LIQ:15:OT:RR:BSTC:CCI H137757 ALS
Mr. Lloyd W. Barnhart
Logistics Manager
BPC Chicago, LLC.
2150 East Lake Cook Road, Suite 110
Buffalo Grove, Illinois 60089
RE: Harbor Maintenance Tax; 19 CFR 24.24
Dear Mr. Barnhart:
This letter is in response to your request dated October 14, 2010, with respect to the various issues concerning the harbor maintenance tax. Our ruling is set forth below.
FACTS:
You state that your company is considering a business venture in which various bulk commodities will be imported. You plan on importing the commodities through the Louisiana customs ports of New Orleans, Baton Rouge, and Gramercy, among other Gulf Coast customs ports. You ask several questions regarding how the Harbor Maintenance Tax (also sometimes referred to as “HMT or “Harbor Maintenance Fee” or “HMF”) will be assessed based on the scenarios you present, which are as follows:
Scenario # 1: Importing vessel arrives at New Orleans with bulk cargo. A consumption entry is filed for the entire shipment under one bill of lading. The cargo is discharged onto barges and then transported to another location on the Mississippi River within the New Orleans port limits.
Scenario # 2: Importing vessel arrives at Gramercy with bulk cargo. The cargo is listed under two separate bills of lading. A consumption entry is filed on bill of lading A at Gramercy. The cargo is then transported to another location on the Mississippi River within Gramercy port limits. The cargo listed on bill of lading B is discharged onto barges and transported in-bond to a location within the Baton Rouge port limits, at which point a consumption entry will be filed at Baton Rouge for that cargo.
Scenario # 3: The importing vessel arrives at the port of Gramercy loaded with bulk cargo. At Gramercy, at consumption entry will be filed for the cargo under one bill of lading . The cargo will then be discharged from the vessel to barges and transported to another location within the New Orleans Port.
Scenario # 4: The importing vessel arrives at the port of Gramercy loaded with bulk cargo. At Gramercy, the cargo is discharged onto barges and delivery authorization will be obtained under a paperless inbond entry under one bill of lading. The cargo is transported to Baton Rouge, where a consumption entry is filed.
ISSUES:
Are Baton Rouge, Gramercy, and New Orleans considered one collective port for the purposes of assessing the HMT pursuant to 19 CFR 24.24?
Are commercial vessels that use fuel that is subject to the Inland Waterway Fuel Tax exempt from the HMT?
Where is the HMT to be paid if cargo is entered at one port but unladen at another port?
Where is the HMT to be paid if cargo is imported at one port but entered at another port?
LAW AND ANALYSIS:
The statutory authority for the Harbor Maintenance Tax is found in the Water Resources Development Act of 1986 (Pub. L. 99-662; 100 Stat. 4082, 4266; 26 U.S.C. § 4461 et seq.). Under this statute, a tax is imposed for the use of a port, defined as any channel or harbor or component thereof in the United States which is not an inland waterway, is open to public navigation, and at which Federal funds have been used since 1977 for construction, maintenance, or operation. Pursuant to 26 USC § 4462(g)(2), intra-port movements are exempt from imposition of the tax imposed under 26 U.S.C. § 4461. See also 19 CFR 24.24(d)(1). The Customs Regulations implementing these statutory provisions are found at 19 CFR Part 24. A list of the ports subject to the HMT is provided under 19 CFR 24.24(b)(1). Under the heading “Louisiana,” “Mississippi River Ports/Baton Rouge and Vicinity” has the ports of Baton Rouge and Gramercy listed under it, while “Mississippi River Ports/New Orleans and Vicinity” has the ports of New Orleans and Port Sulphur listed under it.* Thus, for HMT purposes, any of the following movements are considered intraport:
Any movement within the port of New Orleans, as defined under 19 CFR 24.24(b)(1);
Any movement within the port of Baton Rouge, including Gramercy, as defined under 19 CFR 24.24(b)(1);
For HMT purposes, any of the following movements are not considered intraport:
Any movement from the port of Baton Rouge, including Gramercy, to the port of New Orleans, as those ports are defined under 19 CFR 24.24(b)(1).
