VES-3-02-OT:RR:BSTC:CCR H236157 LLB
Supervisory Import Specialist
Vessel Repair Unit
U.S. Customs and Border Protection
423 Canal Street, Suite 246
New Orleans, Louisiana 70130
RE: 19 U.S.C. § 1466; Vessel Repair Entry C20-0082385-9; M/V GREEN BAY; Protest No. 2002-12-10008; Spare Parts; U.S.-Singapore Free Trade Agreement.
Dear Sir:
This letter is in response to your memorandum of February 17, 2012, forwarding for our review the protest filed on behalf of Waterman Steamship Corp., (hereinafter “the protestant”) from the denial of an application for relief for Vessel Repair Entry C20-0082385-9. Our decision follows.
FACTS
The M/V GREEN BAY, a U.S.-flag vessel (hereinafter “the vessel”) owned by the protestant, incurred foreign shipyard costs for spare parts for which a timely vessel repair entry was filed. The protestant timely filed an Application for Relief for entry item numbers 1-9, but did not for file for relief for entry item numbers 10-12. In a decision dated December 16, 2011, the Vessel Repair Unit, denied relief for entry item numbers 1-5 and 9. The protestant timely filed the subject application for further review seeking relief from duty pursuant to the U.S.-Singapore Free Trade Agreement.
ISSUE
Whether the imported spare parts are eligible for duty-free treatment under the U.S.-Singapore Free Trade Agreement.
LAW and ANALYSIS
Generally, the vessel repair statute exempts from duty spare repair parts or materials that have been manufactured in the United States or entered the United States duty-paid, and used aboard a cargo vessel engaged in foreign or coastwise trade. Where a part is purchased from a party unrelated to the vessel owner, a United States invoice or bill of sale constitutes sufficient evidence that the product was either manufactured in the United States or entered in the United States duty-paid. See e.g. HQ 115561 (Apr. 8, 2002).
This protest, however, concerns vessel spare parts purchased from another country and laden aboard the vessel at Singapore. The protestant concedes such in its protest that the spare parts were purchased abroad and air-freighted to Singapore to be laden onboard the vessel. The protestant claims relief in accordance with the U.S.-Singapore Free Trade Agreement (US-SFTA). The implementation of the U.S.-SFTA is provided for by the United States-Singapore Free Trade Agreement Implementation Act (Pub.L. 108-78; 117 Stat. 948), implemented by General Note 25 to the Harmonized Tariff Schedule of the United States (HTSUS). General Note 25 provides, in pertinent part:
(a) Originating goods under the terms of the United States-Singapore Free Trade Agreement (SFTA) are subject to duty as provided herein. For the purposes of this note, goods of Singapore, as defined in subdivisions (b) through (o) of this note, that are imported into the customs territory of the United States and entered under a provision for which a rate of duty appears in the “Special” subcolumn of column 1 followed by the symbol “SG” in parentheses are eligible for the tariff treatment and quantitative limitations set forth in the “Special” subcolumn, in accordance with sections 201 and 202 of the United States-Singapore Free Trade Agreement Implementation Act (Pub.L.108-78; 117 Stat. 948).
(b) For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, goods imported into the customs territory of the United States are eligible for treatment as originating goods of a SFTA country under the terms of this note only if they–
(i) were wholly obtained or produced entirely in the territory of Singapore or of the United States, or both;
(ii) are goods that, in their condition as imported, are enumerated in subdivision (m) of this note and imported from the territory of Singapore; or
(iii) have been transformed in the territory of Singapore or of the United States, or both, so that each nonoriginating material:
(A) undergoes an applicable change in tariff classification set out in subdivision (o) of this note as a result of production occurring entirely in the territory of Singapore or of the United States, or both; or
(B) if no change in tariff classification is required, the good otherwise satisfies the applicable requirements set forth in such subdivision (o).
. . .
(c) (i) For purposes of subdivision (b)(i) of this note, except as otherwise provided in subdivision (d) of this note for textile and apparel articles, the expression wholly obtained or produced” refers to goods that are–
. . .
(K) goods produced in the territory of Singapore or of the United States, or both, exclusively from goods referred to in subdivisions (A) through (I) above, inclusive, or from the derivatives of such goods.
Accordingly, in order to be eligible for preferential treatment pursuant to the US-SFTA, the subject spare parts would have to have been “wholly obtained or produced entirely in the territory of Singapore” in accordance with the provisions of General Note 25(b)(i), which would require that the spare parts have been “produced in the territory of Singapore” as provided for in General Note 25(c)(i)(K); have been enumerated in subdivision (m) of General Note 25 and imported from the territory of Singapore; or, have been transformed in the territory of Singapore or of the United States, or both, so that each nonoriginating material underwent an applicable change in tariff classification set out in subdivision (o) of General Note 25. A review of the supporting documentation is indicative of the origin of the subject merchandise:
Vessel Entry Item 1: “Spare Parts for Main Eng.”
Invoice and air waybill: ISS Machinery Services Limited, Osaka Japan Shipping Terms: FOB Japan Manufacturers: Nabtesco Corporation; Toyahashi; Mitusui-Man B&W; Wakefield Corporation; and Sunflame.
Vessel Entry Item 2: “Spare Parts for HFO Purifier”
Invoice and air waybill: IHI Marine Co. Ltd. Aichi, Japan
Manufacturers: Nakakita Seisakusho, Co. Ltd.
Vessel Entry Item 3: “Spare Parts for Main Eng.”
Invoice and air waybill: Sunami Marine Co., Ltd. Kobe, Japan
Manufacturers: Nakakita Seisakusho, Co. Ltd.
Vessel Entry Item 4: ‘Spare Parts for Lifeboats”
Invoice and air waybill: Hanil-Fuji (Korea) Co., Ltd. Busan, Korea
Manufacturers: DSB Engineering Co., Ltd.
Vessel Entry Item 5: “Spare Parts for Main Eng.”
Invoice and air waybill: Fuji Trading Co., Ltd., Kobe, Japan
Manufacturers: Mitsui B&W
Vessel Entry Item 9: “Spare Parts of Viscosity”
Invoice and bill of lading: Sunami Marine Co., Ltd. Kobe, Japan
Manufacturers: Keihin Corp. and Nakakita Seisakusho, Co. Ltd.
Based on our review of the foregoing invoices, the spare parts were not only shipped from Japan and Korea, but were also manufactured in these countries as well. Accordingly, we are of the opinion that these items do not qualify for preferential treatment pursuant to the U.S.-SFTA insofar as the protestant has not adduced any evidence that would support that the spare parts were “produced in the territory of Singapore” as provided for in General Note 25(c)(i)(K); have been enumerated in subdivision (m) of General Note 25 and imported from the territory of Singapore; or, have been transformed in the territory of Singapore or of the United States, or both, so that each nonoriginating material underwent an applicable change in tariff classification set out in subdivision (o) of General Note 25.
HOLDING
The duties for which the protestant seeks relief are dutiable pursuant to 19 U.S.C. § 1466 as discussed in the Law and Analysis section of this ruling. You are instructed to deny the protest in accordance with this ruling.
In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2007), 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 final duty determination of the entry in accordance with this decision must be accomplished prior to the 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,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection