CON 9-03
H256982 SMS
OT:RR:CTF:ER
David Smith
Cozen O’Connor
16271 I Street, N.W., Suite 1100
Washington, D.C. 20006
RE: Temporary importation under bond of Alternative Maritime Power Units under 9813.00.50, HTSUS, as professional equipment and tools of the trade.
Dear Mr. Smith:
This is in response to your request for a ruling, dated September 5, 2014, on behalf of Hyundai Marine Co., Ltd. (“Hyundai”). Your request is regarding whether Alternative Maritime Power (“AMP”) units may be entered under a temporary importation under bond (“TIB”).
FACTS:
In your letter, you request guidance on whether you may enter AMP units into the United States under a TIB, as professional equipment and tools of trade for duty-free treatment under subheading 9813.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”). As you explained, Hyundai is an international ocean carrier, headquartered in the Republic of Korea, that transports containerized cargo between foreign and U.S. ports. Hyundai calls on the ports of Los Angeles and Oakland, California, and is subject to California’s laws and regulations. The State of California recently promulgated new regulations entitled “Airborne Toxic Control Measures for Auxiliary Diesel Engines Operated on Ocean Going Vessels At-Berth in a California Port” (the “At-Berth Regulations”), setting emission standards for carriers operating at the ports of California. See 17 California Code of Regulations (“CCR”) § 93118.3.
The At-Berth Regulations require that beginning January 1, 2014: 1) at least fifty percent of a fleet’s visits to the California ports shall meet the onboard auxiliary diesel engine operational time limits of three hours per visit, provided the vessel uses a synchronous power transfer to change from vessel-based power to shore-based power, or five hours total if the vessel does not use synchronous power transfer; and 2) the fleet’s onboard auxiliary diesel engine power generation, while at berth, shall be reduced by at least fifty percent from its baseline power generation. See 17 CCR § 93118.3(d)(1)(A), (D). Beginning January 1, 2017, the requirements increase to seventy percent and by January 1, 2020, to eighty percent. 17 CCR § 93118.3(d)(1)(B), (C). The regulations define “synchronous power transfer” as “the synchronized switchover in vessel-based power to shore-based power without a loss in power during such transfer.” 17 CCR § 93118.3(c)(33).
Hyundai states that in order to comply with the At-Berth Regulations, and to continually dock at the California ports, it has procured four AMP units for its eight vessels that call at the Oakland and Los Angeles ports. The AMP units are used to connect Hyundai’s vessels to the shore power outlets, provided at the pier, providing electrical power without the ship having to use its auxiliary diesel engines. The AMP units are comprised of high voltage cables, a switchboard, and a control panel, all housed inside a forty-foot intermodal shipping container.
Regarding the use of the AMP units, you explained that since January 1, 2014, the AMP units have been carried onboard Hyundai vessels and have remained on board for the duration of the time the vessels are at the ports of California. This process has taken up “valuable space on the ship” and “requires frequent repositioning of the units in order to load and unload the ship,” which exposes the AMP units to harsh conditions, increasing their susceptibility to damage and failure. Accordingly, Hyundai proposes removing the AMP units from the vessels and housing them on the piers, for their availability for use when Hyundai calls at the Los Angeles and Oakland ports. Two AMP units would be positioned at the Port of Los Angeles and two at the Port of Oakland; the AMP units would remain at these two ports and would not be transported to any other ports. The AMP units would be used only to support Hyundai vessels, and would not be imported for sale or sale on approval, nor will they undergo further processing in the United States. Hyundai explained that once the AMP units are stored at the marine terminal, they will not be used unless directed by Hyundai. Hyundai further indicated that because the AMP units will only be used to support non-resident Hyundai vessels at the Ports of Los Angeles and Oakland, the AMP units will be unused for five to six days between the vessels calls at the two ports. The sole reason for importing the AMP units into the United States is to support the vessels necessary to Hyundai’s business operations, in compliance with California Law.
Hyundai contends that the AMP units are required to be used with its vessels, sojourning temporarily in the United States, for the specific purpose of providing shore power for the operations of vessels at berth at California ports. Without these units, the vessels could not perform its basic functions (i.e. providing light and hotel services for the crew, maintaining refrigerated containers, facilitating onboard maintenance, and conducting loading and unloading of cargo). Accordingly, Hyundai requests that U.S. Customs and Border Protection (“CBP”) grant their request to enter the AMP units under TIB.
ISSUE:
Whether AMP units qualify for duty-free TIB treatment under subheading 9813.00.50, HTSUS, as professional equipment or tools of trade.
LAW AND ANALYSIS:
Pursuant to General Note 1, HTSUS, all merchandise imported into the United States is subject to duty unless specifically exempted. Subheading 9813.00.50, HTSUS, provides for the temporary entry, duty-free and under bond, of:
Professional equipment, tools of trade, repair components for equipment or tools admitted under this heading and camping equipment; all the foregoing imported by or for nonresidents sojourning temporarily in the United States and for the use of such nonresidents...