Therefore, any movement between Baton Rouge and Gramercy (as provided in the definition of Mississippi River Ports/Baton Rouge and Vicinity in 19 CFR 24.24(b)(1)), is intraport and consequently not subject to the HMT, but any movement between Baton Rouge and New Orleans, as those ports are defined under 19 CFR 24.24(b)(1), is not intraport and consequently may be subject to the HMT. See, e.g., CBP Ruling HQ 229202 (September 24, 2002).
You cite Treasury Decision 86-177 to support your contention that Baton Rouge, Gramercy, and New Orleans ports are to be considered one port for the purposes of the HMT. T.D. 86-177 was issued to “consolidate[s] the ports entry of New Orleans, Gramercy, and Baton Rouge, Louisiana, for marine purposes only.” (Emphasis added.) The assessment of a HMT is not a “marine purpose” as that concept is discussed in T.D. 86-177. T.D. 86-177 mentions vessel entry and clearance procedures specifically but nothing else. T.D. 86-177 notes that the three named ports are consolidated for the purposes of “navigation laws,” which specifically include “reporting the arrival and making formal entry of vessels” and “obtaining a permit to proceed between the consolidated port and other U.S. ports.” None of these procedures are to be confused with the assessment of HMT. Furthermore, nothing in T.D. 86-177 suggests that it is applicable in any cases not involving navigation laws as specifically mentioned therein. Therefore, T.D. 86-177 is not applicable to the present case.
Pursuant to 19 CFR 24.24(c)(5), commercial vessels are not subject to the HMT if any fuel used to move the cargo is subject to the Inland Waterway Fuel Tax (hereafter referred to as “IWFT”) (codified at section 4042 of the Internal Revenue Code of 1954). This provision does not make a distinction between vessels that have paid the IWFT directly and those that have paid the IWFT indirectly through a third party. Thus, any vessel for which proof can be shown that any fuel used to move the cargo is subject to the IWFT is exempt from the HMT.
Pursuant to 19 CFR 24.24(a), the HMT is to be assessed on “commercial cargo loaded or unloaded from a commercial vessel.” If the cargo is unloaded upon importation, then the liability for the HMT attaches, and is to be imposed, at the time of unloading at the port where the unloading occurred. See 26 U.S.C. § 4461(c)(2)(B) and 19 CFR 24.24(e)(2)(i). In our view, this means the first unloading of the cargo in cases where the cargo is subsequently reloaded on another vessel to be transported to another U.S. port. If cargo is unloaded and the HMT is assessed on that unloading, and the cargo is then reloaded on the same vessel, the reloading is not subject to the tax. See 19 CFR 24.24(d)(2). In our view, this means that the use of a different vessel would subject that same cargo to the HMT if reloaded on a different vessel for transport to a different U.S. port where it is to be unloaded.
If the cargo is loaded at a U.S. port to be transported to different U.S. port where it is unloaded, then the liability for the HMT attaches, and is to be imposed, at the time of the unloading at the port. See 26 U.S.C. § 4461(c)(2)(B) and 19 CFR 24.24(e)(1)(i). The HMT is to be paid in accordance with 19 CFR 24.24(e)(1)(ii), 19 CFR 24.24(e)(2)(ii), and 19 CFR 24.24(e)(3)(ii), as applicable.
HOLDING:
Transportation from one point within Mississippi River Ports/Baton Rouge and Vicinity to a second point within Mississippi River Ports/Baton Rouge and Vicinity (see 19 CFR 24.24(b)(1)) is intraport for HMT purposes.
Neither Baton Rouge nor Gramercy are within the port of New Orleans, as those ports are described in 19 CFR 24.24(b)(1), for HMT purposes. Transportation between Baton Rouge and New Orleans is not considered intraport for HMT purposes.
A commercial vessel that uses any fuel that is subject to the IWFT to move cargo is exempt from the HMT, regardless of how the IWFT is paid.
Liability for the HMT attaches, and is to be imposed, at the port of unloading if the cargo is imported or to be transported between U.S. ports.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Immigration Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection