when, during the course of a
regularly scheduled international trip, a Canadian-based tractor-
trailer unit transports merchandise loaded at a U.S. point on the
direct southbound route to another U.S. point on that route.   - 4 -

The loading of merchandise at other than a point directly on the
route of the regularly scheduled international trip and
subsequent transportation to a different U.S. point constitutes a
violation of 19 CFR 123.14(c)(1).

                                   Sincerely,




                                   B. James Fritz
                                   Chief