BOR-7-04-CO:R:IT:C 112809 GEV
Rebecca A. Raleigh
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402-3397
RE: Instruments of International Traffic; Base of Operations;
U.S. registration; 19 U.S.C. 1322
Dear Ms. Raleigh:
This is in response to your letter dated July 16, 1993,
requesting a ruling regarding the titling of Canadian vehicles in
the United States. Our ruling on this matter is set forth below.
FACTS:
A U.S. corporation purchases Canadian-manufactured trucks in
Canada where they are kept and from where they are dispatched for
use in the shipment of merchandise between Canada and the United
States. Although the trucks are used primarily in international
traffic, the U.S. corporate owner is exploring the possibility of
their being used in local traffic in Canada and/or the United
States. To that extent it is proposed to register the vehicles
in the United States.
ISSUE:
Whether U.S-owned and registered trucks that are kept in and
dispatched out of Canada are considered to have their "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, 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. In the event a vehicle is considered to
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be foreign-based it 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), and is
therefore 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)).
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 vehicle's base of
operations in and operate out of a certain location, and presents
sufficient evidence to support this intention, Customs will
generally determine that point to be his vehicle's base of
operations. In this regard it should be noted that Customs has
held that absent evidence to the contrary, a U.S. corporation
which leases, controls, and registers a Canadian-manufactured
tractor trailer in the United States, creates a rebuttable
presumption that the trailer is based in the United States
(Customs Ruling 110785 GV, dated October 12, 1990).
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.
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.
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Whether the use of an instrument of international traffic
constitutes a diversion from international traffic is based on
the facts of 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 facts under consideration, we note at the
outset that the titling of a vehicle is merely one of several
criterion Customs considers in determining a vehicle's base of
operations and consequently whether it is considered to come
within the purview of 123.14, Customs Regulations. The fact
that the trucks in issue would be U.S.-owned and registered
creates a presumption that they are based in the United States.
However, the fact that they are primarily kept in and dispatched
out of Canada effectively rebuts that presumption. As such, they
are considered to have their "principal base of operations in a
foreign country" within the meaning of 123.14(a), Customs
Regulations, and may operate in international traffic and local
U.S. traffic in accordance with the provisions of 123.14(a) and
(c), respectively. Parenthetically, we note that the use of
these vehicles in local Canadian traffic would be considered to
be a diversion from any international traffic in which they may
be engaged and would render effective the entry and duty
requirements discussed above.
We reiterate that mere titling of a Canadian-based vehicle
in the United States, without more, does not in and of itself
constitute an importation upon which duties would be imposed
pursuant to the HTSUS. The rationale behind this determination
is based on the judicial construction of the term "importation"
("...the bringing of goods within the jurisdictional limits of
the United States with the intention to unlade them." see
Treasury Decisions (T.D.'s) 42052 at 314, and 47632 at 601, and
cases cited therein) and Customs treatment of foreign yachts
brought into the United States during a shakedown cruise and for
obtaining repairs (see Astral Corp. v. United States, 72 Cust.Ct.
245, C.D. 4536 (1974) wherein the court held that such a yacht
was not imported for purposes of assessing duty because it was
not brought "permanently" into the United States). Accordingly,
absent a diversion from international traffic to unauthorized
local traffic (either in the U.S. or in Canada) as discussed
above, or evidence indicating an intent by the owner to bring the
subject vehicles into the United States on a permanent basis,
registering them in the United States would not render operative
the imposition of duty.
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HOLDING:
U.S.-owned and registered trucks that are kept in and
dispatched out of Canada are considered to have their "principal
base of operations in a foreign country" within the meaning of 19
CFR 123.14(a) and may engage in international traffic and local
traffic without the requirement of entry and payment of duty
provided they operate in accordance with the provisions of 19 CFR
123.14(a) and (c).
Notwithstanding the provisions of 19 CFR 123.14 discussed
above, and absent evidence to the contrary, the titling of U.S.-owned, Canadian-based trucks in the United States does not, in
and of itself, constitute an importation upon which duty would be
imposed pursuant to the HTSUS.
Sincerely,
Acting Chief
Carrier Rulings Branch