VES-13-18-RR:IT:EC 114436 CC
Chief, Liquidation Branch
U.S. Customs
P.O. Box 2450
San Francisco, CA 94126
RE: Protest No. 3001-98-100193; Vessel Repair Entry No. 110-7995660-0;
M.V. PRESIDENT TRUMAN; V-100E; 19 U.S.C. § 1466(h)(3);
HQ 114303
Dear Madam:
This is in response to your memorandum of July 27, 1998, forwarding a protest with respect to the above-referenced vessel repair entry.
FACTS:
The PRESIDENT TRUMAN (the “vessel”), a U.S.-flag vessel, arrived at the port of Seattle, Washington on January 1, 1998. The subject vessel repair entry was subsequently filed. The vessel underwent certain foreign shipyard work in Canada, Japan, and the Republic of China.
An application for relief was timely filed, and your office denied relief in a letter dated February 1, 1996. A petition for review was timely filed, and our office denied the petition in Headquarters Ruling (HQ) 114303, dated March 26, 1998. The subject entry was liquidated on April 24, 1998. A protest was timely filed on June 9, 1998.
The protestant protests our decision to deny relief for Item 10, Doppler Transducers. In HQ 114303 we found that this item was not eligible for relief pursuant to 19 U.S.C. § 1466(h)(3) because it was equipment of the vessel. The protestant claims that this item is a part rather than equipment, and therefore should be eligible for relief pursuant to 19 U.S.C. § 1466(h)(3).
ISSUE:
Whether the costs of the subject item are dutiable pursuant to 19 U.S.C. § 1466(a) or are eligible for treatment pursuant to 19 U.S.C. § 1466(h)(3).
LAW AND ANALYSIS:
19 U.S.C. § 1466(a) provides, in part, for payment of an ad valorem duty of 50 percent of the cost of foreign repairs to vessels documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to engage in such trade.
19 U.S.C. § 1466(h)(3) provides that duty imposed by subsection (a) [19 U.S.C. § 1466(a)] shall not apply to the following:
[T]he cost of spare parts necessarily installed before the first entry into the United States, but only if duty is paid under appropriate commodity classifications of the Harmonized Tariff Schedule of the United States upon first entry into the United States of each such spare part purchased in, or imported from, a foreign country.
We have ruled that 19 U.S.C. § 1466(h)(3) applies only to certain qualifying parts, and does not include equipment. A part under section 1466 is determined to be something which does not lose its essential character or its identity as a distinct entity but which, like materials, is incorporated into a larger whole. It would be possible to disassemble an apparatus and still be able to readily identify a part. The term part
does not mean part of a vessel, which practically speaking would encompass all elements necessary for a vessel to operate in its designed trade. Examples of parts as defined are seen in such items as piston rings and pre-formed gaskets, as opposed to gaskets which are cut at the work site from gasket material. See HQ 113796, dated March 12, 1997, and HQ 114243, dated April 23, 1998.
The term equipment as used in the vessel repair statute is determined to mean something which constitutes an operating entity unto itself. Equipment retains at least the potential for portability. Equipment may be affixed to a vessel in a non-permanent fashion, such as by means of bolts or other temporary methods, which is a feature distinguishing it from being considered an integrated portion of the hull and superstructure of a vessel. Examples of equipment as defined are seen in such items as winches and generators. See HQ 114243.
We found in HQ 114303 that the petitioner’s purchase order indicated that the subject Doppler transducers were navigation equipment. The protestant has submitted, in support of its claims, a copy of an excerpt from SNAME Ship Design and Construction Ship Maneuvering, Navigation and Control Systems, at Page 555, which states, in pertinent part, the following:
Other Aids to Navigation. These aids consist of Doppler sonar, satellite communication receivers, Loran, and Omega. The Doppler sonars consist of keel mounted transducers which send down pulsed sonic beams and convert the return signals into displays of ship speed, ahead and transverse.
The protestant also claims that this excerpt shows that the Doppler Transducers, which the protestant refers to as a “Doppler Speed Log system,” consists of a power supply, an amplifier, a transducer and an indication readout. Thus, the protestant argues, the transducer is only a part of an integrated system and should not be considered equipment.
Although the protestant has submitted some general information on Doppler sonars and transducers, no additional information on the specific item at issue has been submitted. Thus, the only information we have for the item consists of the purchase order and invoices submitted with the petition. Consequently, we are unable to substantiate the information provided by the protestant and unable to conclude that the particular item at issue consists of a part of an integrated system rather than equipment. In addition, although as indicated above we have little information concerning the item, it appears to be more like a subassembly of a system rather than a part. An analogy would be a keyboard, monitor, and central processing unit, all of which would be considered subassemblies of a computer, whereas a microchip would be considered a part. Based on the foregoing, we find that the item at issue is equipment.
HOLDING:
The subject item is considered equipment and thus is not eligible for treatment under 19 U.S.C. § 1466(h)(3). The costs of the subject item are dutiable pursuant to 19 U.S.C. § 1466(a). Accordingly, the protest is DENIED.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the
Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers Branch