Use of Containers Designated as Instruments of International Traffic in Point-to-Point Local Traffic

DEPARTMENT OF TRANSPORTATION

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 10

RIN 1515-AB79

Use of Containers Designated as Instruments of International

Traffic in Point-to-Point Local Traffic

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Customs Regulations to

provide that certain containers which are designated as instruments of

international traffic are deemed to remain in international traffic

provided they exit the United States within 365 days of the date on

which they are admitted to the U.S. For the importing community as well

as Customs, this proposal would greatly simplify the treatment of

containers for Customs purposes regardless of their use in domestic

commerce.

DATES: Comments must be received on or before December 3, 1996.

ADDRESSES: Written comments (preferably in triplicate) must be

submitted to the U.S. Customs Service, ATTN: Regulations Branch,

Franklin Court, 1301 Constitution Avenue, NW., Washington, D.C. 20229,

and may be inspected at the Regulations Branch, 1099 14th Street, NW.,

Suite 4000, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Legal aspects: Glen E. Vereb, Entry and Carrier Rulings Branch,

(202-482-6940).

Operational aspects: Eileen A. Kastava, Cargo Control, (202-927-

0983).

SUPPLEMENTARY INFORMATION:

Background

Section 141.4, Customs Regulations (19 CFR 141.4), provides that

all merchandise imported into the United States is required to be

entered, unless specifically exempted. Section 141.4(b)(3) provides an

exception for instruments of international traffic as described, and

under the conditions provided for, in Sec. 10.41a, Customs Regulations

(19 CFR 10.41a).

Pursuant to 19 U.S.C. 1322, vehicles and other instruments of

international traffic shall be excepted from the application of the

Customs laws to such extent and subject to such terms and conditions as

may be prescribed in regulations or instructions of the Secretary of

the Treasury.

The Customs Regulations issued under the authority of 19 U.S.C.

1322 are contained in Sec. 10.41a. Section 10.41a(a)(1) designates as

instruments of international traffic lift vans, cargo vans, shipping

tanks, skids, pallets, caul boards, and cores for textile fabrics in

use or to be used in the shipment of merchandise in international

traffic.

Section 10.41a(a)(1) also authorizes the Commissioner of Customs to

designate as instruments of international traffic such additional

articles or classes of articles as he shall find should be so

designated. Instruments so designated may be released without entry or

the payment of duty, subject to the provisions of Sec. 10.41a.

Instruments so designated are also stated to be duty-free in subheading

9803.00.50, Harmonized Tariff Schedule of the United States.

Section 10.41a(d) provides that if an instrument of foreign origin

which has been increased in value or improved in condition by a process

of manufacture or other means while abroad is released under

Sec. 10.41a and is subsequently diverted to point-to-point local

traffic within the United States, or is otherwise withdrawn from its

use as an instrument of international traffic, it becomes subject to

entry and the payment of any applicable duties.

[[Page 51850]]

Nevertheless, Sec. 10.41a(f) states in effect that, except for the

application of the coastwise trade laws (see Sec. 4.93, Customs

Regulations (19 CFR 4.93)), no part of Sec. 10.41a precludes (1) the

use of an instrument in picking up and delivering loads at intervening

points in the United States while en route between the port of arrival

and the port of destination of its imported cargo, (2) the use of an

instrument while en route from such point of destination of imported

cargo to a point where export cargo is to be loaded or to an exterior

port of departure by a reasonably direct route to, or nearer to, the

place of such loading or departure, or (3) the use of a ``container''

as defined in the Customs Convention on Containers (together with its

normal accessories and equipment if imported therewith), when such

container arrives empty while en route between the port of arrival and

a point where export cargo is to be loaded or from that point to an

exterior port of departure by a reasonably direct route to, or nearer

to, the place of such loading or departure, provided that such point-

to-point traffic is incidental to the efficient and economical

utilization of the instrument in the course of its use in international

traffic.

Section 10.41a(f) also makes clear that none of the uses enumerated

above constitutes a diversion to unpermitted point-to-point local

traffic within the United States or a withdrawal of an instrument from

its use as an instrument of international traffic.

It is proposed to amend Sec. 10.41a(f) so as to apply only to

instruments of international traffic other than containers as defined

in the Customs Convention on Containers. Permitted domestic traffic in

containers which are instruments of international traffic would be

addressed in a proposed new Sec. 10.41a(g). Current paragraphs (g), (h)

and (i) of Sec. 10.41a would be redesignated as paragraphs (h), (i) and

(j), respectively.

The proposed new paragraph (g) of Sec. 10.41a would provide that

containers, as defined in Article 1 of the Customs Convention on

Containers (1972), are deemed to remain in international traffic

provided they exit the U.S. within 365 days of the date on which they

are admitted to the U.S. This would be so regardless of the fact that

the containers may engage in point-to-point local traffic within the

United States. An exit from the U.S., for purposes of this provision,

would be defined as a movement across the border of the United States

into a foreign country where either:

(1) All merchandise is unladen from the instrument of international

traffic; or

(2) Merchandise is laden aboard the instrument of international

traffic (if the instrument of international traffic is empty).

Furthermore, the person who filed the application for release under

Sec. 10.41a(a)(1) would be responsible for keeping and maintaining such

records as would be necessary to establish the international movements

of the instruments of international traffic. Such records would be

required to be made available for inspection by Customs officials.

Should the container not exit the U.S. within 365 days of the date

on which it was admitted under Sec. 10.41a, it would be considered to

have been removed from international traffic and entry for consumption

would have to be made within 10 business days after the end of the

month in which the container was deemed removed from international

traffic.

Should entry be required under Sec. 10.41a, all containers removed

from international traffic in the same month could be listed on one

entry. The entry could be made at any port of entry. Customs may waive

the invoice requirement at the time of entry and may use the value of

the instrument as carried on the books of the person making entry.

Thus, in brief, the key change contained in this proposal is to

allow a container (as defined in Article 1 of the Customs Convention on

Containers) to engage in point-to-point domestic traffic provided that

such container exits the U.S. within 365 days of the date on which it

was admitted to the United States under Sec. 10.41a. This proposal

would simplify the Customs treatment of containers for both the public

and Customs in that the more difficult-to-apply requirements set forth

in Sec. 10.41a(f) would no longer apply to containers.

Containers specially designed and equipped for carriage by one or

more modes of transport are duty-free under subheading 8609.00.00,

Harmonized Tariff Schedule of the United States. Therefore, Customs

expects little or no loss of revenue to the Government under this

proposal.

It is noted that the amendments proposed herein are principally the

result of written requests submitted by counsel on behalf of certain

carrier, leasing, shipping and container companies, and a meeting

occurring between the companies' representatives, their counsel and

Customs officials.

Comments

Before adopting the proposed amendments, consideration will be

given to any written comments that are timely submitted to Customs.

Comments submitted will be available for public inspection in

accordance with the Freedom of Information Act (5 U.S.C. 552),

Sec. 1.4, Treasury Department Regulations (31 CFR 1.4), and

Sec. 103.11(b), Customs Regulations (19 CFR 103.11(b)), on regular

business days between the hours of 9:00 a.m. and 4:30 p.m. at the

Regulations Branch, Franklin Court, 1099 14th Street, NW., Suite 4000,

Washington, D.C.

Regulatory Flexibility Act and Executive Order 12866

As explained in the preamble, the proposed amendments would

simplify the Customs treatment of containers for the importing public

in that the more difficult-to-apply requirements set forth in

Sec. 10.41a(f) would no longer apply to containers. As such, pursuant

to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.), it is certified that, if adopted, the proposed amendments will

not have a significant economic impact on a substantial number of small

entities. Accordingly, the proposed amendments are not subject to the

regulatory analysis or other requirements of 5 U.S.C. 603 or 604, nor

would they result in a ``significant regulatory action'' under E.O.

12866.

List of Subjects in 19 CFR Part 10

Alterations, Bonds, Customs duties and inspection, Exports,

Imports, Preference programs, Repairs, Reporting and recordkeeping

requirements, Trade agreements.

Proposed Amendments

It is proposed to amend part 10, Customs Regulations (19 CFR part

10), as set forth below.

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,

ETC.

1. The general authority for part 10 would be revised, and the

specific authority for Sec. 10.41a would continue, to read as follows:

Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized

Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484,

1498, 1508, 1623, 1624, 3314;

* * * * *

Sections 10.41, 10.41a, 10.107 also issued under 19 U.S.C. 1322;

* * * * *

2. It is proposed to amend Sec. 10.41a by revising paragraph (f) to

read as follows; by redesignating paragraphs (g), (h) and (i), as (h),

(i) and (j), respectively; and adding a new paragraph (g) to read as

follows:

[[Page 51851]]

Sec. 10.41a Lift vans, cargo vans, shipping tanks, skids, pallets, and

similar instruments of international traffic; repair components.

* * * * *

(f)(1) Except as provided in paragraph (j) of this section, an

instrument of international traffic may be used as follows in point-to-

point traffic, provided such traffic is incidental to the efficient and

economical utilization of the instrument in the course of its use in

international traffic:

(i) Picking up and delivering loads at intervening points in the

United States while en route between the port of arrival and the point

of destination of its imported cargo; or

(ii) Picking up and delivering loads at intervening points in the

United States while en route from the point of destination of imported

cargo to a point where export cargo is to be loaded or to an exterior

port of departure by a reasonably direct route to, or nearer to, the

place of such loading or departure.

(2) Neither use as enumerated in paragraph (f)(1)(i) or (ii) of

this section constitutes a diversion to unpermitted point-to-point

local traffic within the United States or a withdrawal of an instrument

in the United States from its use as an instrument of international

traffic under this section.

(g)(1) Except as provided in paragraph (j) of this section, a

container (as defined in Article 1 of the Customs Convention on

Containers) which is designated as an instrument of international

traffic is deemed to remain in international traffic provided that the

container exits the U.S. within 365 days of the date on which it was

admitted under this section. An exit from the U.S. in this context

means a movement across the border of the United States into a foreign

country where either:

(i) All merchandise is unladen from the container; or

(ii) Merchandise is laden aboard the container (if the container is

empty).

(2) The person who filed the application for release under

paragraph (a)(1) of this section is responsible for keeping and

maintaining such records as may be necessary to establish the

international movements of the containers. Such records shall be made

available for inspection by Customs officials upon reasonable notice.

(3) If the container does not exit the U.S. within 365 days of the

date on which it is admitted under this section, such container shall

be considered to have been removed from international traffic, and

entry for consumption must be made within 10 business days after the

end of the month in which the container is deemed removed from

international traffic. When entry is required under this section, any

containers considered removed from international traffic in the same

month may be listed on one entry. Such entry may be made at any port of

entry. Customs may waive the invoice requirement at the time of entry

and may use the value of the container as carried on the books of the

person making entry.

* * * * *

Dated: February 29, 1996.

George J. Weise,

Commissioner of Customs.

Dennis M. O'Connell,

Acting Deputy Assistant Secretary of the Treasury.

[FR Doc. 96-25463 Filed 10-3-96; 8:45 am]

BILLING CODE 4820-02-P