VES-3-02-OT:RR:BSTC:CCR H249818 KLQ
Mr. Scott A. Wagner
Moore & Company, P.A.
355 Alhambra Circle, Suite 100
Coral Gables, FL 33134
RE: Coastwise Transportation; 46 U.S.C. §§ 55102 and 55103; 19 C.F.R. §§ 4.80 and 141.4; Harmonized Tariff Schedule of the United States (HTSUS) 8903.91.00 and 8903.92.00.
Dear Mr. Wagner:
This letter is in response to your December 24, 2013, ruling request regarding the operation and dutiability of the Turkish-flagged, MY REGINA, in United States (“U.S.”) waters. Our decision follows.
FACTS
The following facts are from e-mails sent to this Office on March 4, 2014, March 27, 2014, April 1, 2014 and April 3, 2014. The subject yacht, the MY REGINA (“vessel”), is Turkish flagged, non-U.S. owned, and under charter by a non-U.S. citizen. The vessel departed from Margarita Isle, Venezuela on March 29, 2014. The vessel will arrive in Miami, Florida on April 6, 2014, and dock at the Miami Beach Marina. Your client indicates that there will be no passengers onboard when the vessel arrives in the United States. The vessel will remain stationary at the dock at the Miami Beach Marina.
While at the Miami Beach Marina, the vessel will serve as a viewing and hospitality venue for the John Walker & Sons Voyager: A Journey Without Boundaries promotional tour. The vessel will provide “certain accommodations and meals for employees of the charterer, staff, sponsors, and their guests.” The foregoing passengers will embark the vessel for purposes of this hospitality and disembark at the conclusion of the event. The vessel will remain stationary during the event.
After the event, the vessel will depart from Miami, Florida to Antigua, Antigua and Barbuda on April 10, 2014. Your client indicates that no passengers will embark the vessel in Miami for purposes of traveling to Antigua. In addition, your client provided a copy of the charter agreement under which the vessel sails. The charter ends on April 10, 2014, and contains a clause stating that the owner of the vessel will not sell the vessel during the charter period. Your client also stated in the ruling request that the vessel is not for sale.
ISSUES
Whether the proposed embarkation and disembarkation of passengers by the subject vessel violates 46 U.S.C. § 55103?
Whether the subject vessel is dutiable upon entry into the United States?
LAW and ANALYSIS
Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.”
The coastwise laws generally apply to points in the territorial sea, which is defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline. See 33 C.F.R. § 2.22(a)(2)(2013).
The CBP Regulations at 19 C.F.R § 4.80 provide, in pertinent part:
(a) No vessel shall transport, either directly or by way of a foreign port, any passenger or merchandise between points in the United States embraced within the coastwise laws, including points within a harbor, or merchandise for any part of the transportation between such points, unless it is:
(1) Owned by a citizen and is so documented under the laws of the United States as to permit it to engage in the coastwise trade;
(2) Owned by a citizen, is exempt from documentation, and is entitled to or, except for its tonnage, would be entitled to be documented with a coastwise endorsement.
(3) Owned by a partnership or association in which at least a 75 percent interest is owned by such a citizen, is exempt from documentation and is entitled to or, except for its tonnage, or citizenship of its owner, or both, would be entitled to be documented for the coastwise trade. The term “citizen” for vessel documentation purposes, whether for an individual, partnership, or corporation owner, is defined in 46 C.F.R 67.3.
(b) Penalties for violating coastwise laws. (1) The penalty imposed for the illegal transportation of merchandise between coastwise points is forfeiture of the merchandise or, in the discretion of the port director, forfeiture of a monetary amount up to the value of the merchandise to be recovered from the consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing the merchandise to be transported [46 U.S.C. § 55102].
Issue 1
The coastwise law applicable to the transportation of passengers is found in 46 U.S.C. § 55103 which provides:
(a) In General. Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel-
(1) is wholly owned by citizens of the United States for purposes of engaging in coastwise trade; and
(2) has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from
documentation but would otherwise be eligible for such a certificate and endorsement.
(b) Penalty. The penalty for violating subsection (a) is $300 for each passenger transported and landed.
The vessel departed from Margarita Isle, Venezuela on March 29, 2014 and will arrive in Miami, Florida on April 6, 2014. Your client indicates that there will be no passengers onboard when the vessel arrives in Miami, Florida. However, passengers will embark the vessel for the hospitality event and disembark at the conclusion of the event. Insofar as the vessel will not leave the dock while at the Miami Beach Marina, no coastwise transportation will occur. The vessel will depart from Miami, Florida on April 10, 2014, and travel to Antigua, Antigua and Barbuda. Your client indicates that no passengers will embark the vessel in Miami for purposes of traveling to Antigua.
Issue 2
With regard to whether the subject vessel will be dutiable upon entry, pursuant to 19 C.F.R. § 141.4 in pertinent part:
(a) General. All merchandise imported into the United States is required to be entered, unless specifically excepted.
(b) Exceptions. The following are the exceptions to the general rule:
(2) Vessels (not including vessels classified in headings 8903 and 8907 and subheadings 8905.90.10 and 8906.00.10 or in Chapter 98, HTSUS, such as under subheadings 9804.00.35 or 9813.00.35). See also Chapter 89, Additional U.S. Note 1, HTSUS.
In HQ H115987 (May 15, 2003) CBP held, “a yacht or pleasure vessel, regardless of length or tonnage, whether motor, sail or steam propelled, owned by a resident of the United States or brought into this country for sale or charter to a resident of the United States, is dutiable under…HTSUS subheadings 8903.91.00 or 8903.92.00.” The subject vessel is owned by a Turkish corporation and is under charter by a non-U.S. citizen. Your client indicates that the subject vessel is not for sale. In addition, your client provided a copy of the charter agreement which states that the owner of the vessel may not sell the vessel during the charter period. The charter agreement concludes on April 10, 2014, the day the vessel is scheduled to leave the United States.
Should the port director find evidence that the subject vessel is being offered for sale or charter to a U.S. resident while the vessel is in the U.S., a consumption entry must be filed and the applicable duty paid under Chapter 89, subheadings 8903.91.00 or 8903.92.00, HTSUS.
HOLDING
The proposed embarkation and disembarkation of passengers by the subject vessel does not violate 46 U.S.C. § 55103.
The subject vessel is dutiable upon entry should the port director find evidence that the subject vessel is being offered for sale or charter to a U.S. resident while the vessel is in the United States.
Sincerely,
Lisa L. Burley
Chief/ Supervisory Attorney-Advisor
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations and Rulings
U.S. Customs and Border Protection