HQ 112011: Instruments of International Traffic; Busses; Transfer Point; 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 112011

                        February 11, 1992

BOR-7-04-CO:R:IT:C 112011 GEV

CATEGORY:  Carriers

Dennis Friesen
Quick Coach Lines Ltd.
6975 - 18th Avenue
Burnaby, British Columbia, Canada V3N 4L1

RE:  Instruments of International Traffic; Busses; Transfer
     Point; 19 U.S.C. 1322

Dear Mr. Friesen:

     This is in response to your letters dated November 18, 1991,
and January 23, 1992, regarding a proposed extension of your
existing bus service between the United States and Canada.  Our
ruling on this matter is set forth below.

FACTS:

     Quick Coach Lines, a Canadian-based carrier, has been
operating as a public service transportation company since August
1, 1987.  After considerable research Quick Coach Lines
discovered that many Canadian travel agents were booking their
clients on flights departing from Bellingham International
Airport and Seattle-Tacoma International Airport.  At that time
there was no direct means of transportation for these Canadian
passengers traveling from Vancouver, British Columbia, Canada to
the United States, and return.

     In response to this needed service, Quick Coach Lines has
established a daily schedule of six (6) busses traveling south
from Vancouver to Seattle-Tacoma and the same schedule traveling
northbound.  To date the company has completed approximately
5,675 round trips.  In 1992 it is estimated that the company will
complete an additional 2,880 round trips from the Vancouver
area.

     In 1990 Quick Coach Line learned that Canadian travel agents
in the Fraser Valley of British Columbia were booking their
clients on flights departing from Bellingham International
Airport and Seattle-Tacoma International Airport.  There is
currently no direct means of transportation from this area to the
United States.  The Fraser Valley has a population of
                              - 2 -

approximately 200,000 people and Quick Coach Lines proposes to
offer the same service to the people in this area as it offers
the people in the Vancouver area.  The details of this proposal
are set forth below.

     1)  Passengers would board the shuttle bus from various
areas in the Fraser Valley of British Columbia.

     2)  The passengers would receive a ticket which identifies
them as traveling to Bellingham International Airport, Downtown
Seattle, or the Seattle-Tacoma International Airport.

     3)  The Fraser Valley shuttle bus will cross the U.S.-Canada
border at the Sumas, Washington, or Lynden, Washington, ports of
entry.  Customs hours of operation will determine which border
crossing will be used.  These border crossings would allow the
most direct route.

     4)  Dispatch notifies the driver traveling the current
route (Vancouver to Seattle-Tacoma International Airport) of the
passenger count on the Fraser Valley shuttle bus.

     5)  At Bellingham International Airport the passengers
traveling to Downtown Seattle or the Seattle-Tacoma International
Airport would then transfer from the shuttle bus to the
Vancouver-Seattle-Tacoma Airport bus.  They would then continue
along the current regular route being used by Quick Coach Lines
until they arrived at Downtown Seattle and the Seattle-Tacoma
International Airport.

     6)  The same system would apply for the return portion of
the trip.  Only passengers traveling from Canada to the United
States or vice versa will be authorized to transfer busses.  All
authorized passengers will be accounted for and confirmed by two-
way radio communication.

ISSUE:

     Whether there is a movement in "local traffic" in violation
of 19 CFR 123.14(c)(1) when a Canadian-based bus company
operating a regularly scheduled international service between
Vancouver, British Columbia, Canada, and Seattle-Tacoma
International Airport, extends that service by operating a
shuttle bus between the Fraser Valley of British Columbia which
picks up passengers in Canada and transports them into the United
States to Bellingham International Airport where they will
transfer to the Vancouver - Seattle-Tacoma International Airport
bus already on its regularly scheduled international route.

                              - 3 -

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 busses 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, busses 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)).  Customs has
long interpreted the phrase "taking out" as meaning destined to a
foreign country and does not cover passengers and/or merchandise
whose intended destination is a second point in the United
States.

     Section 123.14(c), Customs Regulations, states that with one
exception, a foreign-based bus, 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.  For purposes
of section 123.14, Customs interprets the term "local traffic in
the United States" as referring to the transportation of
passengers or merchandise between any two points in the United
States.

     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 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
                              - 4 -

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).

     The Customs Simplification Act of 1953 (Pub. L. 67-243)
added section 322 to the Tariff Act of 1930 (19 U.S.C. 1322) to
grant to international traffic the generally recognized customary
exceptions from Customs requirements.  Although 19 U.S.C. 1322
does not define "customary exceptions," the legislative history
is explicit in stating that the customary exceptions referred to
are those mentioned in the "United States Import Duties" (1952),
at page 269.  Senate Report No. 632, 83rd Congress, 1st Session,
page 12, states "It (19 U.S.C. 1322) does not change the
customary exceptions as set out in...United States Import Duties
(1952) p. 269."  The intent of Congress is also apparent from
House Report No. 760, 83rd Congress, 1st Session, page 13.  These
provisions now appear, essentially without change, in sections
10.41(d) and 123.14 referred to above.

     It is noted that although Public Law 98-573, section 127(b)
(effective October 30, 1984) amended 19 U.S.C. 1322(a) by
substituting the words "shall be excepted" for "shall be granted
the customary exceptions", the legislative history of this
amendment clearly states that its purpose is to provide for the
duty-free entry of repair parts, accessories and equipment of
temporarily admitted containers thereby bringing United States
treatment into conformity with the Customs Convention on
Containers, 1972.

     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 and/or
passengers in international traffic is the key; the domestic
movement of merchandise and/or passengers 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 and/or
passengers moving in international traffic.

     In regard to the proposal under consideration, we note that
the shuttle bus is engaging solely in international traffic
(Canada - Bellingham International Airport).  The local traffic
in question (Bellingham - Seattle-Tacoma International Airport)
is performed by a bus that is currently operating on its
regularly scheduled international route and this domestic
movement follows the same basic route as the passengers moving in
international traffic (Vancouver - Seattle-Tacoma International
Airport).  Accordingly, the proposal as described above would not
constitute a violation of 19 CFR 123.14(c)(1).

                              - 5 -

HOLDING:

     There is no movement in "local traffic" in violation of 19
CFR 123.14(c)(1) when a Canadian-based bus company operating a
regularly scheduled international service between Vancouver,
British Columbia, Canada, and Seattle-Tacoma International
Airport, extends that service by operating a shuttle bus between
the Fraser Valley of British Columbia which picks up passengers
in Canada and transports them into the United States to
Bellingham International Airport where they will transfer to the
Vancouver - Seattle-Tacoma International Airport bus already on
its regularly scheduled international route.


                                   Sincerely,




                                   B. James Fritz
                                   Chief
                                   Carrier Rulings Branch