Vessel Repair Entry No. C13-0043782-4; 19 U.S.C. 1466; Petition

HQ 114771 August 6, 1999 VES-13-18-RR:IT:EC 114771 GOB CATEGORY: Carriers Port Director of Customs Attn.: Residual Liquidation and Protest Branch, Room 761 Six World Trade Center New York, N.Y. 10048 RE: Vessel Repair Entry No. C13-0043782-4; 19 U.S.C. 1466; Petition Dear Madam: This is in response to your memorandum of July 30, 1999, which forwarded the petition submitted by Pacific Gulf-Marine, Inc. (“petitioner”) with respect to the above-referenced vessel repair entry. FACTS: The M/V TELLUS (the “vessel”), a U.S.-flag vessel, arrived at the port of Baltimore, Maryland on January 27, 1999. The subject vessel repair entry was timely filed. By letter of May 28, 1999, your office denied the application for relief. ISSUE: Whether the subject items are dutiable pursuant to 19 U.S.C. 1466(a)? LAW AND ANALYSIS: 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. The petitioner claims that certain items are eligible for treatment under 19 U.S.C. (h)(2). It is our position that 19 U.S.C. 1466(h)(2) contemplates duty-paid entry of eligible spare repair parts or materials having been made prior to the vessel repair entry at issue. The petitioner has not established that this occurred. We note additionally that the items are not eligible for treatment under 19 U.S.C. 1466(h)(3) for the following reasons: 1. The petitioner has not established that the items, or all of the items, are “parts”; and 2. Even if the petitioner had satisfactorily established that the items were parts, they were not installed prior to entry. Aside from the applicability of 19 U.S.C. 1466(h)(2) and (3), and our determinations thereon, we note that the situation at issue was addressed in a case decided prior to the enactment of subsections (h)(2) and (3), U.S. v. Standard Oil of California, 27 C.C.P.A. 334, 337, C.A.D. 108 (1940), wherein the court stated: It is our opinion that the section [19 U.S.C. 1466] clearly provides that equipment purchased abroad for a vessel documented under the laws of the United States shall, at least if transported to the United States upon such vessel, be subject to duty at 50 per centum ad valorem. While the court referred to “equipment” in the above excerpt, the actual items at issue were parts of diesel engines. Regardless, in the absence of the applicability of an exemption such as subsection (h)(2) or (3), the duty under 19 U.S.C. 1466(a) applies to “equipments ... repair parts or materials ... or the expenses of repairs made in a foreign country ...” HOLDING: As detailed above, the petition is denied. Sincerely, Jerry Laderberg Chief, Entry Procedures and Carriers Branch