VES-11-11 CO:R:IT:C 111869 BEW
Mr. Dennis M. Mahoney
Manager
Fedmar International
20950 Center Ridge Road
Cleveland, Ohio 44116
RE: Tonnage Taxes; Entry of vessels; Ontario, Canada; 46 U.S.C.
App. 121
Dear Mr. Mahoney:
This is in reference to your letter of August 12, 1991,
concerning a request for a ruling regarding proper tonnage tax
assessment for vessels arriving in ballast at U.S. ports after
having performed cargo work in the Province of Ontario, Canada.
Enclosed with your request is a letter dated July 21, 1991,
addressed to the District Director of Customs, Cleveland, Ohio,
and a letter dated August 7, 1991, from the District Director of
Customs, Cleveland, Ohio, concerning this matter.
FACTS:
You state that the M.V. BARONIA arrived at the port of
Cleveland in ballast from Toronto, Ontario, Canada, at 06:30
hours on April 24, 1991. You state that the vessel had completed
discharge of the previous voyage's cargo at the port of Toronto,
just prior to arrival at the port of Cleveland.
You state that you paid 27 cents tonnage tax for the vessel
in the amount of $3,093.66. You state that no tonnage taxes
should have been assessed since the vessel arrived from the
Province of Ontario. You request a refund of the full amount of
$3,093.66 assessed against the subject vessel.
ISSUE:
Whether a vessel which has proceeded from a foreign port to
which the 27 cents tonnage tax rate is applicable, unladen all of
the cargo at a port where the 9 cent rate is applicable and
proceeds in ballast to the U.S. is subject to the assessment of
tonnage at the higher rate of 27 cents.
LAW AND ANALYSIS:
The Omnibus Budget Reconciliation Act of 1990, amended 46
U.S.C. App. 121, to increase the tonnage taxes collected from
vessels arriving in the United States from foreign ports. For
all vessels entering a port of the United States from any foreign
port or place in North America, Central American, the West
Indies, the Bahamas Islands, the Bermuda Islands, Newfoundland,
or the coast of South American bordering on the Caribbean Sea
(considered to include the mouth of the Orinoco River), or the
high seas adjacent to the United States or the above listed
locations, to 9 cents per ton, not to exceed in the aggregate of
45 cents per ton in any one year. For vessels entering a port of
the United States from any other foreign port or place, the
amount of tonnage tax was increased to 27 cents per ton, not to
exceed $1.35 per ton per year.
The Customs Regulations pertaining to tonnage taxes and
light money are found in section 4.20-4.24, Customs Regulations
(19 CFR 4.20-4.24). Section 4.20 (a)(2) provides that when a
vessel transports cargo or passengers from a 27 cent port to a 9
cent port and all such cargo or passengers have been unladen at
the 9 cent port, and the vessel proceeds in ballast to the United
States, the rate is assessed at the 9 cent rate.
Under the foregoing section of the Customs Regulations, the
tonnage taxes would be assessed against the subject vessel at the
lower rate of 9 cent, unless exempted under section 4.21 of the
Customs Regulations (19 CFR 4.21).
Section 4.21 of the Customs Regulations provides for certain
exemptions from tonnage taxes. Section 4.21 (b)(13) provides
that a vessel shall not be liable to the payment of tonnage taxes
or light money because:
(13) It enters otherwise than by sea from a foreign
port at which tonnage or lighthouse dues or equivalent
taxes are not imposed on vessels of the United States.
Title 46 United States Code, Appendix, section 132 (46
U.S.C. App. 132) provides:
Vessel entering otherwise than by sea from a foreign
port at which tonnage or lighthouse dues or other
equivalent tax or taxes are not imposed on vessels of
the United States shall be exempt from the tonnage duty
of 9 cents per ton, not to exceed in the aggregate of
45 cents per ton in any one year, for fiscal years
1991, 1992, 1993, 1994, and 1995, and 2 cents per ton,
not to exceed in the aggregate of 10 cents per ton in
any one year, for each fiscal year thereafter.
The Customs Regulations provide under section 4.21(13),
footnote 44 (19 CFR 4.21(13) n. 44) that "... (46 U.S.C. 132)
This section applies to a vessel arriving in the United States on
a voyage otherwise than by sea from a port in the province of
Ontario, Canada, only."
Based on the foregoing, under the above stated circumstances
we find that the subject vessel is exempt under the provisions of
46 U.S.C. App. 132 and 19 CFR 4.21(13) from the payment of
tonnage taxes.
The procedures and requirements for obtaining a refund of
tonnage taxes and light money are in section 4.24 of the Customs
Regulations (19 CFR 4.24) (copy enclosed). Under that section,
an application for refund must be made within 1 year from the
date of payment. The authority to make refunds has been
delegated to the several Regional Commissioners of Customs.
Paragraph (e) of section 4.24 provides that such an application
must include:
... a certificate by the owner or ... agent that payment of
tonnage tax at the applicable rate has been or will be made
for each entry of the vessel on a voyage on which that rate
is applicable before the end of the current tonnage year,
exclusive of any payment which has been refunded or which
may be refunded as a result of such application.
A copy of this letter is being sent to the District Director
of Customs, Cleveland, Ohio, for information.
HOLDING:
A vessel which enters the U.S. otherwise than by sea from a
foreign port at which tonnage or lighthouse dues or
equivalent taxes are not imposed on vessels of the United
States, is exempt from the payment of tonnage taxes under
the provisions of 46 U.S.C. App. 132.
The subject vessel which arrived in ballast from Ontario,
Canada is exempt from the payment of duty under the
provisions of 46 U.S.C. App. 132 and 19 CFR 4.21(13).
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch
Enclosure
cc: District Director, Cleveland