BOR-4-03/04-RR:IT:EC 114398 GEV
Rick Drinkwater
Manager, Multimodal Division
Yanke Group of Companies
2815 Lorne Ave.
Saskatoon, Saskatchewan, Canada S7J 0S5
RE: Instruments of International Traffic; Canadian-based Trucks;
Intermodal Transportation;
19 U.S.C. 1322
Dear Mr. Drinkwater:
This is in response to your letter dated June 24, 1998,
requesting clarification with respect to intermodal (i.e.,
truck/rail) movements of cargo from Canada to the United States.
Our ruling on this matter is set forth below.
FACTS:
Yanke Group of Companies ("Yanke"), a Canadian-based motor
carrier, seeks to utilize CP Railway service inbound and outbound
via Chicago, Illinois, to Canada and vice versa. The two
scenarios it is currently contemplating are as follows:
(1) A load originating in Canada is destined to the
U.S. (Bensenville, IL,
CP Terminal). Yanke would use the railway for
its linehaul into the
U.S. A Yanke truck would subsequently pick up
the load from the
rail and deliver it to Yanke's customer.
(2) A U.S. customer has two loads to be transported to
Canada. A Yanke
truck takes one load to the rail terminal and it
is railed to Canada.
The truck then returns to the customer to pick
up another load that is
transported to Canada by the truck.
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In both of the above scenarios, the Yanke truck would also
pick up a road load and deliver it in Canada.
ISSUE:
Whether the use of Canadian-based trucks in the intermodal
transportation of merchandise described above is violative of
123.14, Customs Regulations (19 CFR 123.14).
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 trucks in question are 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), they are 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)).
In addition, pursuant to 19 U.S.C. 1625(c)(1), Customs
published a notice in the October 1, 1997, Customs Bulletin,
Volume 31, Number 40, advising interested parties that Customs is
revoking all prior rulings inconsistent with its change in
interpretation of the Customs Regulations regarding the admission
into the United States of certain foreign-based trucks as
instruments of international traffic. The notice stated that
effective December 1, 1997, Customs position regarding this
matter is that whether the movement of such vehicles is
considered to be international or domestic for purposes of the
administration of 123.14, Customs Regulations (19 CFR 123.14)
is dependent upon the origin and destination of the merchandise
carried. Such vehicles engaged, in whole or in part, in the
carriage of merchandise originating in one country and
terminating in another country shall be considered to be engaged
in international traffic. In addition, the movement of such
vehicles without a payload between two points in the same country
shall not be considered a domestic movement.
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)).
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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.
With respect to your inquiry, you should know that Customs
recent change in interpretation set forth in the October 1, 1997,
Customs Bulletin cited above applies solely to truck traffic.
Intermodal (e.g., truck/rail or truck/vessel) movements of
merchandise, including the ones you pose, were not contemplated
by the petition Customs received from the American Trucking
Associations requesting the aforementioned interpretive change.
Consequently, the use of Yanke trucks in the intermodal scenarios
you pose would be violative of 19 CFR 123.14 inasmuch as the
subject trucks would be considered to be engaged in local traffic
(i.e., pickups and deliveries to and from the U.S. rail terminal)
not permitted within that regulatory authority.
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HOLDING:
The use of Canadian-based trucks in the intermodal
transportation of merchandise described above is violative of
123.14, Customs Regulations (19 CFR 123.14).
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch