HQ 0111135 - Vessel Repair; First Time Arrival in U.S.; Vessel Arriving as Deck Cargo; Requirement for Vessel Repair Entry; Vessel ADRIATIC VIII; Internal Advice Request; 19 U.S.C. 1466 - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1992 HQ Rulings > HQ 0111117 - HQ 0111331 > HQ 0111135

HQ 111135
June 28, 1990

VES-13-18-CO:R:P:C 111135 LLB

CATEGORY: CARRIER

Chief, Technical Branch
U.S. Customs Service
Pacific Region
One World Trade Center
Long Beach, California 90831

RE: Vessel Repair; First Time Arrival in U.S.; Vessel Arriving as Deck Cargo; Requirement for Vessel Repair Entry; Vessel ADRIATIC VIII; Internal Advice Request; 19 U.S.C. 1466

Dear Sir:

Reference is made to your letter of June 20, 1990, sent via tele-fax, forwarding the June 8, 1990, request for advice from the agent for Global Marine Drilling concerning the vessel repair entry requirements for the U.S.-flag jack-up drill rig ADRIATIC VIII.

FACTS:

The vessel ADRIATIC VIII, a jack-up drill rig documented under the laws of the United States, will be entering a port of the United States for the first time. It was constructed in Hong Kong in 1983, and has remained continuously abroad since that time. At the time the vessel comes to the U.S., it will be carried as deck cargo aboard the foreign-flag, semi-submersible, self-propelled barge MIGHTY SERVANT.

ISSUE:

Whether a vessel arriving as cargo aboard another vessel is required to file an entry for vessel repairs which may have been performed abroad during a continuous period of foreign use extending some seven years.

LAW AND ANALYSIS:

Section 1466 provides, in pertinent part, for payment of duty in the amount of 50 percent ad valorem of 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 engage in such trade.

The Customs Regulations provide, in section 4.14(b)(1) (19 CFR 4.14(b)(1)), that:

Upon first arrival of the vessel in the
United States, the owner or master shall declare on Customs Form 226 all equipment, parts, or materials purchased, and all repairs made, outside the United States.

The regulations provide further instructions concerning the filing of an entry for vessel repairs in section 4.14(b)(2) (19 CFR 4.14(b)(2)) in stating that:

All equipment, parts, or materials purchased for, and all repairs made outside the United States to, any vessel subject to the provisions of this section shall be entered on Customs Form 226 by the master or owner of the vessel. The entry shall be filed with the appropriate Customs officer at the port of first arrival within five working days after arrival.

"Arrival" is a term of art which is defined for vessel entry purposes in section 4.2(b) of the regulations (19 CFR 4.2(b)) as follows:

For the purposes of this part, the time of arrival of a vessel shall be that time when she first comes to rest, whether at anchor or at a dock, in any harbor within the Customs territory of the United States.

In the context of the vessel repair statute the vessel ADRIATIC VIII will be considered to have arrived at the time it is removed from the transporting vessel and comes to rest either at anchor or at a dock. It will then be at rest within the Customs territory of the U.S. after having arrived from a foreign port, and the requirement to file a vessel repair entry and to pay any required duties will become effective.

The vessel repair statute provides in subsection (e) (19 U.S.C. 1466(e)), that when a vessel covered by the vessel repair statute:
...arrives in a port of the United States two years or more after its last departure from a port in the United States, the duties imposed by [section 1466] shall apply only with respect to... [purchases and repairs] made during the first six months after the last departure of such vessel from a port of the United States.

In this case, the vessel will be arriving in the U.S. for the first time and cannot meet the literal requirement of having previously departed from the United States. The intent of the provision is that duty be collected on repairs to vessels which may have been taken abroad for the purpose of obtaining foreign repairs, thus the six-month limitation on dutiability during periods of extended absence from the United States. The fact that a U.S.-flag vessel has not previously been in the U.S. should not, however, act to deny the benefit of the six-month duty cap. In the present case, the date of first entry of the newly constructed vessel into service is the date on which we will consider the statutory six-month period to have begun for duty purposes. Therefore, a declaration and entry should be filed to cover all service beginning with that date. If no repairs were made or equipment or materials purchased during the vessels foreign service, a negative declaration must be filed to reflect that fact.

HOLDING:

The vessel ADRIATIC VIII must file a declaration and entry on Customs Form 226 upon arrival, such arrival occurring at the time it is removed from the transporting vessel in the United States. Such declaration and entry must be filed to cover the entire period of the vessel's service, but duty liability extends only for the period covering the first six months of its operation, as stated in the law and analysis section of this ruling.

Sincerely,

B. James Fritz

Previous Ruling Next Ruling