HQ 112116: Instruments of International Traffic; Canadian-based Truck Transiting the United States; 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 112116

                         March 16, 1992

BOR-7-04-CO:R:IT:C 112116 GEV

CATEGORY:  Carriers

J.A. Saquetti
J.A. Saquetti Transporting
5 Agate Rd., Unit 301
North York - Ontario - Canada M3M 2B2

RE:  Instruments of International Traffic; Canadian-based Truck
     Transiting the United States; 19 U.S.C. 1322

Dear Mr. Saquetti:

     This is in response to your undated letter requesting a
ruling regarding the proposed transportation of cars through the
United States by a truck owned by your company.  Our ruling is
set forth below.

FACTS:

     J.A. Saquetti Transporting is a Canadian-based car carrier
operating primarily in Ontario, Canada.  This carrier has been
contacted by prospective used car buyers from Central America
interested in buying cars from Canada.  This transaction would
involve the movement of cars by truck from Ontario to Central
America via the United States.  In transiting the United States
the truck carrying the cars would enter and exit the United
States at Niagara Falls, New York, and Laredo, Texas,
respectively.

ISSUE:

     Whether the transportation of merchandise by a Canadian-
based truck from Canada through the United States en route to
Central America constitutes local traffic in violation of 19 CFR
123.14(c)(1) and/or (2).

LAW AND ANALYSIS:

     Section 141.4, Customs Regulations (19 CFR 141.4), provides
that entry as required by title 19, United States Code, 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
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requirements for entry.  Since the Canadian-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), it is 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)).

     Generally speaking, 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 123.14(a), (b), and (c)(1), Customs
Regulations (19 CFR 123.14(a), (b), and (c)(1)).  It should be
noted, however, that in regard to truck tractors, whether they
stay connected to their respective trailers or separate, the same
restrictions set forth in the aforementioned regulatory authority
would nonetheless apply.

     Section 123.14(c), Customs Regulations, states that with one
exception, a foreign-based truck, admitted as an instrument of
international traffic under 123.14, shall not engage in local
traffic in the United States.  The exception, set out in
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, 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 123.12(a)(2)
which allows use for such transportation as is reasonably
incidental to its economical and prompt departure for a foreign
country.  Section 123.14(c)(2) applies only to trailers and not
to tractor-trailer units which, as stated above, are considered
trucks as that term is used in the Customs Regulations.

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     Section 10.41(d), Customs Regulations, which 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 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 123.14, is subject to forfeiture under 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 regulations promulgated pursuant to 19
U.S.C. 1322 discussed above, we note that Treasury Decision (T.D.
83-118), published in the Federal Register on May 25, 1983 (48 FR
23384) amended 19 CFR 123.12(a)(2) to provide that foreign
railroad equipment other than locomotives may be used on an
outward trip in such trains or for such local traffic as is
reasonably incidental to its economical and prompt departure for
a (any) foreign country.  The "outward" trip, then, would no
longer refer exclusively to a return trip to the country in which
the railroad equipment began its run.  The equipment might
return, or it might proceed to another foreign country.

     The purpose of the amendments to 19 CFR 123.12 set forth in
T.D. 83-118 was to allow a three country movement (Canada-U.S.-
Mexico, or reverse) of foreign locomotives and railroad equipment
in international traffic, and thus not subject those locomotives
or that equipment to formal entry or duty.  A conforming
amendment to 19 CFR 123.14(c)(2) cross-referencing 19 CFR
123.12(a)(2) was also contained in T.D. 83-118.  This conforming
amendment changed the wording of the local traffic exemption for
a foreign-based truck trailer from "...on the return trip to the
country from which it entered the United States..." to "...on its
departure for a foreign country..."  Notwithstanding the three
country movement above, the substance of the regulation, as
counsel suggests, remains essentially the same.

     In regard to the facts now under consideration, it is
apparent that the proposed three country movement of cars by a
Canadian-based truck from Ontario, Canada to Central America,
transiting the United States, does not involve the transportation

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of merchandise between points in the United States and is solely
a movement in international traffic.  Accordingly, there is no
movement in local traffic in violation of 19 CFR 123.14(c)(1)
and/or (2).

HOLDING:

     The transportation of merchandise by a Canadian-based truck
from Canada through the United States en route to Central America
does not constitute a movement in local traffic in violation of
19 CFR 123.14(c)(1) and/or (2).

                                   Sincerely,




                                   B. James Fritz
                                   Chief
                                   Carrier Rulings Branch