HQ 0109687 - Use of a Canadian-flag sailboat, owned by residents of the United States, in the waters of the United States - United States International Trade Commision Rulings

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HQ 109687
October 11, 1988

VES 4 011/02/03 CO:R:P:C 109687 BEW

CATEGORY: CARRIER

Mr. David J. Lyttle:
122 Lockwood Road
Syracuse, New York 12314

RE: Use of a Canadian-flag sailboat, owned by residents of the United States, in the waters of the United States

Dear Mr. Lyttle:

This is in reference to your undated letter, received on August 8, 1988, concerning the temporary importation of a Canadian sailboat into the United States for a trip of less than one year's duration.

FACTS:

You state that you are a United States citizen who resides in Canada during the summer months, and in Syracuse, New York, during the rest of the year. You state that in September of this year, you and your wife are planning to travel from Ontario, Canada, to the Florida Keys via the intercoastal waterway in a Canadian-built sailboat, and return to Canada next summer. You state that the vessel was purchased in Canada and normally used and stored in Canada. You state that if you were a resident of Canada, you would be eligible to apply for a cruising license under the provisions of section 4.94, Customs Regulations (19 CFR 4.94), and that with a cruising license the vessel would not be subject to entry and duty upon its arrival in a port of the United States. You further state that since you are United States residents, under the provisions of section 4.94(a), the vessel is subject to duty when you make entry at the port of arrival in the United States.

You request an interpretation of 19 CFR 148.2(d), and ask that Customs rule that your trip of less than one year duration be considered a "short period of time" under sections 148.2(d) and 148.8 of the Customs Regulations in order that you may claim status as a nonresident and thus qualify for a cruising license under section 4.94.

ISSUES:

1. Whether a cruising license may be issued to a Canadian-flag pleasure boat, owned by a United States resident, when the vessel enters the United States for a temporary visit.

LAW AND ANALYSIS:

The master of any foreign vessel arriving in a United States port, whether from a foreign port or another United States port, is required to make vessel entry under title 19, United States Code, section 1435 (19 U.S.C. 1453), and section 4.3 of the Customs Regulations (19 CFR 4.3). Such vessels are also required to clear when bound for a foreign port, and must have a permit to proceed from one United States port to another.

Title 46, United States Code, Appendix, section 104 (46 U.S.C. App. 104), authorizes the issuance of cruising licenses to pleasure vessels of countries which extend reciprocal privileges to United States pleasure vessels. Canada is such a country. The determining factor as to whether a vessel is eligible for a cruising license is the documentation of the vessel and not the residency of the owner. Section 4.94 of the Customs Regulations, concerns the issuance of cruising licenses which exempt foreign yachts from formal entry and clearance procedures. Subsequent to the receipt of the cruising license, yachts may arrive and depart from the United States and cruise in specified waters of the United States without entering and clearing, without filing manifests and obtaining or delivering permits to proceed, and without the payment of entrance and clearance fees, or fees for receiving manifests and granting
permits to proceed, duty on tonnage, tonnage tax, or light money. The license is granted subject to the condition that the vessel will not engage in trade or violate the laws of the United States in any respect. (See 19 CFR 4.94(c), copy enclosed). A cruising license does not exempt a vessel from the requirement to report its arrival in the United States to Customs immediately upon such arrival (see 19 U.S.C. 1433 and 19 CFR 4.2, copy enclosed). In addition, a yacht or pleasure boat owned by a resident of the United States or brought into the United States for sale or charter to a resident thereof is dutiable at the rate of 1.5 percent ad valorem, under item 696.05 or 696.10, Tariff Schedules of the United States, copy enclosed.

We emphasize that although cruising licenses exempt yachts having them from the above described requirements while cruising in the United States, they are not required as a condition precedent to cruising in the United States or its waters.

Cruising licenses, as their name implies, are intended for the use of foreign vessels on relatively brief cruises in the United States and are not to be used as a form of permanent license to permit a foreign vessel to remain indefinitely in our waters. A cruising license is not renewable.

Pursuant to 46 U.S.C. App. 104 and 19 CFR 4.94, an application for a cruising license is to be filed with Customs by the vessel owner or master. Only yachts which are "used and employed exclusively as pleasure vessels" (see 46 U.S.C. App. 104) may be granted cruising licenses.

For your information, 19 CFR 148.2 provides that citizens of the United States ... shall be deemed residents of the U.S. returning from aboard with the meaning of "residents" as used in schedule 8, part 2A. TSUS (19 U.S.C. 1202), in absence of satisfactory evidence that they have established a home elsewhere.ilable evidence presented to him.

Generally, if a returning person has been outside the United States for less than three years, a declaration by the person upon arrival that when he departed he intended never to return to the United States except for visits, will be considered, but will not be conclusive evidence of intent.

Intent may be further examined by eliciting answers to such questions as:

(a) the duration of your foreign stay; and

(b) whether while aboard you maintained a home in the United States.

If you meet the above stated conditions for nonresident Customs status, you will be accorded the exemptions from duty and tax available to a nonresident.

If you do not meet the above conditions, you are considered to be "returning resident to the United States". Generally, under the conditions set forth above a returning resident may be classified as a nonresident pursuant to section 148.2(d) and 148.8, Customs Regulations, if your are entering the country for a "short visit". If this is the case, the boat may be brought in free of duty under the provisions of items 812.30, Tariff Schedules of the United States (TSUS), on condition that you will export the boat upon your departure from the United States. Customs has held, however, that a stay in excess of 30 days raises a strong presumption that the visit does not fall into the category of a "short visit" within the meaning of section 148.2(d).

Contrary to the above, in Legal Determination 80-0153, dated October 28, 1980, the Customs Service ruled that a resident of the United States who resides seasonally in a contiguous foreign country (Canada and Mexico) and who returns to the United States on incidental trips may not claim optional nonresident Customs status for short visits in order to enter accompanying articles acquired aboard under the personal exemptions from duty and tax available to nonresidents. The articles acquired abroad may be enter under the personal exemptions available to returning residents if they apply. If duty is paid on the articles, the items may be entered duty free on subsequent importations upon satisfying Customs officers that duty has been paid.

HOLDING:

1. A cruising license may be issued to a Canadian-flag pleasure boat, owned by a United States resident, when the vessel enters the United States for a temporary visit.

2. A returning resident of the United States may be claim nonresident status when he is entering the United States
for a short stay. A stay in excess of 30 days gives rise to a presumption that the visit does not fall into the category of a "short visit" within the meaning of section 148.2(d).

3. A resident of the United States who resides seasonally in a contiguous foreign country (Canada and Mexico) and who returns to the United States on incidental trips may not claim optional nonresident Customs status for short visits in order to enter accompanying articles acquired aboard under the personal exemptions from duty and tax available to nonresidents. In addition, a Canadian-built, Canadian-flag yacht or pleasure boat owned by a resident of the United States which he sails into the United States is dutiable at the rate of 1.5 percent ad valorem, under item 696.05 or 696.10, Tariff Schedules of the United States. The owner of the vessel when traveling with the vessel would be entitled to the personal exemption at the time of entry, presently $400 per family member.

Sincerely,

B. James Fritz

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