VES-3-RR:IT:EC 114204 CC
R.H. Dickerman
President
Dickerman Overseas Contracting Co.
1800 Admiral Court
Kissimmee, FL 34744
RE: Amphibious vehicles; Vessels; Place of build; Coastwise
trade; Passenger transportation; 46 U.S.C. App. 289
Dear Mr. Dickerman:
This is in response to your letter of December 22, 1997,
requesting that we rule that certain foreign-built amphibious
vehicles rebuilt in the U.S. qualify for use as vessels in
domestic passenger transportation.
FACTS:
You state that your company is importing amphibious trucks
from England at a cost of approximately $6000 each. The vehicles
have been in storage for approximately 10 years and require
extensive mechanical work prior to being placed in service. Your
company mechanics strip virtually very major mechanical component
from the hull, including engine, transmission, transfer case,
etc. After the mechanical work is completed, the vehicle is
shipped to a subcontractor for additional work, such as
installing additional seats.
You have enclosed a summary of expenses, which states the
following costs for the vehicles: original purchase price from
England --- $6000; re-manufacture cost --- $68,220.98; retail
sales price --- $200,000. You have included invoices and photos
of the vehicles in their condition as received from England and
after they have been remanufactured.
ISSUE:
Whether, following refurbishment in the United States, the
imported vehicles under consideration may lawfully be used to
provide passenger transportation between points embraced within
the coastwise laws.
LAW AND ANALYSIS:
46 U.S.C. App. 289, the passenger coastwise law, prohibits
the transportation of passengers between points embraced within
the coastwise laws of the United States, either directly or by
way of a foreign port, in a non-coastwise-qualified vessel (i.e.,
any vessel not built in and documented under the laws of the
United States and owned by persons who are citizens of the United
States).
Pursuant to 46 U.S.C. 12106 and 12110, the Customs
Service has consistently held that the prohibition in 46 U.S.C.
App. 289 applies to all non-coastwise qualified vessels. Such
vessels include any vessel other than a vessel built in, properly
documented under the laws of, and owned by citizens of the
United States, with certain exceptions (see 46 U.S.C.
12106(a)(2)(B) and 19 CFR 4.80(a)(2) and (3)).
In its administration of 46 U.S.C. App. 289, the Customs
Service has ruled that the carriage of passengers entirely within
territorial waters, even though the passengers disembark at their
point of embarkation and the vessel touches no other coastwise
point, is considered coastwise trade subject to the coastwise
laws. However, the transportation of passengers to the high seas
(i.e., beyond the 3 mile territorial sea) and back to the point
of embarkation, assuming the passengers do not go ashore, even
temporarily, at another United States point, often called a
"voyage to nowhere," is not considered coastwise trade. 29
O.A.G. 318 (1912).
In Headquarters Ruling (HQ) 114171, dated November 24, 1997,
we ruled on a similar case, the importation of amphibious
vehicles refurbished in the United States. In that ruling, we
stated the following:
Normally, the process of documenting a vessel is
completed by the United States Coast Guard. For the
purpose of documentation and the issuance of a
coastwise license, the Coast Guard first makes a
determination that a vessel measures at least 5 net
tons and has been built in the United States. However,
vessels measuring less than 5 net tons cannot be
documented under the United States flag by the United
States Coast Guard. In the case of such vessels, the
United States Customs Service determines questions on
certain qualifications which are germane to the
vessel's activities. In particular, the Customs
Service must determine whether vessels of less than 5
net tons have been built in the United States for
purposes of the coastwise laws.
Of course, qualified vessels of less than 5 net
tons are not precluded from engaging in the coastwise
trade simply because they cannot be documented under
the laws of the United States. Section 4.80(a),
Customs Regulations (19 CFR 4.80(a)(2)) provides that
no vessel exempt from documentation (e.g. of less than
5 net tons) shall transport any passengers or
merchandise between United States coastwise points
unless the vessel is owned by a citizen of the United
States and is entitled to or, except for its tonnage,
would be entitled to be documented with a coastwise
license. As stated above, to be entitled to be
documented with a coastwise license, a vessel must,
among other things, be built in the United States (46
U.S.C. 12106(a)(2)), with an exception inapplicable in
this case.
We have carefully reviewed the documentation you have
submitted, and have determined that the amphibious vehicles under
consideration are very similar to those of HQ 114171. In
addition, the value added to the refurbished vehicles is similar
to the value added to the vehicles in HQ 114171. (The value
added, comparing purchase price to retail sales price, is 33
times the purchase price for these vehicles; in HQ 114171 the
retail price was approximately 40 times the purchase price of the
vehicles.) Consequently, in application of HQ 114171, we find
that the amphibious vehicles are considered to be of United
States manufacture.
HOLDING:
The refurbished amphibious vehicles are considered to be of
United States manufacture and may be utilized in domestic
passenger transportation activities.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch