HQ 0111538 - Protest No. No. 27040-005053: Long Beach, California Vessel Repair Entry No. C27-0045926-9, dated April 29, 1990; SEALAND DEFENDER, Voyage 105. 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 111538

November 13, 1991

VES-13-18-CO:R:IT:C 111538 BEW

CATEGORY: CARRIER

Chief, Technical Assistant
Pacific Region
Commercial Operations
One World Trade Center
Long Beach, California 90853

RE: Protest No. No. 27040-005053: Long Beach, California Vessel Repair Entry No. C27-0045926-9, dated April 29, 1990; SEALAND DEFENDER, Voyage 105. 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 memorandum from your office which transmitted protest No. 27040-005053, relating to vessel repair entry No. C27-0045926-9, concerning the SEALAND DEFENDER, Voyage 105, which arrived at the port of Long Beach, California, on April 29, 1990.

FACTS:

On April 4, 1990, while in Kobe, Japan, the vessel SEALAND DEFENDER underwent various shipyard operations. The dutiability of these operations has previously been considered by your office. The entry was liquidated on October 12, 1990. The protest was timely filed on December 13, 1990. Included in your considerations was the matter of whether the spare parts used in the repairs are dutiable under the statute.

The only item which is presently being protested is Item (9a) - owner supplied spare parts which were used in foreign repairs made to the pneumatic logic box for M/E report control system.

The protestant claims that the subject items should be duty free because these are spare parts which have been previously imported and duty paid under the Harmonized Tariff Schedules of the United States (HSTUS).

The protestant has submitted Customs Form 7501, Entry Summary, dated April 6, 1989, and other documents to show that the subject parts and materials were imported in the United States, and that duties were paid on May 10, 1989.

ISSUE:

1. Whether sufficient evidence is presented to establish that the owner-supplied spare parts used for foreign repairs are spare parts which were previously imported into the United States and duties paid under the HTSUS, 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 evidence presented by the protestant is sufficient to substantiate that the subject parts are owner-supplied foreign parts which were imported into the United States and duty paid under the HTSUS, thus warranting remission pursuant to 19 U.S.C. 1466(h).

HOLDING:

The foreign work performed on the subject vessel for which the protestant seeks relief is non-dutiable under 19 U.S.C. 1466(h).

Accordingly, the protest is granted.

Sincerely,

B. James Fritz

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