VES 12-02 CO:R:P:C DHR
United States
Item 8901.10.00 Harmonized System
Tariff Schedules
Mr. Dale G. Vander Yacht
Border Brokerage Company
Post Office Box B
Blaine, Washington 98230
RE: Tariff classification of a two-person submarine and the
applicability of the coastwise laws to its use in the
United States.
Dear Mr. Yacht:
Your inquiry of May 25,1988, addressed to our New York
office concerning the tariff classification of two-man
submarines and the application of the coastwise laws to their
operation has been referred to the Carrier Rulings Branch for a
direct reply to you.
FACTS:
It is proposed to import Canadian-built two-man
submarines. The craft is self-propelled by a battery-driven
electric motor and is referred to by the manufacturer,
Adventure Vehicle Dynamics, Inc., of British Columbia, as a
"Sport Sub".
The advertising literature for the submarine makes
reference to a Sport Sub pilot requiring training in its
operation plus having to have scuba certification. The
literature also refers to the revenue which can be generated by
the Sport Sub's making 6 to 8 excursion dives per day. The
letter of inquiry represents that the craft would generally be
used for hire, whereby an operator would take a person for a
ride and return to the point of departure.
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ISSUES:
1. Whether the Sport Sub is subject to duty.
2. Whether the operation of the Sport Sub, as described
in the letter of inquiry, would be in violation of the
coastwise laws.
3. Could the craft engage in coastwise trade if the hull
were manufactured in the United States.
LAW AND ANALYSIS:
Section 401, Tariff Act of 1930, as amended (19 U.S.C.
1401), defines the term "vessel" as "every description of water
craft or other contrivance used, or capable of being used, as a
means of transportation in water." The Sport Subs are deemed
to be "vessels" as that term is used in the statutes.
General Headnote 5 (g), Tariff Schedules of the United
States (TSUS) provides that vessels which are not yachts or
pleasure vessels within the purview of the Schedules are not
articles subject to the provisions of the Schedules.
Item 8901.10.00, Harmonized System Tariff Schedules of the
United States (effective January 1, 1989 ) provides that
vessels such as the craft under consideration used for the
transportation of persons are free of duty.
The Customs Service has ruled that vessels which carry
passengers solely within United States territorial waters are
engaged in coastwise trade, even where the passengers disembark
from the vessel at the United State point of embarkation. It
follows that vessels which traverse waters outside the United
States during the course of a round trip from a United States
point are not engaged in coastwise trade. Pursuant to the
provisions of section 12102, title 46, United States Code, only
a vessel which is built in the United States can be documented
to engage in the coastwise trade. The United States Coast
Guard is the agency responsible for the documentation of
vessels.
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HOLDING:
1. The Sub Sport two-man submarines, if brought in for
use as described in your letter, would not be subject to the
assessment of duty. If, however, it should later be determined
that the crafts are suitable for use and are being used by
either the owner or operator for pleasure purposes, the Customs
Service would be constrained to review the issue of whether
they are subject to the payment of duty under either the TSUS
or the Harmonized System.
2. The dutiable status of the Sport Sub would not affect
the applicability of the coastwise laws to its proposed
operation.
3. Whether the Sport Sub would be considered U.S.-built
if the hull were manufactured in the United States and thus be
entitled to engage in the coastwise trade would be a matter for
determination by the United States Coast Guard.
Sincerely,
B. James Fritz
Chief,
Carrier Rulings Branch
CC: Assistant Area Director, New York
CO:R:P:C:DReusch:mr 10/28/88