VES-13-18-CO:R:IT:C 111538 BEW
Chief, Technical Assistant
Pacific Region
Commercial Operations
One World Trade Center
Long Beach, California 90853
Re: Protest No. No. 27040-005053: Long Beach, California Vessel
Repair Entry No. C27-0045926-9, dated April 29, 1990;
SEALAND DEFENDER, Voyage 105. U.S. spare parts and owner-
supplied spare parts; Customs and Trade Act of 1990; P.L.
101-382; 19 U.S.C. 1466(h).
Dear Sir:
This is in reference to a memorandum from your office which
transmitted protest No. 27040-005053, relating to vessel repair
entry No. C27-0045926-9, concerning the SEALAND DEFENDER, Voyage
105, which arrived at the port of Long Beach, California, on
April 29, 1990.
FACTS:
On April 4, 1990, while in Kobe, Japan, the vessel SEALAND
DEFENDER underwent various shipyard operations. The dutiability
of these operations has previously been considered by your
office. The entry was liquidated on October 12, 1990. The
protest was timely filed on December 13, 1990. Included in your
considerations was the matter of whether the spare parts used in
the repairs are dutiable under the statute.
The only item which is presently being protested is Item
(9a) - owner supplied spare parts which were used in foreign
repairs made to the pneumatic logic box for M/E report control
system.
The protestant claims that the subject items should be duty
free because these are spare parts which have been previously
imported and duty paid under the Harmonized Tariff Schedules of
the United States (HSTUS).
The protestant has submitted Customs Form 7501, Entry
Summary, dated April 6, 1989, and other documents to show that
the subject parts and materials were imported in the United
States, and that duties were paid on May 10, 1989.
ISSUE:
1. Whether sufficient evidence is presented to establish
that the owner-supplied spare parts used for foreign
repairs are spare parts which were previously imported
into the United States and duties paid under the HTSUS,
which are free under the vessel repair statute (19
U.S.C. 1466(h)).
LAW AND ANALYSIS:
Title 19, United States Code, section 1466(a), provides in
pertinent part for payment of duty in the amount of 50 percent ad
valorem on 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 be employed in such
trade.
The climate with regard to parts shipped abroad from the
United States for foreign installation was transformed on August
20, 1990, when the President signed Public Law 101-382 which
added a new subsection (h) to section 1466. While this
provision applies by its terms only to foreign-made imported
parts, there is ample reason to extend its effect to U.S.-made
materials as well. To fail to do so would act to discourage the
use of U.S.-made materials in effecting foreign repairs since
continued linkage of remission provisions of subsection (d)(2)
with the assessment provisions of subsection (a) of section 1466
would obligate operators to pay duty on such materials unless
they were installed by crew or resident labor. If an article is
claimed to be of U.S. manufacture, there must be proof of its
origin in the form of a bill of sale or domestic invoice. If an
article is claimed to have been previously entered for
consumption, duty paid by the vessel operator, there must be
proof of this fact in the form of a reference to the consumption
entry number for that previous importation, as well as to the
U.S. port of importation. If imported articles are purchased
from third parties in the United States, a domestic bill of sale
to the vessel operator must be presented.
The evidence presented by the protestant is sufficient to
substantiate that the subject parts are owner-supplied foreign
parts which were imported into the United States and duty paid
under the HTSUS, thus warranting remission pursuant to 19 U.S.C.
1466(h).
HOLDING:
The foreign work performed on the subject vessel for
which the protestant seeks relief is non-dutiable under 19 U.S.C.
1466(h).
Accordingly, the protest is granted.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch