Instruments of International Traffic; Canadian-based Trucks; Canadian-based Trailers; U.S.-based Trucks; U.S.-based Trailers; 19 U.S.C. § 1322; 19 C.F.R. §§ 123.14(c)(1), 123.14(c)(2), and 123.16.

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H242646 September 13, 2013 BOR-4-04-OT:RR:BSTC:CCR HQ H242646 WRB CATEGORY: Carriers Mr. Brian Rasperger Novelis Corp. 3560 Lenox Road, Suite 2000, Atlanta, GA 30326 RE: Instruments of International Traffic; Canadian-based Trucks; Canadian-based Trailers; U.S.-based Trucks; U.S.-based Trailers; 19 U.S.C. § 1322; 19 C.F.R. §§ 123.14(c)(1), 123.14(c)(2), and 123.16. Dear Mr. Rasperger: This is in response to your May 8, 2013, ruling request regarding whether the proposed use of U.S.-based and Canadian-based trucks and trailers to carry merchandise is permissible under 19 U.S.C. § 1322 and 19 C.F.R. § 123.14 and 123.16. Our ruling is set forth below. FACTS The Novelis Corp. (hereinafter “Novelis”), contemplates transportation of merchandise loaded onto Canadian-based truck trailers on a route between its manufacturing facility in Oswego, New York, and Ford Motor Company in Detroit, Michigan. Specifically, Novelis proposes to ship 25 trailers of aluminum coils each day from Oswego to Detroit via Canada. Novelis also contemplates using U.S.-based trucks and U.S.-based trailers to transport the merchandise. At all times, trucks would only haul trailers of the same origin: Canadian-based trucks would only haul Canadian-based trailers; and, U.S.-based trucks would only haul U.S.-based trailers. The trucks would leave Oswego each day with loaded trailers transporting aluminum coils to a secure lot in Hamilton, Ontario. Upon arrival in Hamilton, the trucks would drop the trailers and immediately pick up empty trailers or trailers loaded with scrap for the return journey back to the Novelis facility in Oswego, New York. At the same time, trucks would depart each day from Detroit with empty trailers or trailers loaded with aluminum scrap. These trucks would go to the secure lot in Hamilton, Ontario, drop off the empty trailers or trailers loaded with aluminum scrap and pick up the trailers loaded with aluminum coils, delivering them to the Ford facility in Detroit. ISSUES Whether the use of Canadian-based trucks and trailers as described in the above scenario would be in violation of §§ 123.14(c)(1) and 123.14(c)(2). Whether the use of U.S.-based trucks and trailers in the above scenario would require formal entry and payment of duty upon return from Canada pursuant to 19 C.F.R. § 123.16. 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 C.F.R. 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 HQ 112415 (Sept. 22, 1992) and HQ 111176 (Sept. 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). Canadian-Based Trucks and Trailers At the outset, we reiterate that whether the movement of foreign-based trucks is considered to be international or domestic for purposes of the administration of § 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. The facts of this matter indicate both the origin and destination of the merchandise carried to be the United States. The aluminum coils discussed in the FACTS section above originate in Oswego, New York and are destined for Detroit, Michigan. Likewise, the aluminum scrap originates in Detroit, Michigan, and is destined for Oswego, New York. Notwithstanding the transfer of trailers to different trucks in Ontario, the merchandise movement in this case would be domestic. Consistent with CBP’s interpretation of 19 C.F.R. 123.14, such transportation would be considered to be local traffic. 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.” Such a position is consistent with our prior rulings. In HQ 115635 (May 16, 2002), CBP held that transportation of merchandise from a location in the United States through a Canada Customs Bonded Warehouse/Facility in Ontario, to another destination at another point in the United States using Canadian-based trucks would violate 19 C.F.R. § 123.14(c)(1). Likewise, in HQ H214215, (Oct. 15, 2012) we determined that the proposed transportation of U.S.-manufactured merchandise from the United States to Canada, where it was to be stored in a bonded warehouse, with subsequent transportation to a different port of entry in the United States, using Canadian-based trucks would violate 19 C.F.R. § 123.14. As discussed above, because the movement of the subject coiled aluminum and aluminum scrap is between two U.S. points (Oswego, New York, and Detroit, Michigan), the merchandise movement in this case would be domestic in nature, and its transportation would be considered to be local traffic. Consequently, there would be no international traffic as contemplated in 19 C.F.R. § 123.14(c)(1) and no export move or return of the vehicle to its base country. Therefore, the 19 C.F.R. § 123.14(c)(1) exception would be inapplicable to the present matter. Accordingly, we are of the opinion that the use of Canadian-based trucks and trailers as described in the above scenario would violate 19 C.F.R. § 123.14. Canadian-Based Trailers Regarding the contemplated use of Canadian-based trailers to effectuate the contemplated transportation of merchandise, 19 C.F.R. § 123.14(c)(2) provides that a foreign-based truck trailer may carry merchandise between points in the United States on its departure for a foreign country under the same conditions as are prescribed for “other foreign railroad equipment” in § 123.12(a)(2). As we discussed in HQ 115355, May 2, 2001, “Section 123.14(c)(2), Customs Regulations (19 C.F.R. § 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 (emphasis supplied). 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.” In that matter, we determined that the use of the subject vehicles (including trailers) in the United States did not constitute “local traffic” within the meaning of § 123.14(c) since none of them would be involved in the transportation of merchandise between any two points in the United States. The same analysis does not obtain here, however. In the present matter, the subject trailers would be involved in the transportation of merchandise between two points in the United States, Oswego, New York, and Detroit, Michigan. In HQ 112164, April 6, 1992, we examined a proposed intermodal (truck/rail) transportation of merchandise between two United States points via Canada. In that matter, it was proposed to load U.S.-origin merchandise in North Dakota onto Canadian trailers, which were to be hauled to Winnipeg, Manitoba, Canada. These trailers would then be loaded onto Canadian rail cars (i.e., the “piggyback” procedure) for transportation to Montreal, Quebec, Canada. Upon arrival in Montreal, the trailers were to be off-loaded from the rail cars and then be hauled to various points in Maine. In HQ 112164, we ruled that the movement of a Canadian trailer which, after being loaded in the U.S., was hauled to Canada, placed aboard a Canadian rail car, transported to a second Canadian point, then hauled to its final U.S. destination constituted a movement in local traffic in violation of 123.14(c)(2). Accordingly, the use of Canadian-based trailers as described in the FACTS section above would violate 19 C.F.R. § 123.14(c)(2). U.S.-Based Trucks and Trailers Section 123.16, CBP Regulations provides, “Trucks, busses, and taxicabs, whether of foreign or domestic origin, taking out merchandise or passengers for hire or leaving empty for the purpose of bringing back merchandise or passengers for hire shall on their return to the United States be admitted without formal entry or the payment of duty upon their identity being established by State registration cards.” Per 19 U.S.C. § 1401, the word “merchandise” means goods, wares, and chattels of every description and includes merchandise the importation of which is prohibited, and monetary instruments as defined in section 5312 of title 31, United States Code. We are of the opinion that the aluminum coils and aluminum scrap under consideration herein meet the definition of “merchandise.” In the present matter, U.S.-based trucks and trailers would depart the United States bound for Ontario taking out merchandise for hire. From New York, the trucks would depart with trailers carrying aluminum coils; from Michigan, the trucks would depart with trailers carrying aluminum scrap. On the occasions where an empty trailer would be carried out from Detroit to Ontario, we are of the opinion that it would be leaving empty for the purpose of bringing back merchandise, specifically aluminum coils on the return journey. Therefore, the requirements of 19 C.F.R. § 123.16 would be satisfied on both legs of the journey through Ontario. Accordingly, the use of U.S.-based trucks and trailers as described in the above scenario would not require formal entry and payment of duty upon return from Canada pursuant to 19 C.F.R. § 123.16. HOLDING The use of Canadian-based trucks and trailers as described in the above scenario would violate 19 C.F.R. § 123.14. The use of U.S.-based trucks and trailers as described in the above scenario would not require formal entry and payment of duty upon return from Canada pursuant to 19 C.F.R. § 123.16. Sincerely, Lisa L. Burley Acting Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Restricted Merchandise Branch Office of International Trade, Regulations & Rulings U.S. Customs and Border Protection