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HQ 111181


May 8, 1991

VES-13-18-CO:R:IT:C 111181 BEW

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations Division
South Central Region
New Orleans, Louisiana 70130

RE: Petition for Review on New Orleans, Louisiana, VR-C20- 0022248-2, dated July 13, 1989, LASH BARGES arriving on Vessel ACADIA FOREST, Voyage 69WB. 19 U.S.C. 1466(h); LASH Barges; Documented Vessels; Entry.

Dear Sir:

Reference is made to your memorandum of July 18, 1990, which forwards for our consideration a petition for relief from the assessment of vessel repair duties filed by Forest Lines, Inc.

FACTS:

The vessel, a Lighter Aboard Ship (LASH) vessel, arrived with a complement of LASH barges which had undergone various operations while abroad. The petition seeks specific relief from the assessment of duties on this entry, as well as agreement from Customs that certain types of charges, to be specified below, are not dutiable, are recurring, and need not be declared or entered on future arrivals.

ISSUE:

Whether LASH barge repairs are exempted from duty under the provisions of 19 U.S.C. 1466(h).

Whether LASH barge operators are now relieved from the need to conduct pre-voyage inspections on their vessels and to file individual vessel repair entries for such barges. Further, whether the statute applies to entries made either before or after the August 20, 1990, date of enactment, so long as those entries had not been finally liquidate by that date.

Whether items of repairs or recurring items need be entered on future vessel repair entries.

LAW AND ANALYSIS:

Title 19, United States Code, section 1466(a), provides in pertinent part for payment of duty in the amount of 50 percent ad valorem on the cost of foreign repairs to vessels documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to be employed in such trade.

On August 20, 1990, the President signed into law the Customs and Trade Act of 1990 (Pub. L. 101-382), section 484E of which amends the vessel repair statute by adding a new subsection (h), which provides in part:

(h) The duty imposed by subsection (a) of this section shall not apply to--

(1) the cost of any equipment, or any part of equipment, purchased for, or the repair parts or materials to be used, or the expense of repairs made in a foreign country with respect to, LASH (Lighter Aboard Ship) barges documented under the laws of the
United States and utilized as cargo containers.

It is clear that the statutory exemption does not apply to all LASH barges, but rather only to those which are documented under U.S. laws and are utilized as cargo containers. Further, the benefits of the statute are not made applicable to LASH barges which are undocumented. Neither should benefits extend to LASH barges which were not in continual cargo container service (e.g., such service may have been suspended or terminated) between the time of the last pre-repair departure from the U.S., and first subsequent U.S. arrival.

The effective date of the amendment is stated as follows:

Effective Date.--The amendment made by this section shall apply to--

(1) any entry made before the date of enactment of this Act that is not liquidated on the date of enactment of this Act, and

(2) any entry made--

(A) on or after the date of enactment of this Act, and

(B) on or before December 31, 1992.

In the instant case, the entry was filed on July 13, 1989, before the date of enactment of the Customs and Trade Act of 1990. The subject entry has not been liquidated, therefore the entry is subject to treatment under the new law.

Following enactment of Pub. L. 101-382, Customs identified the need for various policy determinations regarding administration of the new 19 U.S.C. 1466(h). The necessary determinations have now been made.

In paragraph (h)(1), the statute is clear in its intent to exempt qualifying vessels from repair duty. It must, however, be made clear that the vessels for which this benefit is sought are duly qualified. This requirement must be satisfied by providing statements on the relevant vessel repair entries (Customs Form 226) that the LASH barges in question are documented under U.S. law, and were at all times relevant to the transaction under consideration, in use as a cargo containers. Vessels where service has been suspended or terminated are not qualified vessels.

As a result of the aforesaid exemption and the new law's legislative history, owners and masters of LASH barges are relieved from (a) the pre-voyage inspection requirements set forth in 19 C.F.R 4.14(d)(iii)(G) and (b) the multiple Customs Form 226 declaration and entry requirements contained in 19 C.F.R. 4.14 (a)(iv). To the extent that there are any undocumented LASH barges in service, however, the regulatory procedures remain valid.

The term "liquidated" means the posting of the bulletin notice in the appropriate customhouse, as set forth in 19 C.F.R. 159.9(c). Nevertheless, we recognize a distinction between when an entry is "liquidated" and when such liquidation is ultimately effective. For example, we recently ruled on the retroactive impact of 19 U.S.C. 1466(h) on pending Customs cases involving entries made before the August 20, 1990, date of enactment. See, Customs Ruling Letter 111474 GV. Specifically, we held that the term "liquidated" as used in 19 U.S.C. 1466(h) is intended to mean "finally liquidated" and an entry is not "finally liquidated" if it is still the subject of administrative or judicial proceedings. Section 514(a) of the Tariff Act of 1930 (19 U.S.C. 1514(a)) provides, in part, that the liquidation of an entry shall be final unless a protest is timely filed, or if a court action is filed to contest denial of a protest; and Hambro Automotive Corp. v. United States, 603 F.2d 850, 853 (CCPA, 1979); United States v. Desiree Intern USA Ltd., 497 F.Supp. 264, 265 (D.C. N.Y., 1980); and Computime, Inc. v. United States, 622 F.Supp. 1083 (CIT 1985).

We note the position stated by Senator Breaux that the new amendments to section 1466 "...are intended to apply to any entry made prior to the date of enactment of [this Act] which is not finally liquidated when the bill becomes law." Accordingly, for purposes of the retroactive impact of new section 1466(h) the benefits of said legislation will inure to those entries which were not finally liquidated (i.e., for which a timely application, petition, protest or court action was initiated) on or before August 20, 1990. With regard to the subject petition, we find that it was timely filed on May 18, 1990. Accordingly, we find that the entry in question is subject to the benefits of the new law.

Customs has determined not to require a separate vessel repair entry (CF 226) for each LASH barge which has undergone repairs abroad. The operator of the mother vessel will, however, be required to submit one master entry document which lists the LASH vessels repaired abroad and certifies that those barges are documented under U.S. law and are in use as cargo containers.

With regard to the requirements that Customs be notified as to these recurring charges in the future, the Customs Regulations provide, at section 4.14(b)(1) (19 CFR 4.14(b)(1), that such is required:

... regardless of the dutiable status of such items or expenses.

Even though the new statute generally exempts LASH barge repairs from duty, the obligation to report such expenses of repair has not been eliminated. That report is the means of Customs determining any dutiability issues under section 1466(h); determinations as to possible dutiability cannot be made by parties who might owe that duty.

HOLDING:

Following thorough consideration of the facts and law, Customs has determined to administer the newly enacted 19 U.S.C. 1466(h) as set forth in the LAW AND ANALYSIS section of this ruling. The subject entry is subject to treatment under the new law.

Sincerely,

B. James Fritz
Chief

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