VES-3-06-OT:RR:BSTC:CCR H268702 KLQ
Karl Schneider
Integrity Customs Brokerage
19747 U.S. 59 North, Suite 402
Houston, TX 77338
RE: Harbor Maintenance Fee; Merchandise Processing Fee; Importer Security Filing; 26 U.S.C. §§ 4461-62; 19 U.S.C. § 58c; 19 C.F.R. §§ 24.23-24 and 149.
Dear Mr. Schneider,
This is in reference to your August 4, 2015 ruling request on behalf of Exxon Mobil Upstream Services, LLC. The National Commodity Specialist Division forwarded your ruling request to Regulations and Rulings on September 10, 2015. The ruling request presents eight issues, two of which are within the purview of the Cargo Security, Carriers and Restricted Merchandise Branch, specifically, those issues relate to the Harbor Maintenance Free (“HMF”), the Merchandise Processing Fee and the Importer Security Filing (“ISF”). The remainder of the issues are within the purview of the Entry Process and Duty Refunds Branch and the Tariff Classification and Marking Branch. Your ruling request was referred to those branches for a review of the remaining six issues. Our decision on the two issues referenced above is set forth below.
FACTS
The following facts have been extracted from the August 4, 2015 ruling request. Exxon Mobil Upstream Services, LLC has contracted for a subsea umbilical laying project on the Outer Continental Shelf (“OCS”) in the United States (“U.S.”) Gulf of Mexico (“GOM”). The Norwegian supplied umbilical, along with buoyancy modules, umbilical termination assembly, mud mat and other disassembled parts of the umbilical will be laden onboard the vessel in Norway. The vessel will then transport the articles to the U.S. in one of two scenarios.
In the first scenario, the vessel will lade the subject cargo in Norway and will then proceed directly to Walker Ridge, Block 584 on the OCS in the GOM to conduct the umbilical installation. In the second scenario, the vessel will lade the subject cargo in Norway and will call a U.S. port, either Mobile, Alabama or Gulfport, Mississippi. None of the articles laden in Norway will be unladen at the U.S. port. The vessel will then proceed from the U.S. port to Walker Ridge, Block 584 on the OCS in the GOM to conduct the umbilical installation.
ISSUES
Issue 4
Whether pursuant to 26 U.S.C. §§ 4461-62 and 19 C.F.R. § 24.24, the cargo laden onboard the vessel in Norway is subject to the HMF?
Whether pursuant to 19 U.S.C. § 58c(a)(9) and 19 C.F.R. § 24.23, the cargo laden onboard the vessel in Norway is subject to the merchandise processing fee?
Issue 6
Whether pursuant to 19 C.F.R. § 149, an ISF is required for the merchandise laden onboard the vessel in Norway?
LAW AND ANALYSIS
Issue Four: Harbor Maintenance Fee
The statutory authority for the HMF is found under 26 U.S.C. § 4461:
(a) General rule.
There is hereby imposed a tax on any port use.
(b) Amount of tax.
The amount of the tax imposed by subsection (a) on any port use shall be an amount equal to 0.125 percent of the value of the commercial cargo involved.
(c) Liability and time of imposition of tax.
(1) Liability.
The tax imposed by subsection (a) shall be paid by--
(A) in the case of cargo entering the United States, the importer, or
(B) in any other case, the shipper.
(2) Time of imposition.
Except as provided by regulations, the tax imposed by subsection (a) shall be
imposed at the time of unloading.
Pursuant to 26 U.S.C. § 4462, “port use” is defined as, “the loading of commercial cargo on, or the unloading of commercial cargo from, a commercial vessel at a port.” “Commercial cargo” is defined as “any cargo transported on a commercial vessel, including passengers transported for compensation or hire.” The Customs and Border Protection (“CBP”) Regulation promulgated under the authority of the statute, 19 C.F.R. § 24.24(a) states in pertinent part, “[c]ommercial cargo loaded on or unloaded from a commercial vessel is subject to a port use fee of 0.125 percent (.00125) of its value if the loading or unloading occurs at a port within the definition of this section, unless exempt under paragraph (c) of this section or one of the special rules in paragraph (d) of this section is applicable.” A complete list of ports subject to the HMF is found under 19 C.F.R. § 24.24(b)(1).
In the first scenario, the subject cargo will be laden onboard the vessel in Norway and will be unladen on the OCS in the GOM. Neither the ports in Norway nor the OCS are ports specified in 19 C.F.R. § 24.24(b)(1). Insofar as the cargo will neither be laden nor unladen from a port specified in 19 C.F.R. § 24.24(b)(1), there is no port use. Insofar as there is no port use, the subject cargo is not subject to the HMF.
In the second scenario, the vessel will transport the subject cargo from Norway to either Mobile, Alabama or Gulfport, Mississippi. Both Gulfport and Mobile are ports subject to the HMF. However, none of the articles laden onboard the vessel in Norway will be unladen in Mobile or Gulfport. Insofar as the subject cargo will not be unladen in Mobile or Gulfport, there is no port use. Insofar as there is no port use, the subject cargo is not subject to the HMF.
