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HQ 109480


May 5, 1988

VES-3-23/VES-3-02 CO:R:P:C 109480 PH

CATEGORY: CARRIER

Mrs. Suzanne Perry
Blue Odyssey Adventures
Post Office Box 10
Hanalei, Hawaii 96746

RE: Determination of build of an inflatable boat of less than 5 net tons when the inflatable "tube" portion of the boat is built abroad

Dear Mrs. Perry:

This in response to your letter of March 27, 1987, received in this office on April 26, 1988, concerning the replacement of the "tube" portion of your 1984 28 foot Motomar inflatable boat. Our ruling to you dated December 9, 1985 (file number: 107955), also concerned this matter. In our letter of November 23, 1987 (file number: 108917), we advised you that, although we had a record of having received your March 27, 1987, letter, we were unable to find it. The letter we received on April 26, 1988, is apparently a duplicate copy of your original March 27, 1987, letter.

FACTS:

Our ruling of December 9, 1985 (file number: 107955), held that your 1984 28 foot Motomar inflatable boat would be consid- ered to have been built in the United States, for purposes of the coastwise laws, after undergoing the rebuilding processes de- scribed in your letter of October 1, 1985. These processes were described in our ruling as follows:

... [T]he console, motors, and floorboards were removed, the boat was deflated, and the keel was re- moved. New floorboards, runners, stringers, gas box, fish/ice box, storage boxes, console and keel were made. Rubber material was purchased to replace the seams and heavily worn areas of the boat. The center section directly below the keel was retaped using a
full length patch for reinforcement. The side seams along the pontoons were all retaped and refinished with gel-coat. The lace cup was replaced with tow rings to support the lifelines. All above and below water seams were retaped on the boat. The bow tow ring was removed and replaced.

... [M]etal work ... consisting of the installation of transom support bars and stainless backing plates where they are through-bolted to the transom and deck [was done]. Stainless channel support bars and corre- sponding backing plates were manufactured for the run- ners. Stainless motor backing plates were installed on the transom. Stainless "L" brackets were manufactured to mount the console and storage boxes. Stainless through-bolts were purchased to bolt down the runners on the floorboards and drilled for cotter pins to se- cure the new plates on the keel. New stringers were fitted with copper tubing inserts. The runners were epoxied and bolted to the floorboards. Holes in the support block for the keel, which serves as a bilge outlet, were enlarged.

... [T]he hull, including tube and transom, is valued at $7,000. The two 90 horsepower Mercury motors purchased were valued at $10,000. The total investment made for boat reconstruction was $7,801.80 for parts and labor. Equipment purchased (radios, antennas, PFD's, etc.) came to a total of $6,751 [resulting in] the total cost of transforming the boat [being] $24,552.

You now state that you have found it necessary to replace the "tube," or the part of the boat which holds air. You have pur- chased a new tube from the Motomar factory in Italy for $7,000. The same work that was done on the original tube has been done on the new tube. The transom which came attached to the tube was cut down to size, refinished with epoxy marine resin, and new holes were drilled for through-bolts to mount the backing plates for the engines. The transom was double taped where it meets the pontoons.

Copies of receipts and photographs concerning the work originally done on the boat were included with the ruling request for our December 9, 1985, ruling but the photographs you state were enclosed with your March 27, 1987, letter did not arrive in this office. We assume, as you state, that these photographs "coincide" or are similar to those enclosed with the ruling request for our December 9, 1985, ruling.

ISSUE:

Is an inflatable boat, the "tube" portion of which was built abroad, which was originally modified or rebuilt in the United States substantially enough to be considered built in the United States, for purposes of the coastwise laws, still considered to have been built in the United States when the original foreign- built tube portion of the boat is replaced with another such foreign-built tube portion?

LAW AND ANALYSIS:

Generally, the coastwise laws prohibit the transportation of merchandise or passengers between points in the United States em- braced within the coastwise laws in any vessel other than a ves- sel built in, documented under the laws of, and owned by citizens of the United States. The passenger coastwise law, 46 U.S.C. App. 289, provides that:

No foreign vessel shall transport passengers between ports or places in the United States, either directly or by way of a foreign port, under a penalty of $200 for each passenger so transported and landed.

Pursuant to 46 U.S.C. 12106 and 12110 and their predecessors (46 U.S.C. 65i and 65m and, before them, 46 U.S.C. 11) and consistent with 46 U.S.C. App. 883, the coastwise merchandise law, the Customs Service has consistently held that the prohibi- tion in 46 U.S.C. App. 289 applies to all non-coastwise-qualified vessels. Non-coastwise-qualified vessels include any vessel oth- er than a vessel built in, properly documented under the laws of, and owned by citizens of the United States, with certain excep- tions (see 46 U.S.C. 12106(a)(2)(B) and 19 CFR 4.80(a)(2) and

Usually, the United States Coast Guard determines whether a vessel is built in the United States, for purposes of documenta- tion of the vessel, and this determination is followed by Customs for purposes of the requirement that vessels engaging in the coastwise trade must be built in the United States. Vessels which are of less than 5 net tons, as we understand to be true of the Motomar inflatable boat under consideration, cannot be documented under the United States flag by the Coast Guard.

Qualified vessels of less than 5 net tons are not precluded from engaging in the coastwise trade simply because they cannot be documented under the laws of the United States, however. Sec- tion 4.80(a), Customs Regulations (19 CFR 4.80(a)), enumerates the vessels which may engage in the coastwise trade. Subpara- graph (a)(2) of this section (i.e., 19 CFR 4.80(a)(2)) provides
that no vessel exempt from documentation (e.g., of less than 5 net tons) shall transport any passengers or merchandise between United States coastwise points unless the vessel is owned by a citizen of the United States and is entitled to or, except for its tonnage, would be entitled to be documented with a coastwise license. As stated above, to be entitled to be documented with a coastwise license a vessel must, among other things, be built in the United States (46 U.S.C. 12106(a)(2)), with an exception inapplicable in this case.

Thus, foreign-built inflatable boats may not be used in the coastwise trade. Customs has ruled, however, that inflatable boats which, although originally built abroad, have been suffi- ciently modified or rebuilt in the United States may be consid- ered built in the United States, for purposes of the coastwise laws. We so held with regard to the work done on your Motomar inflatable boat in our ruling of December 9, 1985, citing as au- thority the initial such ruling, dated March 1, 1985 (file number 107435/106756). Since the imported portion of your Motomar in- flatable boat after the replacement of the original tube with the new tube will not be any greater than was the imported portion of the boat before replacement of the original tube, we conclude that the boat would still be considered built in the United States, for purposes of the coastwise laws.

HOLDING:

An inflatable boat, the "tube" portion of which was built abroad, which was originally modified or rebuilt in the United States substantially enough to be considered built in the United States, for purposes of the coastwise laws, is still considered to have been built in the United States when the original foreign-built tube portion of the boat is replaced with another such foreign-built tube portion.

Sincerely,

Kathryn C. Peterson

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