Entry of oily waste water

HQ H218137 July 24, 2012 OT:RR:CTF:ER-H218137 RHO Mr. Burton Burroughs Orange Peel Transportation, Inc. 417 Thalia Road, Suite 104 Virginia Beach, VA 23452 Re: Entry of oily waste water Dear Mr. Burroughs: This is in response to your May 6, 2012, request on behalf of Norton Lilly International (Norton) for a ruling as to whether entry is required for “sludge and oily waste” (oil waste water) when it is removed from ships entering U.S. ports and resold. You inquired whether entry was necessary when oil waste water is imported into the United States and the oil is separated from the water and resold. In the event that entry is required, you further inquired as to the relevant procedures for entry of the oil waste water in such cases. FACTS Norton is an international shipping, logistics, and marine services company, which is acting as an agent for a major international shipper, Maersk. International cargo ships produce thousands of gallons of oil waste water en route to U.S. ports as by-products of the operation of the vessel. In the past, Maersk paid subcontractors to remove and dispose of the oil waste water. However, it is now resold and not disposed of. Norton has arranged for a subcontractor to purchase from Maersk the oil waste water that it removes from ships arriving in the United States. In a conversation with our office on May 21, 2012, you clarified that the subcontractor extracts oil from the waste water for resale. The specific subcontractor varies, depending on the U.S. port of landing, but the payment structure is consistent. The subcontractor removes the oil waste water from the Maersk ship and pays Maersk a rate of approximately five cents per gallon of oil extracted from the waste water. ISSUE Whether entry is required for imported oil waste water that is sold to a company for further processing. LAW AND ANALYSIS An entry must be filed when oil waste water is removed from a ship for sale. All merchandise imported into the United States must be entered unless excepted. The oil waste water is sold to another company for further processing and thus, it is merchandise and does not fall into any of the enumerated exceptions. Since all merchandise must be entered when imported, the oil waste water in this case must be entered. Per 19 U.S.C. § 1484, with enumerated exceptions, all merchandise imported into the customs territory of the United States must be entered. The list of specific exceptions to entry is provided in the CBP regulations under 19 C.F.R. § 141.4(b) and includes vessels, instruments of international traffic and railway locomotives. The exemptions listed in General Note 3(e) to the HTSUS, none of which apply here, include corpses, telecommunications transmissions and articles returned from space. See General Note 3(e). Thus, if the oil waste water is merchandise, it must be entered. Pursuant to 19 U.S.C. § 1401(c), for purposes of the Tariff Act of 1930, the word “merchandise” is defined as “goods, wares, and chattels of every description, and includes merchandise the importation of which is prohibited . . . .” Black’s Law Dictionary defines merchandise as “tangible or movable personal property other than money; especially, articles of trade or items or merchandise.” Black’s Law Dictionary 762 (9th ed. 2009). In Cormorant Shipholding v. United States, 617 F. Supp. 2d 1270 (Ct. Intl. Trade 2009): Common definitions of “merchandise” include vessel repairs. See, e.g., American Heritage Dictionary of the English Language 1099, 1939 (4th ed., Houghton Mifflin Co. 2000) ("merchandise" are "goods bought and sold in business; commercial wares"; further, a "ware" is "an article of commerce" or "an immaterial asset or benefit, such as a service or personal accomplishment, regarded as an article of commerce"); 1 Shorter Oxford English Dictionary 1754, 464 (6th ed., Oxford University Press 2007) ("merchandise" are "[t]he commodities of commerce; goods to be bought and sold"); Webster's Third New International Dictionary of the English Language 1413 (Merriam-Webster, Inc. 2002) ("merchandise" means "the commodities or goods that are bought or sold in business: the wares of commerce"); 3 Oxford English Dictionary 563-64 (2d ed., Clarendon Press 1989) (in turn, a "commodity," especially in commerce, constitutes "[a] kind of thing produced for use or sale, an article of commerce, an object of trade"); 1 Shorter Oxford English Dictionary, supra, 464 (a "commodity" is "[a] thing of use or value . . . a thing that is an object of trade"). Vessel repairs, as goods and services with commercial benefits, are plainly "commercial wares" and constitute things "produced for use or sale" in that they restore vessel parts to their previous state of operation. When imported, the oil and the water are bound together and must undergo a process to be separated. The oil waste water at issue is sold and payment is based upon the amount of oil extracted from it. Hence, the oil waste water is a thing of value, an object of trade. As it is valuable when imported, it is considered merchandise for customs purposes. Consequently, the oil waste water must be entered upon importation. In support of your request, you cited CBP ruling, H133295 (September 19, 2011), which holds that oil waste water generated onboard a vessel and removed from its engine room does not have to be manifested per 19 U.S.C. § 1584 because it is not merchandise. This ruling is inapplicable to the present matter. The oil waste water at issue in H133295 was disposed of as waste and not resold. That ruling was limited to the situation where the oil waste water was treated as waste, i.e., not an article of commerce, and therefore, did not constitute merchandise. You also inquired as to the entry requirements for the oil waste water. Entry requirements are fact-specific and there is not enough information about the entry transaction, such as the value of the oil waste water at time of importation, to provide specific information on entry procedure. Please refer to Parts 141 and 142 of 19 C.F.R. for guidance on entry procedures. HOLDING When oil waste water is imported for sale, it is merchandise and entry is required. Please note that 19 C.F.R. §177.9(b)(1) 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 ruing 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 field 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, Carrie L. Owens, Chief Entry Process and Duty Refunds Branch