Issue Four: Merchandise Processing Fee
Pursuant to 19 U.S.C. § 58c(a)(9) and 19 C.F.R. § 24.23, a fee for processing merchandise is assessed, unless specifically excepted, on merchandise that is entered and released during a fiscal year. The subject cargo is not exempt from the merchandise processing fee. Therefore, if the subject cargo is entered and released, the merchandise processing fee will apply. If the subject cargo is not entered or released, the merchandise processing fee will not apply.
Issue Six: Importer Security Filing
To help prevent terrorist weapons from being transported to the U.S., vessel carriers bringing cargo to the U.S. are required to transmit certain information to CBP about the cargo they are transporting prior to lading that cargo at foreign ports of entry. Section 203 of the Security and Accountability for Every Port Act of 2006 provides that the Secretary of Homeland Security (“Secretary”) acting through the Commissioner of CBP, shall promulgate regulations to:
[R]equire the electronic transmission to the Department [of Homeland Security] of additional data elements for improved high-risk targeting, including appropriate security elements of entry data, as determined by the Secretary, to be provided as advanced information with respect to cargo destined for importation into the United States prior to loading of such cargo on vessels at foreign seaports.
Title 19 C.F.R. § 149.1 provides in relevant part:
(a) Importer Security Filing Importer. For purposes of this part, “Importer Security Filing (ISF) Importer” means the party causing goods to arrive within the limits of a port in the United States by vessel. […] For FROB cargo, the ISF Importer will be the carrier. […].
(b) Importation. For purposes of this part, “importation” means the point at which cargo arrives within the limits of a port in the United States.
Title 19 C.F.R. § 149.3(b) provides:
FROB, IE shipments, and T&E shipments. For shipments consisting entirely of foreign cargo remaining on board (FROB)…the following elements must be provided for each good listed at the six-digit HTSUS number at the lowest bill of lading level (i.e., at the house bill of lading level, if applicable).
(1) Booking party. Name and address of the party who initiates the reservation of the cargo space for the shipment. A widely recognized commercially accepted identification number for this party may be provided in lieu of the name and address.
(2) Foreign port of unlading. Port code for the foreign port of unlading at the intended final destination.
(3) Place of delivery. City code for the place of delivery.
(4) Ship to party. Name and address of the first deliver-to party scheduled to physically receive the goods after the goods have been released from customs custody. A widely recognized commercially accepted identification number for this party may be provided in lieu of the name and address.
(5) Commodity HTSUS number. Duty/statistical reporting number under which the article is classified in the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS number must be provided to the six-digit level. The HTSUS number may be provided to the 10-digit level.
An ISF is required when cargo laden at a foreign port is destined for importation into the U.S. In the first scenario, the vessel will lade the subject cargo in Norway, a foreign port; however, the vessel will unlade the cargo on the OCS. The OCS is not a port in the U.S. as contemplated under 19 C.F.R. § 149.1(b). Therefore, if the subject cargo is laden in Norway and unladen on the OCS, without first arriving within the limits of a port in the U.S., an ISF will not be required.
In the second scenario, the vessel will lade the subject cargo in Norway and will then call Mobile, Alabama or Gulfport, Mississippi. None of the cargo laden in Norway will be unladen in Mobile or Gulfport. The vessel will then transport the subject cargo from either Mobile or Gulfport to the OCS where the cargo will be unladen. Mobile and Gulfport are both ports within the U.S. Therefore, for purposes of 19 C.F.R. § 149.1(b), if the vessel transports the subject cargo from Norway to Mobile or Gulfport, the subject cargo will have been imported within the limits of a port in the U.S. However, insofar as the subject cargo will not be unladen at a U.S. port, but instead will be transported to the OCS for unlading, pursuant to 19 C.F.R. § 149.3(b), the subject cargo qualifies as foreign cargo remaining onboard (“FROB”). Pursuant to 19 C.F.R. § 149.1(a), insofar as the subject cargo is FROB, the carrier will be required to submit an ISF and the carrier will have to submit the ISF according to the terms of 19 C.F.R. § 149.3(b).
HOLDING
Issue 4
Pursuant to 26 U.S.C. §§ 4461-62 and 19 C.F.R. § 24.24, the cargo laden onboard the vessel in Norway is not subject to the HMF.
Pursuant to 19 U.S.C. § 58c(a)(9) and 19 C.F.R. § 24.23, if the subject cargo laden onboard the vessel in Norway is entered and released, the merchandise processing fee will apply. If the subject cargo laden onboard the vessel in Norway is not entered or released, the merchandise processing fee will not apply.
Issue 6
Pursuant to 19 C.F.R. § 149, an ISF is required for the merchandise laden onboard the vessel in Norway.
Sincerely,
Lisa L. Burley
Chief/Supervisory Attorney-Advisor
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations and Rulings
U.S. Customs and Border Protection