HQ 0111499 - Protest No. 1001-0-201026; S.S. MORMACSTAR V-138C - United States International Trade Commision Rulings

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HQ 111499

July 23, 1991

VES-13-18-CO:R:IT:C 111499 LLB

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations
ATTN: Regional Vessel Repair Liquidation Unit New York, New York 10048-0945

RE: Protest No. 1001-0-201026; S.S. MORMACSTAR V-138C

Dear Sir:

This is in reference to your memorandum dated January 28, 1991, forwarding additional information regarding a protest concerning vessel repair entry no. C01-0015421-7. Our findings are set forth below.

FACTS:

The S.S. MORMACSTAR is a U.S.-flag vessel owned by Wilmington Trust Company of Wilmington, Delaware. The vessel had foreign shipyard work performed during June 14-18, 1990, in Bilbao, Spain. Subsequent to the completion of the work the subject vessel arrived in the United States at Portland, Maine, on June 29, 1989.

A vessel repair entry covering the work in question was filed on the date of arrival. Several documents relating to this entry were filed with the New York Vessel Repair Liquidation Unit (VRLU) with the intention that they collectively constituted an application for relief. Upon a review of these documents by the Carrier Rulings Branch it was determined that the requirements for an application for relief as set forth in section 4.14(d)(1), Customs Regulations (19 CFR 4.14(d)(1)) were not met and that the entry should be liquidated without regard to any claim for relief (see Headquarters Ruling 110739 KVS, dated March 21, 1990).

The entry was liquidated on June 1, 1990. On June 26, 1990, a timely protest was filed claiming, among other elements, that the cost of certain allegedly U.S.-manufactured materials was non-dutiable. The protestant was allowed an additional 60 days from the date of notification of the decision on the protest in which to submit evidence on this point.

ISSUE:

Whether the additional evidence which is presented is sufficient to prove that the parts and materials for which the protestant seeks relief were U.S.-manufactured and therefore non-dutiable under 19 U.S.C. 1466.

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, provides in pertinent part for the 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 foreign or coastwise trade, or vessels intended to engage in such trade.

The Customs and Trade Act of 1990, section 484E, Pub. L. No. 101-382 (codified at 19 U.S.C. 1466(h)(2)), amended the vessel repair statute to except from duty spare repair parts or materials that have entered the United States duty-paid and are used aboard a cargo vessel engaged in foreign or coastwise trade.

In regard to the dutiability under section of 1466 of equipments, parts, repair materials, etc., which have been manufactured and purchased in the United States for installation abroad on U.S.-documented vessels, Customs is guided by the position as delineated in T.D. 75-257, which held that where equipment, parts, repair materials, etc., which have been manufactured and purchased in the United States are installed abroad on U.S.-documented vessels by other than U.S. residents or regular crew, the labor alone is dutiable. If the installation of such articles is performed by U.S. residents or the regular crew, remission is warranted pursuant to section 1466(d)(2). In order to support claims of U.S. manufacture and purchase, we require evidence beyond an affidavit from an interested party. We require direct evidence of U.S. manufacture (e.g., an affidavit by the equipment manufacturer) as well as proof of U.S. purchase.

In the protest currently under consideration, the protestant submitted invoices and purchase orders. While it was apparent that the documentation was sufficient proof of U.S. purchase, it was insufficient for purposes of proving U.S. manufacture. Accordingly, we delayed final consideration of the protest for a period of 60 days from the date the protestant was notified of our decision by the New York VRLU so that direct evidence of U.S. manufacture might be submitted.

The most recent evidence includes invoices from three concerns, International Paint, Arcy Manufacturing Company, and Hobart Brothers Company. All are U.S. companies who have supplied documents indicating that the materials supplied the vessel in this matter are manufactured in the United States. Further, evidence has been submitted to the New York Vessel Repair Liquidation Unit which satisfies that office that a charge for pipe fabrication in the amount of $2,570.25 and associated repair parts costing $131.32, should be remitted. The reason for these latter findings is that the fabrication was performed in the U.S. by resident labor, and the related parts were of U.S. manufacture.

HOLDING:

Following a thorough review of the evidence and analysis of the law and applicable precedents, we have determined to allow the protest in whole.

Sincerely,

B. James Fritz

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