Articles may not be imported for sale or sale on approval and may remain in this country, without the payment of duty, for a period of one year from the date of importation. See U.S. Note 1(a) of Subchapter XIII, Chapter 98 of the HTSUS. However, upon application to the Port Director at the port where the entry is filed, this period may be extended for one or more further periods which, when added to the initial one year, shall not exceed a total of three years. Id. Under U.S. Note 1(b) of Subchapter XIII, entry shall be made by the nonresident importing the articles or by an organization represented by the nonresident, which is established under the laws of a foreign country or has its principal place of business in a foreign country. In order to obtain the benefit of duty-free treatment, the importer must satisfy all of the accountability requirements under the U.S. Notes of Chapter 98, Subchapter XIII to the satisfaction of the Port Director.
The CBP regulations pertaining to TIBs are found in 19 C.F.R. §§ 10.31-10.40. Section 10.37 of the regulations provides that extensions of the time for exportation of merchandise under a TIB may be granted by the appropriate port director upon written application on CBP Form 3173. Pursuant to 19 C.F.R. § 10.31(f) a bond shall be given on Customs Form 301, containing the bond conditions set forth in 19 C.F.R. § 113.62. For professional equipment, tools of trade and repair components entered under subheading 9813.00.50, HTSUS, the bond required to be given shall be in an amount equal to 110 percent of the estimated duties, including fees, determined at the time of entry. See 19 C.F.R. § 10.31(f).
Subchapter XIII of the HTSUS and the CBP regulations do not define “professional equipment” or “tools of trade.” In HQ 223970, dated September 22, 1992, CBP held that “equipment under subheading 9813.00.50, HTSUS, is intended to be necessary for the exercise of the calling, trade, or profession of a person visiting this country to perform a specific task.” The type of articles allowed have been varied due to the liberal construction given to the terms “professional equipment” and “tools of trade.” Id. CBP has previously approved a variety of equipment, such as: a mobile education vehicle for dealers; a van with permanently attached equipment of hydraulic tracer controls for machine tools admitted for demonstration tours in the U.S.; drilling equipment temporarily attached to a barge for use in underwater digging operations; rigging equipment used in the installation of offshore platforms, not permanently affixed to any vessel, rig or platform; chain saws for pulp or logging operations; diesel tractors for logging operations; television receivers for showing methods of installation and servicing; portable transmitter-receivers for broadcasting from an aircraft; photographic plates for cosmic ray studies; and foreign-origin cinematography equipment intended for use in the production of motion pictures. Id. See also, HQ 221702 (Dec. 27, 1989)(foreign-origin cinematography equipment owned by a non-resident importer and used solely by or under the personal supervision of the non-resident importer in the production of motion pictures in the United States for U.S. persons or corporations, may be entered under TIB and subheading 9813.99.50).
In HQ 223970, we held that a vehicle containing both affixed and portable x-ray equipment qualified under subheading 9813.00.50, HTSUS. The mobile x-ray unit enabled the x-ray services to be offered at various client facilities in the United States, such as nursing homes, detention centers, and private homes. Id. We have also ruled that mobile paper shredding units qualified. See HQ 222651 (Jan. 7, 1991). In that case, the mobile paper shredders enabled the commercial shredding operations to take place at various locations in the United States. In both HQ 222651 and HQ 223970, CBP determined that the mobile x-ray vehicle and the mobile shredding vehicle had permanent fixtures consisting of the equipment enabling the performance of the work to be done, which was crucial to determining that they qualified for entry under 9813.00.50, HTSUS. Conversely, in HQ 240090, dated June 10, 2014, CBP found that a pick-up truck and trailer containing equipment and a fuel tank, used to support a helicopter doing an exploration project, did not qualify for duty-free treatment. Specifically, CBP found that the pick-up truck was simply a means of transporting items generally, rather than one that is necessary to the performance of the work to be done. Id. Therefore, equipment necessary to enable a specific task or the performance of the work to be done, constitutes “professional equipment” “or “tools of trade.”
In the instant case, Hyundai describes the AMP units and the need for their use in order to maintain the fundamental operations of their vessels, in compliance with the At-Berth Regulations. The need for AMP units is akin to the previously issued TIBs such as the drilling equipment temporarily attached to a barge for use in underwater digging operations; rigging equipment used in the installation of offshore platforms; the paper shredding units; and the x-ray equipment. The AMP units are not used for a general purpose, but for the specific need of powering the vessels docked at California ports consistent with new At-Berth Regulations. The AMP units are not permanently attached to the vessel, but can be temporarily maintained on the shore. The AMP units house the high voltage cables, switchboard, and control panel needed to connect Hyundai’s vessels to shore power outlets. The responsibility of the Hyundai employees is to ensure that the vessels stay powered while at the Los Angeles and Oakland Ports. The vessels can no longer use its auxiliary diesel engines while at call at California Ports, under the At Berth Regulations, and their power must be maintained with shore power outlets. Accordingly, the AMP units constitute professional equipment necessary to enable the performance of the work to be done, vessel operations and loading and unloading of cargo.
Turning to the provision related to use, we note that is only addressed in terms of who is actually using or supervising the use of the item. Specifically, CBP has held that entry under subheading 9813.00.50, HTSUS, is personal to the nonresident, is nontransferable, and terminates when the nonresident either ceases to use the imported merchandise or when it ceases to be used under the direct supervision of the nonresident. In HQ 221702, dated December 27, 1989, CBP held that foreign-origin cinematography equipment, intended for use in the production of motion pictures in the United States for U.S. residents or corporations, which were owned and operated solely by or under the personal supervision of the nonresident importer, may be imported temporarily under subheading 9813.00.50, HTSUS. The same equipment, however, would not qualify for TIB if the nonresident importer intended to lease or rent the equipment to third parties in the United States. Id. Consequently, the use provision is personal to the nonresident importer and not transferable.
Although it is required that the merchandise is used by or under the supervision of the nonresident, we note that such use may be intermittent in nature. In HQ 222651, dated January 7, 1991, mobile paper shredders were transported and used at various locations, for short periods of time, in the United States. CBP found that this scenario was permissible under subheading 9813.00.50, “provided that . . . the [mobile shredder] is intended for use by the nonresident making entry or for use under his or her supervision.” (Emphasis in original). Likewise, in HQ 223970, dated September 22, 1992, a Canadian company entered into the United States a mobile x-ray unit, which enabled x-ray services to be offered at various facilities in the United States. The Canadian company indicated that the mobile x-ray unit would cross the Canadian and U.S. border daily to service accounts in each country. Id. CBP similarly found that this scenario was permissible under the subheading, including the fact that the nonresident company would make numerous entries during the TIB period. Id. CBP only suggested that the company obtain a written determination from the Department of Transportation as to whether a declaration would be needed on each daily entry. Id. While not discussed in the rulings, the shredder and x-ray unit were used then moved to another location and used again, with a cease in use during the change in locations and considered suitable under 9813.00.50. Therefore, as seen in HQ 222651 and HQ 223970, CBP has previously allowed companies to act as the nonresident importer and has allowed the use of the equipment to be intermittently.
In this situation, Hyundai will house the AMP units on the ports in California, and instead of moving the AMPs to be used at different ports, the vessels that need power will be transported to the AMP units. This is akin to the mobile equipment in HQ 222651and HQ 223970, being allowed to be used, cease to be used, transported to another location, and then used again. As discussed above, it is imperative that the merchandise is used by or under the supervision of the nonresident; however, intermittent use is permissible. Here the AMP units will be used solely by Hyundai personnel for their nonresident Hyundai vessels, and will not be used by a U.S. resident or corporation. The fact that the AMP units will not be in continuous use does not affect their ability of entering into the United States temporarily under bond, as professional equipment or tools of trade.
It has been established that the AMP units qualify as professional equipment necessary to enable the performance of the work to be done, vessel operations and loading and unloading of cargo; Hyundai, is an international ocean carrier, headquartered in the Republic of Korea, sojourning temporarily in the United States; and the AMP units will be used solely for Hyundai vessels. Additionally, Hyundai explained that the AMP units will not be imported for sale or sale on approval and it does not have any interest in the units, but for their mandated use in obtaining shore-based power. Accordingly, the use and equipment as described are eligible for duty-free TIB treatment under subheading 9813.00.50, HTSUS, as professional equipment or tools of trade.
Additionally, in order to satisfy the requirements for the TIB, the imported article must be timely exported. An “exportation” is defined as “a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country.” Swan & Finch Company v. United States, 190 U.S. 143 (1903); see also 19 C.F.R. § 101.1. Moreover, CBP’s regulation, 19 C.F.R. §10.38, requires that an application for exportation be made on CBP Form 3495. Hyundai does not indicate when it plans to export the AMP units. If Hyundai fails to file CBP Form 3495 and timely export the units, it will breach the terms of the TIB. Once the merchandise is exported and the TIB bond is cancelled, it may not be reentered under the same TIB. Accordingly, if Hyundai wishes to re-enter the goods into the United States, a new TIB would be required. See e.g., HQ H238987 (Sept. 20, 2013) (transporting vehicles to Canada, which have been previously entered under a TIB for use in a trade show, is an exportation; accordingly, CBP Form 3495 is required to close out the TIB entry in the United States).
HOLDING:
AMP units stationed on the ports of California may temporarily be brought into the United States under subheading 9813.00.50, HTSUS, in order to provide shore-based power to Hyundai vessels, provided that the conditions of U.S. Note 1(a) and (b) of Subchapter XIII, HTSUS, and 19 CFR §§ 10.31-10.41, as applicable, are met.
Please note that 19 C.F.R. §177.9(b) provides that”[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service filed office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
Sincerely,
Gail G. Kan, Acting Chief
Entry Process and Duty Refunds Branch