BOR-7-04-CO:R:P:C 110785 GV
Emery W. Ingalls
District Director
U.S. Customs Service
312 Fore Street
Post Office Box 4688
RE: Entry requirements for foreign-owned, U.S.-leased and U.S.-
registered tractor trailers
Dear Mr. Ingalls:
This is in reference to your memorandum dated January 12,
1990 (your ref: 89-0106-00063) seeking advice on the
interpretation of the applicable Customs Regulations regarding
the entry requirements for foreign-owned, U.S. leased and U.S.
registered tractor trailers. Our advice is set forth below.
FACTS:
Gemini Transportation (Gemini) of Greensburg, Pennsylvania,
leases a Canadian-made tractor trailer from C.M. Trucking Ltd. of
Shubenacadie, Nova Scotia, Canada. Gemini registers the tractor
trailer in Pennsylvania and it carries Pennsylvania plates. C.M.
Trucking Ltd. is owned by Carl McNea, the driver, who resides in
Shubenacadie, Nova Scotia, Canada.
ISSUES:
Whether a foreign-owned, U.S.-leased and U.S.-registered
tractor trailer is considered to have its "principal base of
operations in a foreign country" within the meaning of 19 CFR
123.14(a).
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 tractor
trailer in question is not subject to one of the exemptions
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listed under General Note 4, Harmonized Tariff Schedule of the
United States (HTSUS; Pub. L. 100-418, effective January 1,
1989), it is subject to entry and payment of any applicable duty.
Instruments of international traffic enter the United States
without the filing of a Customs entry and free of duty under the
provisions of 19 U.S.C. 1322. To qualify as instruments of
international traffic, vehicles having their "principal base of
operations in a foreign country" must be arriving in the United
States with merchandise or passengers destined for points in the
United States, or arriving empty or loaded for the purpose of
taking merchandise or passengers out of the United States (see
section 123.14(a), Customs Regulations (19 CFR 123.14(a)).
Customs' determination as to a vehicle's base of operations
is based on the evidence in each case. If an operator has the
demonstrated intention to establish his base of operations and
operate out of a certain location, and presents sufficient
evidence to support this intention, Customs will generally
determine that point to be his base of operations.
Section 123.14(c), Customs Regulations, states that with one
exception, a foreign-based truck, bus, and taxicab 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.
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.
In regard to trailers, it is Customs view that they remain
in international traffic until they reach the point of complete
unlading on the inward trip. They may not, however, be used to
carry merchandise between points on the inward trip unless they
are in use on a regularly scheduled international trip. 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 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 are considered trucks as
that term is used in the Customs Regulation.
Section 10.41(d), Customs Regulations (19 CFR 10.41(d)),
provides, in pertinent part, that any foreign-owned vehicle
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brought into the United States for the purpose of carrying
merchandise or passengers 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.
In regard to the facts under consideration, it is our
opinion that a Pennsylvania corporation which leases, controls,
and registers a Canadian-built tractor trailer in Pennsylvania,
creates a rebuttable presumption that it is based in the United
States. Absent evidence to the contrary, we so hold.
Consequently, as to section 123.14, the provisions therein would
be inapplicable. The tractor trailer would not be subject to
formal Customs entry and payment of applicable duty provided its
use is restricted solely to international traffic.
It should be noted, however, that notwithstanding the
inapplicability of section 123.14, in view of the fact that the
tractor trailer is Canadian-owned, it may be in violation of
section 10.41(d) if it carries merchandise between points in the
United States for hire or as an element of a commercial
transaction without having made a formal Customs entry. Failure
to make entry in this situation, just as failure to enter a
foreign-based vehicle before use in local traffic in violation of
section 123.14(c), is subject to penalty under 19 U.S.C. 1592
(See sections 10.41(d) and 123.14(d)).
Furthermore, if a vehicle is considered to be U.S.-based
thereby rendering section 123.14 inapplicable, and if such a
vehicle is not in violation of section 10.41, failure to comply
with the report of arrival requirements set forth in 19 U.S.C.
1433(b), would result in the assessment of penalties pursuant to
19 U.S.C 1436, as amended.
We note that section 123.16 applies not only to vehicles of
foreign origin which were entered when first imported prior to
their sale and registration in the United States, but also to any
vehicle operating in international traffic.
HOLDING:
Absent evidence to the contrary, the fact that a tractor
trailer is foreign-owned, U.S.-leased and U.S.-registered creates
a rebuttable presumption that its principal base of operations is
in the United States thereby rendering inapplicable the
provisions of 19 CFR 123.14. The tractor trailer would not be
subject to formal Customs entry and payment of applicable duty
provided its use is restricted solely to international traffic.
Notwithstanding the inapplicability of section 123.14,
pursuant to section 10.41(d), any foreign-owned vehicle brought
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into the United States for the purpose of carrying merchandise or
passengers between points in the United States for hire or as an
element of a commercial transaction, is subject to treatment as
an importation of merchandise from a foreign country and a
regular Customs entry therefor shall be made. Failure to so
enter may result in penalties being incurred under 19 U.S.C.
1592.
Sincerely,
B.James Fritz
Chief
Carrier Rulings Branch