HQ 111753: Instruments of International Traffic; Canadian-based 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 111753

                        October 23, 1991

BOR-7-04-CO:R:IT:C 111753 GEV

CATEGORY:  Carriers

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

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

Dear Mr. Shawn:

     This is in response to your letter dated June 20, 1991, on
behalf of your client, Tippet-Richardson Limited, further
expounding on your letter of April 29, 1991, requesting a ruling
regarding the proposed use of Canadian-based trucks in the United
States.  Our ruling is set forth below.

FACTS:

     Tippet-Richardson Limited ("Tippet-Richardson") is a
Canadian-based motor contract carrier operating in the United
States under the Interstate Commerce Commission authority of
Allied Van Lines, Naperville, Illinois.  It conducts scheduled
and non-scheduled trips between the United States and Canada.

     Tippet-Richardson operates a weekly "West Coast Schedule
Run" on a set route from Toronto, Ontario, Canada to Tustin,
California.  The route originates in Toronto and loads/unloads in
Calgary, Alberta; Kamloops, British Columbia; Vancouver, British
Columbia and ultimately unloads in Tustin, California.  This
operation is conducted with specifically-designated drivers and
equipment.  Furthermore, the operation is run on a fixed weekly
schedule over a designated route regardless of any load
variations.

     In counsel's letter dated April 29, 1991, it was stated that
Tippet-Richardson proposes to add four United States stops on
the Toronto-Tustin route.  Specifically, the proposal included
the transportation of merchandise in local traffic on both the
inbound and return trips between Seattle, Washington, Portland,
Oregon, the San Francisco Bay Area, Fremont, California, and
Tustin.
                              - 2 -

     Based on the above representation of facts, Customs, in
ruling letter 111669 GEV, dated June 6, 1991, held that the
local traffic in question was in violation of section
123.14(c)(1) because "...although it would appear to occur
pursuant to regularly scheduled international trips, it cannot be
said to be directly incidental to the international schedule.
Specifically, the record does not support a finding that the
domestic movements between three of the United States ports in
question (Seattle, Portland, and Tustin) and the San Francisco
Bay Area (a non-specific destination) and Fremont follow the
same basic route as the merchandise moving in international
traffic (Canada-Tustin)."

     Upon receiving the above ruling, counsel for Tippet-
Richardson, by letter dated June 20, 1991, submitted additional
information, including highlighted maps, modifying their original
request.  This most recent information pertaining to this
proposal is as follows.

     Upon entering the United States from Vancouver, British
Columbia, Canada the trucks proceed on Interstate 5 south through
Washington, Oregon, and California until they reach Sacramento,
California.  At Sacramento, the trucks continue on Interstate 80
west until they reach the Interstate 680 junction.  They continue
south on Interstate 680 until they reach the Tippet-Richardson
terminal and warehouse facility in Fremont, California.  They
then unload any shipments destined to the Fremont area and then
load outbound shipments originating in Fremont.  After leaving
Fremont the trucks travel north on Interstate 680 until they
reach the Interstate 580 junction, which they take east until it
meets Interstate 5.  The trucks complete their route by traveling
south on Interstate 5 until they reach Tustin, California, where
they then load international shipments destined to Canada or
return empty to Canada.

     Tippet-Richardson proposes to add three stops on the
Toronto to Tustin route (we note that the April 29, 1991, request
stated four stops).  In most instances, these stops are for
partial truckload lots (i.e., smaller shipments, not a full van
load, and will usually share trailer space with other shipments,
including through international shipments moving from or to
Canada on the regularly scheduled service).  Specifically, it is
proposed to serve Seattle, Washington; Portland, Oregon; and
Silicon Valley locations in the south San Francisco Bay Area.
Such stops include Palo Alto, Sunnyvale, Cupertino, and Santa
Clara.

                              - 3 -

ISSUE:

     Whether there is a movement in local traffic in violation of
19 CFR 123.14(c)(1) when a Canadian-based tractor-trailer unit
operating in international traffic on a weekly schedule between
Toronto, Ontario, Canada and Tustin, California, transports
merchandise on both the inbound and return trips between Seattle,
Washington; Portland, Oregon; and Silicon Valley locations in the
south San Francisco Bay Area, including Palo Alto, Sunnyvale,
Cupertino and Santa Clara.

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 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)).

     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
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.

                              - 4 -

     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 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 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 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.

     It should be noted that the aforementioned ICC authority and
the applicable Customs Regulations are easily reconciled.  The
former authorizes a carrier to transport general commodities or
passengers between points in the United States, while the latter
applies the statutory requirements that govern such movements.

     In regard to the proposed domestic transportation, we
reiterate what was stated in our original ruling on this matter,
that is, although it would appear to occur pursuant to regularly
scheduled international trips, it cannot be said to be directly
incidental to the international schedule.  Specifically, the
record does not support a finding that the domestic movements
between the United States points in question (Seattle, Portland,
and Silicon Valley locations in the south San Francisco Bay Area
                              - 5 -

including Palo Alto, Sunnyvale, Cupertino, and Santa Clara)
follow the same basic route as the merchandise moving in
international traffic.  While it would appear in regard to
Seattle and Portland that the domestic route may follow the
international route in part, none of the Silicon Valley locations
in question are located on the existing regularly scheduled
international route as described in the modified ruling request.
Furthermore, it is stated that the partial truckload lots
"...will usually share trailer space with other shipments,
including international shipments..." (emphasis added)  This
leaves open the possibility that traffic which is solely
domestic may occur between U.S. points not located on the
international route.  Accordingly, the proposal in question
includes local traffic not within the permitted exception set
forth in section 123.14(c)(1).

HOLDING:

     There is a movement in local traffic in violation of 19 CFR
123.14(c)(1) when a Canadian-based tractor-trailer unit
operating in international traffic on a weekly schedule between
Toronto, Ontario, Canada and Tustin, California transports
merchandise on both the inbound and return trips between Seattle,
Washington; Portland, Oregon; and Silicon Valley locations in the
south San Francisco Bay Area, including Palo Alto, Sunnyvale,
Cupertino and Santa Clara.

                              Sincerely,




                              B. James Fritz
                              Chief
                              Carrier Rulings Branch