VES-3-18-RR:IT:EC 116301 GOB
Chief, Vessel Repair Unit
U.S. Customs and Border Protection
423 Canal Street
New Orleans, LA 70130
RE: 19 U.S.C. 1466(a) and (h)(2); Vessel Repair Entry MQ8-1000513-1;
Protest 2002-04-100798; Barge 450-10
Dear Sir:
This is in response to your memorandum of August 26, 2004, forwarding for our review the protest filed by Crowley Marine Services, Inc. (the “protestant”) with respect to Vessel Repair Entry MQ8-1000513-1. Our ruling follows.
FACTS:
The Barge 450-10 (the “vessel”) is a U.S.-flag vessel owned by the protestant. It incurred foreign shipyard costs in Canada. The vessel arrived in Seattle on January 22, 2004. A vessel repair entry was timely filed.
ISSUE:
Whether the costs for which the protestant seeks relief are dutiable under 19 U.S.C. § 1466.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466 (a) (19 U.S.C. § 1466(a)) provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to be employed in such trade.
You have asked us to review the following items: three costs for chain on Washington Chain and Supply, Inc. (“Washington Chain”) invoice 1033541-01; and one item for galvanized wire rope on Washington Chain invoice 1033288-02.
Title 19, United States Code, § 1466(h)(2) (19 U.S.C. 1466(h)(2)) provides in pertinent part that the duty imposed by subsection (a) shall not apply to certain parts and materials. For this purpose we have defined “part” and “material” as follows.
Part – An article 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 identify a part. Examples would include piston rings and pre-formed gaskets.
Material – An item which is consumed in the course of its use and/or loses its identity as a distinct entity when incorporated into the larger whole, e.g., paint and sheets of steel.
Relief under subsection (h)(2) is not available for “equipment,” which we generally define as follows:
Equipment – An article 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 would include winches and generators.
We find that the subject chains (i.e., three costs for chain on Washington Chain invoice 1033541-01) are “parts” within the meaning of 19 U.S.C. 1466(h)(2) in view of the fact that they constitute components of the tow system. They therefore qualify for relief under that provision as they meet the other requirements of the provision. Our determination is consistent with HQ 113585 dated June 6, 1996, where we held that an anchor chain is a “part” eligible for relief under 19 U.S.C. 1466 (h)(3) and HQ 112202 dated May 20, 1992, where we held that an anchor chain was eligible for treatment under 19 U.S.C. 1466(h)(2).
We find that the galvanized wire rope on Washington Chain invoice 1033288-02 is a “part” within the meaning of 19 U.S.C. 1466(h)(2). It also constitutes a component of a tow system and therefore qualifies for relief under that provision as it meets the other requirements of the provision.
HOLDING:
You are instructed to grant the protest with respect to the subject items on the two Washington Chain invoices.
In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), 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 in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Glen E. Vereb
Chief
Entry Procedures and Carriers Branch