HQ 112415

September 22, 1992

BOR-7-04-CO:R:IT:C 112415 GEV

CATEGORY: Carriers

Peter Staff

International Stage Lines

4171 Vanguard Road

Richmond, B.C., Canada V6X 2P6

RE: Instruments of International Traffic; Busses; Local Traffic; 19
U.S.C. 1322

Dear Mr. Staff:

This is in response to your letter dated July 30, 1992, requesting a
ruling regarding the operation of your charter bus company. Our ruling
is set forth below.

FACTS:

International Stage Lines is a Canadian-owned and operated charter bus
company located in Vancouver, B.C., Canada. A typical itinerary of their
trips includes the embarkation of passengers in Seattle, Washington, for
the purpose of proceeding on a chartered tour through the Canadian
Rockies for several days with a return trip to Seattle. The points of
embarkation and disembarkation within Seattle may differ.

ISSUE:

Whether there is a movement in \"local traffic\" in violation of 19 CFR
123.14(c)(1) when a Canadian-based bus operating pursuant to a charter
tour boards passengers in Seattle, Washington, proceeds to various stops
in Canada to tour the Canadian Rockies, and subsequently disembarks the
passengers at the same or a different location within Seattle, without
making a formal Customs entry.

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

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regulations from the requirements for entry. Since the foreign-based
busses 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, busses having their principal base
of operations in a foreign country must be arriving in the United States
with passengers and/or merchandise destined for points in the United
States, or arriving empty or loaded for the purpose of taking passengers
and/or merchandise

out of the United States (see 19 CFR 123.14(a)). Customs has long
interpreted the phrase \"taking out\" as meaning destined to a foreign
country and does not cover passengers and/or merchandise whose intended
destination is a second point in the United States.

Section 123.14(c), Customs Regulations, states that with one exception,
a foreign-based bus, 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.
For purposes of section 123.14, Customs interprets the term \"local
traffic in the United States\" as referring to the transportation of
passengers or merchandise between any two points in the United States.

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 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
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. Section 123.14(d), Customs Regulations provides that any
vehicle used in violation of section 123.14, is subject to forfeiture
under section 592, Tariff Act of 1930, as amended (19 U.S.C. 1592).

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The Customs Simplification Act of 1953 (Pub. L. 67-243) added section
322 to the Tariff Act of 1930 (19 U.S.C. 1322) to grant to international
traffic the generally recognized customary exceptions from Customs
requirements. Although 19 U.S.C. 1322 does not define \"customary
exceptions,\" the legislative history is explicit in stating that the
customary exceptions referred to are those mentioned in the \"United
States Import Duties\" (1952), at page 269. Senate Report No. 632, 83rd
Congress, 1st Session, page 12, states \"It (19 U.S.C. 1322) does not
change the customary exceptions as set out in\...United States Import
Duties (1952) p. 269.\" The intent of Congress is also apparent from
House Report No. 760, 83rd Congress, 1st Session, page 13. These
provisions now appear, essentially without change, in sections 10.41(d)
and 123.14 referred to above.

It is noted that although Public Law 98-573, section 127(b) (effective
October 30, 1984) amended 19 U.S.C. 1322(a) by substituting the words
\"shall be excepted\" for \"shall be granted the customary exceptions\",
the legislative history of this

amendment clearly states that its purpose is to provide for the
duty-free entry of repair parts, accessories and equipment of
temporarily admitted containers thereby bringing United States treatment
into conformity with the Customs Convention on Containers, 1972.

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;
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 charter tour itinerary under consideration, it is
apparent that unless the points of embarkation and disembarkation in
Seattle are the same, the International Stage Lines busses would be
transporting passengers whose intended destination is a second point in
the United States albeit with intervening Canadian stops. The fact that
a bus boards passengers in Seattle, then proceeds to Canada where the
passengers have several overnight stays at one specific location and/or
several different locations prior to arriving at their U.S. destination,
cannot be construed as \"taking out\" to Canada within the meaning of
section 123.14(a). Accordingly, the busses in question, unless embarking
and disembarking passengers at the same location in Seattle, would not
be engaged purely in international traffic as contemplated by section
123.14(a).

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In the event the tour includes the transportation of passengers between
United States points (i.e, different points within Seattle), the
movement is unquestionably local traffic within the meaning of 19 CFR
123.14(c)(1) and is permitted provided it is incidental to a regularly
scheduled international trip. It should be noted that the mere fact that
this movement is a \"charter tour\" would indicate that it is operated
on other than a regular schedule.

Accordingly, the International Stage Lines busses transporting
passengers pursuant to the charter tour in question without making a
formal Customs entry would be engaged in local traffic not within the
permitted exception set forth in 19 CFR 123.14(c)(1) if the points of
embarkation and disembarkation within Seattle are not the same. If such
points do not differ no violation of the aforementioned Customs
regulations would occur. To hold otherwise would be inconsistent with
the intent of Congress to limit competition with domestic transportation
by vehicles in international traffic. It would work to the detriment of
domestic interests.

HOLDING:

A Canadian-based bus operating pursuant to a charter tour which boards
passengers in Seattle, Washington, proceeds to various stops in Canada
to tour the Canadian Rockies, and disembarks the passengers at their
final destination in Seattle, without making a formal Customs entry, is
engaged in \"local traffic\" not within the permitted exception in 19
CFR 123.14(c)(1) if the points of embarkation and disembarkation within
Seattle are not the same.

B. James Fritz

Chief

Carrier Rulings Branch