BOR-4-04:RR:BSTC:CCR H214215 ALS
A.N. Deringer, Inc.
48 Customs Loop
Houlton, Maine 04730
RE: Instruments of International Traffic; Canadian-based Truck; 19 U.S.C. § 1322; 19 CFR 123.14(c)(1)
Dear Sirs: This is in response to your letter dated January 30, 2012, requesting a ruling on a proposed transportation of merchandise by your company. You specifically seek our clarification as to whether our ruling HQ H115635 is applicable to the scenario you propose, as discussed herein. Our ruling on this matter is set forth below. FACTS: Your company provides freight forwarding services to various clients involved in the transportation of goods between Canada and the United States. You present a scenario on which you seek our determination. A shipper, located in the United States, will export U.S.-manufactured merchandise from the United States to Canada, where it will be stored in a bonded warehouse under the custody of Canadian Border Services Agency (CBSA). Upon arrival at the Canadian port of entry, the shipment would be placed under bond for transportation within Canada to the bonded warehouse with the use of a Cargo Control Document (CCD). You note that at the point of being placed in the bonded warehouse, the merchandise is considered imported but not released from CBSA custody. At a future date, some of the previously-exported U.S.-manufactured merchandise is removed from the bonded warehouse and imported back into the United States under bond. Upon arrival at the port of exportation, the CBSA bond is satisfied. The merchandise is then transported to a port of entry within the United States, which you state “will normally be Houlton, Maine.” In all cases, the transportation will be done with Canadian-based trucks.
ISSUE: Whether the use of Canadian-based trucks as described in the above scenario is in violation of 19 CFR 123.14(c)(1).
LAW AND ANALYSIS: 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). The phrase “taking out” has long been interpreted as meaning destined to a foreign country and does not cover merchandise that has an intended destination of a second point in the United States. See, e.g., CBP Ruling HQ 112415 (September 22, 1992) and CBP Ruling HQ 111176 (September 12, 1990). Furthermore, certain foreign-based vehicles engaged, in whole or in part, in the domestic carriage of merchandise that either originate from a location outside the United States or will be subsequently 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 Vol. 31, No. 40, pp. 7-13 (October 1, 1997).
Section 123.14(c), CBP 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 "may carry merchandise… between points in the United States if such carriage is incidental to the immediately prior or subsequent engagement of that vehicle in international traffic." This regulatory provision further provides that, "[a]ny such carriage by the vehicle in the general direction of an export move or as part of the return of the vehicle to its base country shall be considered incidental to its engagement in international traffic."
We have previously held in a similar case that transportation of merchandise from the United States to Canada, and then subsequently back to the United States, with the use of Canadian-based trucks is violative of 19 CFR 123.14(c)(1). See CBP Ruling HQ 115635 (May 16, 2002). In HQ 115635, the merchandise was transported via a Canadian-based truck from one point in the United States to another point in the United States, with an intervening transportation of the merchandise to Canada. You contend that because the merchandise in this case is deemed “imported into Canada,” as a result of being transported under bond in Canada to a bonded warehouse until transported back into the United States, the present scenario is distinguished from HQ 115635. We find no such distinction, however. The status of the subject merchandise while being transported in Canada has no bearing on the nature of the transportation, which in this case is no different than what we ruled upon in HQ 115635. In both cases, merchandise was transported from the United States to Canada with the use of Canadian-based trucks, stored for an indeterminate length of time, and then subsequently transported back to the United States with the use of Canadian-based trucks. Thus, we find that our ruling in HQ 115635 is applicable to this case. Therefore, the proposed transportation would be violative of 19 CFR 123.14(c)(1).
HOLDING:
The use of Canadian-based trucks in the proposed scenario as discussed above is violative of 19 CFR 123.14(c)(1).
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection