OT-RR:BSTC:CCI H071035 GOB
Jeannette Revis
Manager – Transportation/Customs
Maersk Line, Limited
One Commercial Place
20th Floor
Norfolk, VA 23510-2103
RE: 19 U.S.C. § 1466; United States-Oman Free Trade Agreement
Dear Ms. Revis:
This is in response to your correspondence of August 3, 2009 on behalf of Maersk Line, Limited (“Maersk”) with respect to the vessel repair statute, 19 U.S.C. § 1466, and the United States-Oman Free Trade Agreement (“Oman FTA”). Our ruling is set forth below.
FACTS:
Maersk proposes to have maintenance performed on the main engine of certain vessels by the original equipment manufacturer in Dubai, U.A.E. Prior to the work at Dubai, Maersk must send the vessels’ generators to Salalah, Oman for overhaul. Your request concerns the treatment under 19 U.S.C. § 1466 of the cost of the labor performed in Oman in the situation where generators are reinstalled on the vessels in Dubai and in the situation where generators are placed on the vessels in Dubai as spares.
ISSUE:
Whether the cost of the labor performed in Oman is dutiable under 19 U.S.C. § 1466 or duty-free under the Oman FTA.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466 (19 U.S.C. §1466) provides for the payment of duty at a rate of fifty percent ad valorem on the cost of equipment for and foreign repairs to vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to be employed in such trade.
The provisions of the Oman FTA were adopted by the United States with the enactment of the United States – Oman Free Trade Agreement Implementation Act (the “Act”), Pub. L. 109-283, 120 Stat. 1191 (19 U.S.C. 3805 note), on September 26, 2006. On December 29, 2008, President Bush signed Proclamation 8332 to implement the provisions of the Oman FTA. The proclamation, which was published in the Federal Register on December 31, 2008 (73 FR 80289), modified the Harmonized Tariff Schedule of the United States (“HTSUS”) as set forth in Annexes I and II of Publication 4050 of the U.S. International Trade Commission. The modifications to the HTSUS included the addition of new General Note 31 and the insertion throughout the HTSUS of the preferential duty rates applicable to individual products under the Oman FTA where the special program indicator “OM” appears in parenthesis in the “Special” rate of duty subcolumn.
Subheading 9818.00.07, HTSUS, is among the provisions listed in Annex II to the Oman FTA where the special program indicator “OM” appears in the parenthesis in the “Special” rate of duty subcolumn. Subheading 9818.00.07, HTSUS, provides as follows:
Equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon, a vessel described in U.S. note 1 to this subchapter:
. . .
Other, upon first arrival in any port of the United States of any vessel described in U.S. Note 1 to this subchapter
Subheading 9818.00.07, HTSUS, reflects the essential concept of 19 U.S.C. § 1466, i.e., dutiability on the cost of foreign vessel repairs and equipment purchased in a foreign country. The special program indicator “OM” appears in the parenthesis in the “Special” rate of duty subcolumn for this subheading. The rate of duty in the “Special” subcolumn for this subheading is “Free.”
We therefore find that the cost of the labor performed in Oman on the generators of the subject vessels is duty-free under the Oman FTA. This is the case whether the generators are reinstalled on the vessels in Dubai or placed on the vessels in Dubai as spares.
HOLDING:
The cost of the labor performed in Oman on the generators of the subject vessels is duty-free under the Oman FTA.
We emphasize that this ruling is merely advisory in nature and does not eliminate the requirement to declare work performed abroad at the vessels’ first United States port of arrival, nor does it eliminate the requirement to file vessel repair entries showing this work (See section 4.14(d) and (e), CBP Regulations (19 CFR § 4.14(d) and (e))). Furthermore, any final determination on this matter is contingent on CBP’s review of the evidence submitted pursuant to section 4.14(i), CBP Regulations (19 CFR § 4.14(i)).
Sincerely,
Glen E. Vereb
Chief
Cargo Security, Carriers & Immigration Branch