HQ 0111336 - Petition for Review on Houston Vessel Repair Entry No. C53- 0012147-8, June 12, 1989; Vessel: M/V PRIDE OF TEXAS, Voyage No. 38; U.S. spare parts and owner-supplied spare parts; Customs and Trade Act of 1990; P.L. 101-382; 19 U.S.C. 1466(h). - United States International Trade Commision Rulings

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HQ 111336

June 7, 1991

VES-13-18-CO:R:IT:C 111336 BEW

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations Division
ATTN: Vessel Repair Liquidation Unit
New Orleans, Louisiana 70130

RE: Petition for Review on Houston Vessel Repair Entry No. C53- 0012147-8, June 12, 1989; Vessel: M/V PRIDE OF TEXAS, Voyage No. 38; U.S. spare parts and owner-supplied spare parts; Customs and Trade Act of 1990; P.L. 101-382; 19 U.S.C. 1466(h).

Dear Sir:

This is in reference to a petition for relief from duties filed by the attorney for Seahawk Management, Inc., on a partial denial of an application for relief for duties assessed on repairs made to the M/V PRIDE OF TEXAS, Voyage No. 38.

FACTS:

The petitioner's request for review centers on the costs relating to the owner supplied U.S. spare parts listed as follows:

I. Invoice Amount
Cooper Industries invoice No. 77805 $4,512.85 Cooper Industries invoice No. 77832 $ 668.60 Cooper Industries invoice No. 77864 $6,662.00 Cooper Industries invoice No. 77869 $ 843.00

II. CamGear Ring P/N 02-350-05-AC $12,104.00

In a decision dated July 13, 1990 (HQ 110644 BEW), we ruled that the applicant had submitted invoices for the subject articles which indicate purchase in the United States, however, there was no evidence submitted that addressed the articles' place of manufacture. We held that since no direct evidence of U.S. manufacture had been submitted, the amounts listed for the U.S. materials were dutiable.

The petitioner has submitted additional evidence to show that the subject materials were manufactured in the United States.

ISSUE:

1. Whether sufficient evidence is presented to establish that subject owner-supplied spare parts were manufactured in the U.S. which are free under the vessel repair statute (19 U.S.C. 1466(h)).

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.

The climate with regard to parts shipped abroad from the United States for foreign installation was transformed on August 20, 1990, when the President signed Public Law 101-382 which added a new subsection (h) to section 1466. While this provision applies by its terms only to foreign-made imported parts, there is ample reason to extend its effect to U.S.-made materials as well. To fail to do so would act to discourage the use of U.S.-made materials in effecting foreign repairs since continued linkage of remission provisions of subsection (d)(2) with the assessment provisions of subsection (a) of section 1466 would obligate operators to pay duty on such materials unless they were installed by crew or resident labor. If an article is claimed to be of U.S. manufacture, there must be proof of its origin in the form of a bill of sale or domestic invoice. If an article is claimed to have been previously entered for consumption, duty paid by the vessel operator, there must be proof of this fact in the form of a reference to the consumption entry number for that previous importation, as well as to the U.S. port of importation. If imported articles are purchased from third parties in the United States, a domestic bill of sale to the vessel operator must be presented.

The petitioner has submitted a letter dated July 31, 1990, from Cooper Industries Energy Service Group confirming that the subject parts were manufactured in the United States. Accordingly, the petition is granted.

HOLDING:

The evidence presented is sufficient to substantiate that the subject parts were manufactured in the United States, thus warranting remission pursuant to 19 U.S.C. 1466(h). The petition is granted.

Sincerely,

B. James Fritz

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