VES-3-06 CO:R:IT:C 112295 GFM
Mr. Paul M. Branch
Business Manager
Superior Livestock Auction
131 East Exchange, Suite 121
Fort Worth, TX 76106
RE: Coastwise trade; 46 U.S.C. App. 883; Continuous voyage;
Importation of Hawaiian cattle into Canada; Re-importation
into U.S.
Dear Mr. Branch:
This is in response to your letter of June 11, 1992,
requesting a ruling on your proposed operation which involves the
coastwise transportation of cattle.
FACTS:
In your letter you state that your client, Superior
Livestock Auction, Inc., seeks to transport Hawaiian cattle from
Hawaii to Canada on board non-coastwise-qualified vessels. You
state that your client intends to import said cattle into Canada
for placement in Canadian feedlots and ranches prior to eventual
re-sale. Your client will then broadcast, via satellite, video-
taped advertisements of said cattle to buyers throughout the
North American continent. Although it is anticipated that some
of the buyers will be American-based operators wishing to import
cattle into the U.S., you state that Canadian buyers will have
the same opportunity as U.S. buyers to bid on the cattle.
Although some cattle will technically be "sold" in the U.S. via
telephone auction, all cattle will be located in Canada and will
be sold F.O.B. from Canadian ranches or feedlots.
ISSUE:
Whether the transportation of cattle, intended to be
introduced into the common stock of the Canadian market but a
portion of which is ultimately shipped to a point within the
United States, which is transported aboard a non-coastwise-
qualified vessel from Hawaii to Canada, constitutes a violation
of 46 U.S.C. App. 883.
LAW AND ANALYSIS:
Section 27 of the Act of June 5, 1920, as amended (41 Stat.
999; 46 U.S.C. App. 883, often called the Jones Act), provides
that:
No merchandise shall be transported by water,
or by land and water, on penalty of
forfeiture of the merchandise (or a monetary
amount up to the value thereof...), between
points in the United States...embraced within the
coastwise laws, either directly or
via a foreign port, or for any part of the
transportation, in any other vessel than a
vessel built in and documented under the laws
of the United States and owned by persons who
are citizens of the United States....
The plain meaning of the statute prohibits merchandise from
being transported on a non-coastwise-qualified vessel between
points in the United States. The words "either directly or via a
foreign port" were inserted in the original statute (46 U.S.C.
App. 883) by the Congress in 1893. Congress, seeing how easily
the protection to American shipping would be vitiated by a simple
transshipment of the same cargo, inserted the words "either
directly or via a foreign port" to prohibit such transshipments.
In determining whether merchandise which is transported from
one point in the United States to a point in a foreign country
and then to another point in the United States is subject to the
prohibition in section 883 by virtue of being transported between
coastwise points "via a foreign point," we have relied upon the
holding of the Supreme Court in The Bermuda, 70 U.S. 514 (1865).
In that decision, the Supreme Court held that:
A transportation from one point to another
remains continuous, so long as intent remains
unchanged, no matter what stoppages or
transshipments intervene (70 U.S. at 553).
The Supreme Court went on to reaffirm the longstanding rule that:
...[E]ven the landing of goods and payment of
duties does not interrupt the continuity of
the voyage of the cargo, unless there be an
honest intention to bring them into the
common stock of the country. If there be an
intention, either formed at time of original
shipment, or afterwards, to send the goods
forward to an unlawful destination, the
continuity of the voyage will not be broken,
as to the cargo, by any transactions at the
intermediate port (70 U.S. at 554).
The Attorney General of the United States relied upon The
Bermuda in his consideration of the applicability of section 883
to certain transportation. In 34 Op. Atty. Gen. 335 (1924) (see
also, 32 Op. Atty. Gen. 350 [1920], concerning the transportation
of fish from Alaska to a United States point via Vancouver,
British Columbia, Canada), the Attorney General considered the
applicability of section 883 to the transportation of grain from
Chicago or Milwaukee to a Canadian port in non-coastwise-
qualified vessels. The grain was unladen into an elevator where
it remained for an indefinite time until it was loaded into
railroad cars for transportation by rail to points in New
England. In some instances the grain had already been sold for
delivery at an American port when it reached the Canadian port,
while in other instances there was an existing intent to ship the
grain to the Canadian elevator for storage in anticipation of
demands for future deliveries for domestic consumption in Canada,
for export abroad, or for sale and delivery in the United States.
The Attorney General's opinion was requested as to whether
the transportation of the grain in the manner described violated
section 883. As to grain which had been consigned through the
Canadian port to a point in the United States or which had been
shipped with the intention that the grain should ultimately be
shipped to a point in the United States, it was the Attorney
General's opinion "that such transportation is without a doubt in
violation of [section 883]" (34 Op. Atty. Gen. at 357). When
there was no intent by the shipper to transship the grain to a
United States port or place, it was the Attorney General's
opinion that "only general rules of law may be laid down" (34 Op.
Atty. Gen. at 362). The general rule of law given by the
Attorney General in this case was that "the intention of the
shipper is the controlling factor" (34 Op. Atty. Gen. at 363).
The Attorney General also stated that:
...[W]hether the facts presented in any particular
case come within such rules must be determined by the
officer charged with the administration of that Act
(34 Op. Atty. Gen. at 362).
The Customs Service is the agency "charged with the
administration" of section 883. We have issued a number of
rulings on the applicability of section 883 to the transportation
of merchandise between coastwise points via a foreign port. In
these rulings, we have held, as did the Supreme Court in The
Bermuda, that an "honest intention to bring the goods
[transported] into the common stock of the [intermediate
foreign] country" is required to break the continuity of
transportation between coastwise points via a foreign point. We
have held that an intent to export merchandise after its
transportation from the United States to an intermediate foreign
port is not, by itself, sufficient to break the continuity of the
transportation when the merchandise is transported onward from
the intermediate foreign port to a second point in the United
States. We have also held that when, at the time of shipment of
merchandise from the United States to an intermediate foreign
port, there existed the expectation that a substantial portion of
the merchandise would not be consumed in the country of the
foreign port, entry through the foreign country's customs and
payment of duty is not considered to break the continuity of the
transportation when any of the merchandise is transported onward
to a second point in the United States.
Turning to the case at hand, there is no manufacturing or
processing of the cattle when first unladen in Canada which
breaks the continuity of the transportation under section
4.80b(a). Although section 4.80b(a) is inapplicable to the facts
of this case because the cattle will not be manufactured into a
new and different product in Canada prior to their shipment to
the United States, it should be noted that we have held that
cattle transported from Hawaii to Canada and fattened to almost
twice their original weight also do not result in a new and
different product pursuant to 19 CFR 4.80b(a). Thus, any
subsequent transportation of such cattle from Canada to the
United States would result in a violation of 46 U.S.C. App. 883.
(Headquarters Ruling Letter 111035, July 25, 1990). Conversely,
cattle transported from Hawaii to Canada where they will be
slaughtered, dressed or packed etc., will result in a new and
different product pursuant to 19 CFR 4.80b(a) and subsequent
transportation thereof from Canada to the United States would not
result in a violation of 46 U.S.C. App. 883 (Headquarters Ruling
Letter 111035, supra).
In the present case, it is possible that some cattle, after
being brought into Canada with the honest intention that they be
introduced into the common stock of that country, will
nonetheless by purchased by buyers in the U.S. who are intent on
importing such cattle into the U.S. As stated, the determination
as to whether 46 U.S.C. App. 883 will apply to such a case rests
upon whether or not the merchandise in question was intended to
become part of the common stock of goods of a foreign country.
If such a circumstance can be shown, it will be enough to break
the continuity of the transportation. In Headquarters Ruling
Letter 112246 (June 23, 1992), it was established that certain
evidence will constitute acceptable proof that such merchandise
was indeed intended to be introduced into the common stock of a
country. Such acceptable evidence includes, but is not limited
to: shipping manifests; foreign country customs and duties
receipts; lists containing names of purchasers of merchandise
from said vessels indicating type and quantity of such
merchandise; auction notices or similar publication documentation
evidencing the fact that such goods will be offered on the
foreign country's market; and an affidavit from a foreign
purchaser testifying that the goods are indeed intended to be
introduced into the common stock of that country.
HOLDING:
As to the case in question, provision of the above
enumerated evidence will be sufficient to validate such a
transaction and insulate it from penalty under 46 U.S.C. App.
883.
This ruling letter does not address any other transactions
or questions which are essentially hypothetical in nature. See
19 CFR 177.7. This letter addresses only those federal
requirements that are administered by the U.S. Customs Service.
Although we are unaware of any other federal or state agency
requirements that might pertain to the undertaking you describe,
it is possible that such requirements exist.
If you have any further questions regarding this matter,
please do not hesitate to contact our office.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch