Requirements for claiming an exemption for vessel supplies pursuant to 19 U.S.C. § 1309 and § 1317.

HQ H284061 August 16, 2017 CON 13OT:RR:CTF:ER H284061 KF Michael K. Tomenga Neville Peterson LLP 1400 16th St. NW Suite 350 Washington, DC 20036 RE: Requirements for claiming an exemption for vessel supplies pursuant to 19 U.S.C. § 1309 and § 1317. Dear Mr. Tomenga: This is in response to your letter on behalf of Gulf Coast Maritime Supply, Inc. (“Gulf Coast”), dated February 10, 2017, requesting a ruling clarifying the requirements for obtaining an exemption from customs duties and internal revenue taxes pursuant to 19 U.S.C. § 1309 and § 1317. FACTS: Gulf Coast is a ship chandler and customs bonded carrier based in Houston, Texas. Gulf Coast provides supplies to vessels from Foreign Trade Subzone 84E (“subzone”) and a customs bonded warehouse (“warehouse”), which are both located at its facility in Houston. Gulf Coast is the owner of the subzone and warehouse, and admits all the supplies stored at its facility. When a sale occurs, Gulf Coast will generate an invoice identifying the vessel being supplied. All supplies will be laden on eligible vessels, meaning vessels which qualify the supplies for a duty and tax exemption pursuant to 19 U.S.C. § 1309 and § 1317. Supplies may be purchased by various entities, including, but not limited to, the eligible vessel’s master, another ship chandler, or an intermediary corporation. To complete a sale, Gulf Coast will withdraw purchased supplies from the subzone or warehouse under Customs supervision in accordance with 19 C.F.R § 10.59-10.60, § 144.37, § 146.67, and § 146.69-146.70. Gulf Coast, or another customs bonded carrier acting on its behalf, will then deliver the supplies to an eligible vessel at the Port of Houston. Gulf Coast seeks confirmation that supplies may be withdrawn without payment of customs duties and internal revenue taxes, pursuant to 19 U.S.C. § 1309 and § 1317, without regard to the identity of the purchaser. ISSUES: Whether the identity of the purchaser of vessel supplies is relevant to the requirements for obtaining an exemption from customs duties and internal revenue taxes pursuant to 19 U.S.C. § 1309 and § 1317. LAW AND ANALYSIS: Pursuant to 19 U.S.C. § 1309(a), “[a]rticles of foreign or domestic origin may be withdrawn…from any customs bonded warehouse…or from a foreign-trade zone[,] free of duty and internal-revenue tax…for supplies (not including equipment) of vessels… operated by the United States, vessels of the United States employed in the fisheries or in the whaling business, or actually engaged in foreign trade[,] …[and] for supplies (including equipment) or repair of vessels of war of any foreign nation, [and] foreign vessels employed in the fisheries or in the whaling business, or actually engaged in foreign trade.” All the requirements for withdrawing supplies free of duty and tax specified in 19 U.S.C. § 1309(a) relate to the identity of the vessel, not the identity of the purchaser. 19 U.S.C. § 1317 states that “shipment or delivery of any merchandise for use as supplies (including equipment) upon…any vessel described in… section 1309(a) of this title…shall be deemed an exportation…without the payment of duty or internal-revenue tax.” The requirements for delivering or shipping supplies free of duty and tax specified in 19 U.S.C. § 1317 likewise solely relate to the identity of the vessel, not the identity of the purchaser. Although there is no ambiguity in the plain language of the statutes regarding the requirements for duty and tax exemption, if a statute is silent on, or omits, a certain requirement then the statute’s legislative history can confirm whether the omission was intentional. See Frontier Ins. Co. v. United States, 25 C.I.T. 717, 725 (2001); see also Biodiversity Legal Found. v. Norton, 285 F. Supp. 2d 1, 9 (D.D.C. Sept. 30, 2003) (“[as n]othing in this provision explicitly requires [the fulfillment of a particular condition, a]ny such mandate, therefore, would have to arise from an interpretation of the statute's operative words”). The legislative history of 19 U.S.C. § 1309 describes the statute’s purpose as “promoting equal footing between U.S. vessels and aircraft with foreign vessels and aircraft.” See Citgo Petroleum Corp. v. United States, 24 C.I.T. 333, 335 (2000) (citing S. Rep. No. 86-1491 (1960), reprinted in 1960 U.S.C.C.A.N. 2780, 2785). The purpose of 19 U.S.C. § 1309, and 19 U.S.C. § 1317 in correlation, was originally achieved by extending the exemption from duty and tax on a reciprocal basis with foreign vessels. Id. Now, the exemption is extended to any vessel engaged in foreign trade. Id. The legislative history of 19 U.S.C. § 1309 discusses the identity of vessels, trade routes, and identifies specific supply products, but makes no reference to the purchaser of the vessel supplies. See 1960 U.S.C.C.A.N. 2780, 2785. Congress has thus consistently excluded the identity of the purchaser from the considerations of the duty and tax exemption accorded by 19 U.S.C. § 1309 and § 1317. In Int'l Trading Co. v. United States, 28 C.I.T. 1, 9 (2004), the Court of International Trade determined that when Congress has consistently expressed its intent in regard to a statute and “there is no indication in the implementing legislation” that a limiting provision was intended, this evidences that the absence of a limitation was intended by Congress. See also Old Republic Ins. Co. v. United States, 645 F. Supp. 943, 950 (1986) (“[s]ince the provisions are part of the same statutory schemes regarding [vessel supply exemptions], [we] can only assume that Congress was aware of the fact that it was omitting” the identity of purchasers from the requirements for claiming an exemption). CBP has likewise consistently excluded the identity of the purchaser from its consideration of the duty and tax exemption requirements of 19 U.S.C. § 1309 and § 1317. In HQ 226319 (July 23, 1996), CBP noted that qualification for an exemption pursuant to 19 U.S.C. § 1309 is established by criteria such as the “identity of the [vessel] on which the[ supplies] were used, when they were used, [and] the trade in which the [vessel was] engaged.” In HQ 114612 (June 15, 1999), CBP reviewed a since-revoked directive concerning vessel supplies for compliance with the terms of 19 U.S.C. § 1309 and § 1317, and with Customs regulations. CBP found that 19 C.F.R § 10.59, implementing the vessel supply statutes, concerned certification that a vessel was actually engaged in foreign trade and was therefore an eligible vessel. HQ 114612 refers to the master of a vessel as an entity entitled to claim the statutory exemptions, but this reference does not stand for the proposition that only a vessel master is eligible to claim a duty and tax exemption pursuant to 19 U.S.C. § 1309 and § 1317. In HQ 228536 (July 18, 2001), CBP clarified that “the criteria for qualifying for the exemption under section 1309[] are those set forth in 19 CFR 10.59 through 10.65, and as set forth in Customs Rulings.” The regulations set forth 19 C.F.R. § 10.59 - § 10.65 are titled “Withdrawal of Supplies and Equipment for Vessels.” Pursuant to 19 C.F.R. § 10.59 “Exemption from customs duties and internal-revenue tax,” the requirements for obtaining an exemption concern the type of trade in which a vessel is engaged, whether supplies are withdrawn on a trial basis, and the types of supplies that may be withdrawn. Pursuant to 19 C.F.R. § 10.65 “Cigars and cigarettes,” the requirements for obtaining an exemption concern the type of trade or activity in which a vessel is engaged, where the vessel is stationed, and the procedures and limitations on withdrawing supplies. The remaining regulations within 19 C.F.R. § 10.60-10.65 concern the procedures for withdrawing supplies, the lading of supplies, and bond requirements and procedures. Given the consistent omission of the identity of the purchaser from the statutory and regulatory vessel supply framework of 19 U.S.C. § 1309 and § 1317, we find that the identity of the purchaser is irrelevant to satisfying the requirements for obtaining a duty and tax exemption. We note that the right to withdraw goods from an FTZ and a customs bonded warehouse is generally limited to the importer of record, as the party with the right to make entry. See CBP.gov, FTZ Manual, 2011, 100, 119 (“[a]ll CBP entries must be made by the party that has the right to make entry”); CBP.gov, Bonded Warehouse Manual for Customs and Border Protections Officers and Warehouse Proprietors, January 2012, 74 (“[t]he right to withdraw merchandise from a bonded warehouse is similar in nature to the right to make entry[, which]… is granted, generally, only to the party listed as the importer of record on the warehouse entry summary”); Customs Directive No. 3530-002A, 5.1.2. (June 27, 2001) (citing amended Section 484 of the Tariff Act of 1930, P.L. 76-446); 19 U.S.C. § 1484(a)(2)(B) (“only the ‘importer of record’ has the right to make entry[; ‘i]mporter of record’ is defined as the owner or purchaser of the goods, or when designated by the owner, purchaser, or consignee, a licensed Customs broker”). As a discussion of all of the requirements to properly withdraw vessel supplies is beyond the scope of your ruling request, we direct you to CBP’s FTZ Manual, “Transfers for Vessel or Aircraft Supply,” and Bonded Warehouse Manual for Customs and Border Protections Officers and Warehouse Proprietors, “Withdrawal for Aircraft or Vessel Supply,” for guidance. HOLDING: Based on the above, supplies may be withdrawn without payment of customs duties and internal revenue taxes, pursuant to 19 U.S.C. § 1309 and § 1317, without regard to the identity of the purchaser. 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.” If any fact in the transaction varies from the facts stipulated to herein, this decision shall not be binding on CBP, as provided for in 19 C.F.R. § 177.9(b). Sincerely, Monika R. BrennerActing Chief Entry Process & Duty Refunds Branch