VES-13-18-CO:R:IT:C 111394 BEW
Chief, Technical Branch
Pacific Region
One World Trade Center
Long Beach, California 90831
Re: Petition for Review on Anchorage Vessel Repair Entry No.
C31-0004885-0, July 17, 1988; Vessel: ARCTIC TRAWLER,
U.S. spare parts and owner-supplied spare parts; Customs and
Trade Act of 1990; P.L. 101-382; 19 U.S.C. 1466(h).
Dear Sir:
This is in reference to a petition for relief from duties
filed by B.A.McKenzie & Co., Inc., on behalf of Arctic King,
Ltd., on a partial denial of an application for relief for duties
assessed on repairs made to the ARCTIC TRAWLER. The vessel
arrived the port of Dutch Harbor, Alaska, on August 25, 1988.
Duty was assessed upon the cost of the foreign shipyard
operations pursuant to title 19, United States Code, section 1466
(19 U.S.C. 1466), under vessel repair entry No. C31-0004885-0.
FACTS:
In 1987, the vessel underwent a conversion from a
catcher/processor fishing vessel to a Surimi factory trawler. In
1987, the owner sent the vessel to a Korean shipyard in order to
have certain refinements made to the vessel. Major vessel
components were upgraded and/or relocated in such a manner as to
affect the operating efficiency of the vessel. Following the
installation of necessary supplies, stores, equipment at
Seattle, the vessel departed for the Bering Sea to commence
operations. The vessel successfully operated in Alaskan waters
as a Surimi factory trawler, but it developed that further
modifications were required in order for the Surimi factory to
produce the minimum contemplated production of 30 tons per day
capacity. Taito Seiko Co., Ltd., arranged for or performed the
shipyard conversion. The vessel arrived in Japan on May 21,
1988. The conversion work was completed July 7, 1988.
The petitioner's request for review centers on the costs
relating to the owner supplied U.S. spare parts listed as
follows:
I. Invoice No. Amount
Bergen Diesel, Inc. 5492 $1,792.36
Bergen Diesel, Inc. 5506 $6,176.92
Bergen Diesel, Inc. 5533 $16,093.90
Bergen Diesel, Inc. 5540 $796.59
Bergen Diesel, Inc. 5548 $16,659.80
Bergen Diesel, Inc. 5549 $1,252.86
Bergen Diesel, Inc. 5581 $6,947.63
Bergen Diesel, Inc. 5584 $296.10
Bergen Diesel, Inc. 5603 $875.05
Bergen Diesel, Inc. 8016 $15,843.18
Bergen Diesel, Inc. 489082 $29,818.00
II. Rasmussen Equipment
Co. Inc. 19311 $12,192
Anthony's Industrial
& Marine Services 4425 $3,137.20
Slattery Equipment Co.
Inc. 5427 $10,939.85
Slattery Equipment Co.
Inc. 5598 $3,500.00
Ballard Hardware and
Supply, Inc. 274383 $2,900.96
Ballard Hardware and
Supply, Inc. 274384 $200.83
Beckwith R2316 $5,597.35
Beckwith K22988 $5,260.50
CB Equipment Company 02003 $10,126.00
Hasco Island Supply Corp. 015119 $1,805.90
Flohr Metal Fabricators,
Inc. 12719 $131,360.00
King Bearing, Inc. 8979-04187 $12,464.68
King Bearing, Inc. 8979-04188 $3,287.57
King Bearing, Inc. 8979-04189 $562.70
King Bearing, Inc. 8979-04190 $1,142.18
Rodda Paint Co. 450639 $5,804.85
Northwest Instrument 70444 $30,200.00
In a decision dated May 17, 1990 (HQ 110208 BEW), we ruled
that the applicant had submitted invoices for the subject
articles which indicate purchase in the United States, however,
there was no evidence submitted that addressed the articles'
place of manufacture. We held that since no direct evidence of
U.S. manufacture had been submitted, the amounts listed for the
U.S. materials were dutiable.
The petitioner has submitted additional evidence to show
that the subject materials were manufactured in the United
States.
ISSUE:
1. Whether sufficient evidence is presented to establish
that subject owner-supplied spare parts were
manufactured in the U.S. which are free under the
vessel repair statute (19 U.S.C. 1466(h)).
LAW AND ANALYSIS:
Title 19, United States Code, section 1466(a), provides in
pertinent part for payment of duty in the amount of 50 percent ad
valorem on the cost of foreign repairs to vessels documented
under the laws of the United States to engage in the foreign or
coastwise trade, or vessels intended to be employed in such
trade.
The climate with regard to parts shipped abroad from the
United States for foreign installation was transformed on August
20, 1990, when the President signed Public Law 101-382 which
added a new subsection (h) to section 1466. While this
provision applies by its terms only to foreign-made imported
parts, there is ample reason to extend its effect to U.S.-made
materials as well. To fail to do so would act to discourage the
use of U.S.-made materials in effecting foreign repairs since
continued linkage of remission provisions of subsection (d)(2)
with the assessment provisions of subsection (a) of section 1466
would obligate operators to pay duty on such materials unless
they were installed by crew or resident labor. If an article is
claimed to be of U.S. manufacture, there must be proof of its
origin in the form of a bill of sale or domestic invoice. If an
article is claimed to have been previously entered for
consumption, duty paid by the vessel operator, there must be
proof of this fact in the form of a reference to the consumption
entry number for that previous importation, as well as to the
U.S. port of importation. If imported articles are purchased
from third parties in the United States, a domestic bill of sale
to the vessel operator must be presented.
The petitioner has submitted documentation certifying that
the subject parts were manufactured in the United States or the
duty has been paid under the Harmonized Tariff Schedule of the
United States. Accordingly, the petition is granted.
HOLDING:
The evidence presented is sufficient to substantiate that
the subject parts were manufactured in the United States, thus
warranting remission pursuant to 19 U.S.C. 1466(h). The petition
is granted.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch