BOR-7-04-CO:R:P:C 111285 GEV
William J. Hirsch, Esq.
Hirsch & Sachs
69 Delaware Ave., Suite 603
Buffalo, New York 14202
RE: Instruments of International Traffic; Canadian-based
Tractors; U.S.-based Trailers; 19 U.S.C. 1322
Dear Mr. Hirsch:
This is in response to your letter dated August 28, 1990
(your file 1366/1) on behalf of your client, a Canadian company,
to Mr. Carlton Brainard, District Director of Customs, Buffalo,
New York, regarding the limitations on the use of U.S.-based
trailers in international traffic. Mr. Brainard has forwarded
your letter to us for direct response. Our ruling is set forth
below.
FACTS:
A Canadian company intends to purchase commercial trailers
in the United States in the name of a new U.S. corporation, to be
set up for the purpose of acquiring and licensing such U.S.-
purchased trailers. The Canadian company does not intend to have
situs of operations in the United States, but will maintain an
"office" in one of the U.S. states, to receive mail and otherwise
conduct the business of purchasing U.S. trailers for
international use.
Once the above arrangement has been concluded, the Canadian
carrier intends to engage in international traffic, utilizing
Canadian-based tractors registered in Canada to combine with the
allegedly U.S.-based trailers, acquired in the manner described
above. With such combined tractor-trailer units, the carrier
intends to engage in international traffic in both directions.
That is, the carrier will pick up shipments originating in
Canada, and destined for points in the United States, and will
make the delivery of such shipments with the combined equipment
described above. Alternatively, the carrier will pick up
shipments in the United States for transportation to points in
Canada. There will be occasions when the equipment will move
empty in one direction or another, but the goal will be to fill
- 2 -
the equipment with northbound and southbound shipments to utilize
the equipment in the most efficient manner. However, these
shipments will always be international in character. The carrier
is aware that it cannot use the aforementioned tractor-trailer
units in local traffic within the United States.
There will be occasions when the allegedly U.S.-based
trailers may be retained in Canada for lengthy periods, up to 6
months or more. The carrier is anxious to learn whether that
lengthy detention will in any way impact on the characterization
of the trailer as being "U.S.-based." The carrier is also
anxious to learn if it will encounter any objections upon
entering the United States from Canada, with the combination of
equipment as described above.
ISSUES:
1. Whether a trailer which remains in Canada for lengthy
periods of up to 6 months or more may be considered to be U.S.-
based for purposes of 19 CFR 123.14.
2. Whether a Canadian-based tractor is prohibited by 19 CFR
123.14 from towing a U.S.-based trailer in the United States.
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 equipment
in question is not subject to one of the exemptions 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 if not
specifically exempted by law and regulations.
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
- 3 -
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 foreign-based 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
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 Canadian company which purchases truck trailers in
the United States in the name of a U.S. corporation which has
them licensed in the U.S. creates a rebuttable presumption that
the trailers are based in the United States. We note, however,
that the keeping of these trailers in Canada for periods of up to
6 months or more constitutes sufficient evidence to rebut the
aforementioned presumption. This is so especially in view of the
fact that it was previously stated that this equipment would be
used in the most efficient manner which would indicate that these
- 4 -
trailers would not be sitting idle during the time they are in
Canada, but would in fact be dispatched to various Canadian
locations from a point in Canada. Consequently, these trailers
would be considered to be Canadian-based during the lengthy
periods of time they remain in Canada and as to section 123.14,
the provisions therein would be applicable. We reiterate,
however, that the tractor-trailer units in question would not be
subject to formal Customs entry and payment of applicable duty
as long as they remain in international traffic.
HOLDINGS:
1. In the absence of evidence to the contrary, a trailer
which remains in Canada for lengthy periods of up to 6 months or
more is presumed to be Canadian-based during that period for
purposes of 19 CFR 123.14.
2. A Canadian-based tractor is not prohibited by 19 CFR
123.14 from towing a U.S.-based trailer in the United States
provided the tractor-trailer unit remains in international
traffic, or falls within the exception for local traffic set
forth in 19 CFR 123.14(c)(1).
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch