HQ 0111622 - Honolulu Repair Entry No. C32-0006757-8 dated November 20, 1990, M/V ROVER. Application; vessel repairs, six-month rule; 19 U.S.C. 1466(e). - United States International Trade Commision Rulings

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HQ 111622

December 11, 1991

VES-13-18-CO:R:IT:C 111622 BEW

CATEGORY: CARRIER

Chief, Technical Branch
Pacific Region
1 World Trade Center
Long Beach, California 90831

RE: Honolulu Repair Entry No. C32-0006757-8 dated November 20, 1990, M/V ROVER. Application; vessel repairs, six-month rule; 19 U.S.C. 1466(e).

Dear Sir:

Reference is made to your memorandum of March 26, 1991, which forwards for our consideration an Application for Relief from vessel repair duties filed by OMI Rover Transportation, Inc., New York, New York, concerning the above-captioned vessel repair entry.

FACTS:

The vessel M/V ROVER previously owned by Ocean Shipholdings, Inc., departed the United States on August 11, 1986, and remained continuously outside the United States until the time it arrived in the port of Honolulu, Hawaii, on November 16, 1990. The vessel was delivered to OMI from Ocean Carriers, Inc. in February 1990.

The entire vessel repair entry involves a potential duty of $430,500.

The applicant has submitted invoices and bank transmittal forms as evidence of the repairs that were made during the first six-months after the vessel departed the United States.

You have requested our advice concerning the following repairs:

Item No. Description

DD Memorandum of Agreement
DD Bank of the Southwest Transmittal
Form

Item No. Description

EE International Paint (Invoice Dated
After 6 months)
EE International Paint (Invoice Dated
After 6 months)
GG Bank of the Southwest Transmittal
Form (Dated After 6 months).
ISSUE:

Whether materials purchased and installed prior the expiration of the six-month period commencing on August 11, 1986, 1983, may qualify for remission of vessel repair duties assessed in the present case.

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 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.

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.

In this case, relief is sought concerning the above stated six items of repairs which occurred during the first six months following the vessel departure from the United States. Subsection (e) of the statute applies vessel repair duty to repair parts purchased or repairs made during the first six months of an extended absence. The statutory language is read disjunctively to apply, as the situation dictates, to either purchases or installations. (Customs Ruling Letter 109300, July 1, 1988). Our findings are set forth below:

Items DD - Memorandum of Agreement and Bank of the Southwest Bank Transmittal Form - these two documents do not segregate dutiable items from non-dutiable items, therefore, the entire amount of $2,264,866 (Singapore dollars), the total amount stated in the Memorandum of Agreement, is dutiable. It appears that the Bank Transmittal, dated April 29, 1987, is payment of only one- half of the amount ($533,220.55 in U.S dollars) that was agreed upon.

Item GG - Bank of the Southwest Bank Transmittal Form - this document does not segregate dutiable items from non- dutiable items, therefore, the entire amount of $173,954.98, is dutiable.

Items EE - International Paint Invoice Nos. 642570 and 642572 are both dated August 20, 1987, with a disposition date of May 22, 1987. It appears from the documents that these invoices are for paint and paint products of U.S. origin which were purchased subsequent to the expiration dated of the six-month period, therefore, the entire amount listed on both documents are non-dutiable.

HOLDING:

Following a thorough review of the facts in this matter, and after an analysis of the law and relevant precedents, we have determined that Items DD and Item GG are dutiable for reason that the purchases under consideration in these items are not segregated and were made within the first six months of the relevant time period under section 1466(e). Items GG are non- dutiable for reason that these items were purchased subsequent to the first six months of the relevant time period.

Sincerely,

B. James Fritz

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