VES-12-02:OT:RR:BSTC:CCR H233278 ALS
Mr. William E. Dysart
Wright & L’Estrange
401 West A Street, Suite 2250
San Diego, California 92101
RE: Yacht; Dutiability; Documentation; Importation; Exportation
Dear Mr. Dysart:
This letter is in response to your ruling request of August 22, 2012, concerning potential duty to be paid on a purchase of a yacht. Our ruling is set forth below.
FACTS:
The vessel in question is a yacht that was built in Taiwan in 2007 and brought into the United States that same year, at which time it was formally entered and duties were paid thereon. The importer sold the vessel to a United States citizen, who then obtained a recreation endorsement for the vessel from the United States Coast Guard. In 2010, the purchaser sold the vessel to Australian citizens, the current owners. The Australians removed the recreation endorsement from the vessel, as they were not eligible to hold such an endorsement because they are not United States citizens. After the Australians took delivery of the vessel outside territorial waters, the vessel remained in the United States for repairs for six weeks after the sale to the Australians took place.
After repairs were completed, and in order to comply with California tax exemptions, the vessel was taken to Mexico. Upon departure from the United States, a Shipper’s Export Declaration (SED) was filed for the vessel, with the ultimate consignee listed as one of the Australian citizens who bought the vessel, using his Australian address. You state that the vessel remained in Mexico “about 60 days” before returning to the United States. You also state that the vessel has never entered Australia. You further state that the owners obtained a cruising license for the vessel upon its return to the United States, and the vessel has been in the United States ever since. The owners have decided to sell the vessel in the United States.
ISSUE:
Whether the subject vessel would be subject to duty upon its sale within the United States to a U.S. resident.
LAW AND ANALYSIS:
The determination as to whether a yacht is dutiable when it has previously been subject to entry and payment of duty is dependent upon whether it has been exported from the United States after is first importation. Customs and Border Protection (CBP) regulations define “exportation” as “a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country.” 19 CFR 101.1(k). It has been long-established that the intention of the parties at the time of shipment abroad is the controlling factor in determining whether or not the shipment is an exportation. See, e.g., CBP Ruling HQ H096657 (January 18, 2012), citing Moore Dry Goods Co. v. United States, 11 Ct. Cust. App. 449, T.D. 39531 (1923); CBP Ruling HQ 114301 (March 25, 1998), citing F.W. Meyers & Co., Inc. v. United States, 29 Cust. Ct. 202, C.D. 1468 (1952).
With respect to an imported, duty-paid, U.S.-flagged yacht, CBP has held that “[m]erely removing a yacht from U.S. territorial waters on a temporary foreign pleasure cruise with the intent to return the yacht to the United States would not constitute an exportation.” See HQ 114931, supra, citing C.S.D. 79-85 (September 27, 1978). We have also determined that the temporary removal of a similarly-situated foreign-flagged vessel from the United States does not in and of itself constitute an exportation. See HQ 114301, supra.
Based on the facts presented, we note that there is no evidence that the vessel has entered Australia, despite being documented under Australian law. A yacht's country of documentation is not in and of itself determinative as to whether an importation has occurred, but rather, is one of any number of factors to be considered in determining whether the person bringing it into the United States did so with the intent that it remain in this country permanently. See American Customs Brokerage Co., Inc., A/C Astral Corp. v. United States, 72 Cust. Ct. 245, 254, C.D. 4556, citing Estate of Lev H. Prichard v. United States, 43 CCPA 85, 87-88; see also CBP Ruling HQ 223889 (July 8, 1998). The same rationale applies when speaking in terms of whether an exportation has in fact taken place (i.e., country of documentation is but one of any number of factors to be considered and not per se the controlling factor). See Estate of Lev H. Prichard v. U.S., 43 CCPA 85, 89; see also David B. Roberts v. U.S., 17 CCPA 215, 217.
Upon reviewing this matter, we note that the vessel in question was previously imported into the United States and documented under the laws of this country. Although its current owner is an Australian citizen who had the vessel documented under the laws of Australia, the vessel has never entered Australia and no Australian duty was ever paid on it. Furthermore, during this ownership the vessel has remained in the United States with the exception of about 60 days in Mexico. Notwithstanding the filing of the SED, which is stated to have been for California tax purposes, given the totality of these circumstances, we have determined that the subject vessel has not been exported from the United States within the meaning of section 101.1(k), Customs Regulations.
HOLDING:
Under the facts of this case, the above-described foreign-built vessel would not be considered to have been exported and then would not be subject to duty upon its sale within the United States to a U.S. resident.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection