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

HQ 114208 February 2, 1998 BOR-4-04-RR:IT:EC 114208 GEV CATEGORY: Carriers Bruce Caputo, Esq. Rockefeller Center Suite 1817 1270 Avenue of the Americas New York, New York 10020-1701 RE: Instruments of International Traffic; Canadian-based Trucks; Local Traffic; 19 U.S.C.  1322 Dear Mr. Caputo: This is in response to your letter dated November 5, 1997, on behalf of your client, Ray Bourbonnais and Son, Inc. ("Bourbonnais"), to Ms. Teri J. Johnson, Customs FP&F Officer in Ogdensburg, N.Y., requesting a ruling permitting the proposed use of Bourbonnais' trucks in local traffic in the United States. By memorandum dated December 16, 1997, Ms. Johnson forwarded your letter to this office for direct response. Our ruling on this matter is set forth below. FACTS: Bourbonnais is a Canadian-based trucking company which engages in the transportation of Canadian forest products into the United States. It has built a substantial customer base around its Quebec-to-New York business and will continue these inbound international shipments regardless of Customs position regarding its proposed local traffic on its return trips to Canada. With respect to the aforementioned proposal, Bourbonnais offers the following. Bourbonnais trucks will enter and leave the United States through Chateaugay, N.Y. Upon entry at Chateaugay these trucks will pick up Route 11 and proceed to their New York inbound destination by Route 190, to New York 87, to Interstate 95, to Route 295, to Route 495. The inbound cargo will be deposited in New York and the vehicles will return to Canada by the same route (using the very same highways in reverse sequence) to the Chateaugay border point where they will exit the United States. - 2 - After off-loading inbound cargo, the subject trucks plan to return by the same route, stopping at 232 Gardner Ave., Brooklyn, N.Y., a distance of about one half of one mile from the direct route highway, and collect a load destined to Chateaugay. Thereafter, the trucks will continue on the direct route to a point in Chateaugay where the load will be delivered to Kenentech Resource Recovery, RFD #1, Chateaugay, which is located about 8/10 of one mile from the direct route. From there, the vehicles will proceed along the direct route to the border point. With respect to the scheduling of these shipments, the trucks will enter the United States at Chateaugay every Monday night and arrive at their New York destination the next day, Tuesday, in the early afternoon. Early the following day, Wednesday, the trucks will begin the return trip to Quebec, stopping at 232 Gardner Ave., Brooklyn, N.Y., at 8:00 a.m. and proceeding directly to the Kenentech facility in Chateaugay for delivery of the Brooklyn load and then to the border point in Chateaugay that same day. Other vehicles will begin the same round trip itinerary on Wednesday and complete it the following Friday following the same sequence and route. Each phase of the trip will be at the same time, on the same day, every week of the year, except for one week when a delivery facility will be down for routine scheduled maintenance. ISSUE: Whether the proposed use of Canadian-based trucks as described in the above scenario would be violative of 19 CFR  123.14(c)(1). 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 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), 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)). Further- more, certain foreign-based vehicles engaged, in whole or in part, in the domestic carriage of merchandise that either originates from a location outside the United States or will be sub- - 3 - sequently moved to a destination outside the United States, or such vehicles moving without a payload between two points in the same country, shall be considered as engaged in international traffic. (See Customs Bulletin of October 1, 1997, Vol. 31, No. 40, at pp. 7-13.) 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)). 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 (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  123.12(a)(2) which allows use for such transportation as is directly 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 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  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. In those instances where merchandise has either not originated from outside the United States or will not be moved to a destination outside the United States, or where there is no movement without a payload between two points in the United States, 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. - 4 - With respect to your inquiry, we note that the use of Bourbonnais' Canadian-based vehicles as described in the scenario you pose would be engagement in "local traffic" within the meaning of  123.14(c) since the vehicles would be transporting merchandise between two points in the United States (Brooklyn and Chateaugay) which has not had a prior movement from an origin (i.e., point of loading) outside the United States or will not be subsequently moved to a destination (i.e., point of delivery) outside the United States. (See Customs Bulletin of October 1, 1997, Vol. 31, No. 40, at p. 11) Consequently, in order to be permitted local traffic within the meaning of  123.14(c)(1), this domestic movement of merchandise must be secondary to the international movement, must be pursuant to a regular international schedule, and must follow the same basic route as the merchandise moving in international traffic. The information you have provided leads us to conclude that these criteria would be met. Accordingly, the use of Bourbonnais' vehicles as proposed would not be prohibited by Customs administration of 19 CFR  123.14. Parenthetically, we note the statement in your letter that "...under the route now planned there will be no material departures from the direct route." Our holding in this case, as in any other ruling letter issued by Customs, is predicated upon a specific set of facts. (See 19 CFR  177.1(b)) You should know that any deviation from the facts considered herein renders inapplicable our decision in this case. HOLDING: The proposed use of Canadian-based trucks as described in the above scenario would not be violative of 19 CFR  123.14(c)(1). Sincerely, Jerry Laderberg Chief Entry Procedures and Carriers Branch