HQ 0111707 - Vessel entry and clearance; Government-chartered vessels; Military Sealift Command; Tonnage tax and light money - United States International Trade Commision Rulings

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HQ 111707

January 7, 1992

VES-5-CO:R:IT:C 111707 LLB

CATEGORY: CARRIER

Mr. Bruce Mitchell
President, S. De Freest and Co., Inc.
606 Fort Street
Honolulu, Hawaii 96813

RE: Vessel entry and clearance; Government-chartered vessels; Military Sealift Command; Tonnage tax and light money

Dear Mr. Mitchell:

Reference is made to your letter of May 16, 1991, in which you ask that we rule upon the extent that statutory vessel entry and clearance requirements are applicable to privately owned commercial vessels operated pursuant to charter to the United States Government.

FACTS:

The Military Sealift Command (MSC), an element of the Department of the Navy, chartered numerous privately-owned United States-flag vessels for the carriage of military cargoes during the pendency of Operation Desert Storm in the Middle East. The question has arisen whether these vessels, operated by civilian crews and carrying military cargoes, are subject to vessel entry and clearance requirements. Included in the file before us is a copy of a Customs Circular dated November 29, 1976 (Circular VES-11-R:CD:C) which provides that 18 named vessels operated by the MSC under private contract are exempt from the assessment of tonnage taxes as well as from the presentation of a Certificate of Financial Responsibility (Oil Pollution Certificate) prior to clearing from a port in the United States. The cited circular does provide, however, that such vessels are otherwise required to report arrival, enter, and clear in the normal manner.

ISSUE:

Whether civilian United States-flag commercial vessels operating under contract to the Department of the Navy and carrying only military cargoes, are required to comply with all normally applicable vessel and entry procedures.

LAW AND ANALYSIS:

Section 1433, title 19, United States Code, provides that every vessel arriving in the United States from a foreign place must report its arrival immediately. The Customs Service considers an American vessel which comes to rest in or engages in an activity in foreign waters to have been in a foreign place for purposes of section 1433. The Customs Service considers that an American vessel has not been in a foreign place for purposes of section 1433 if it merely passes through foreign waters during the course of a voyage. (Customs Ruling 109442, April 28, 1988).

In light of the above-cited interpretation, absent a government-vessel exemption from the reporting requirement, the subject vessels are considered to be required to report upon arrival in the United States from voyages on which the vessel has come to rest or engaged in any activities in foreign territorial waters, other than merely traversing those waters.

Section 4.5, Customs Regulations (19 CFR 4.5), provides that no report of arrival or vessel entry shall be required for vessels owned or controlled by the United States or its agencies:

... if such vessel (1) is manned wholly by members of the uniformed services of the
United States, by personnel in the civil service of the United States, or by both, and (2) is transporting only property of the
United States or passengers travelling on official business of the United States ...

In this case, the vessels in question are operated by civilian contract crews.

When a vessel is required to enter (and when no exception from entry is provided under 19 U.S.C. 1441), it is required that all merchandise aboard be manifested in accord with section 431, Tariff Act of 1930, as amended (19 U.S.C. 1431), and section 4.7, Customs Regulations (19 CFR 4.7). The manifest is required to be available for presentation to Customs upon arrival.

The exemption from the assessment of tonnage taxes and light money in the cited Customs Circular document is based upon section 4.21(b)(4), Customs Regulations (19 CFR 4.21(b)(4)), which provides an exemption for vessels operated or managed by the United States Government and not carrying merchandise for trade purposes. This is a less stringent provision than the statutory provision which exempts certain vessels from the need to make formal entry.

HOLDING:

The result of all the foregoing is that civilian commercial vessels operated by civilian crews pursuant to contractual agreements with the United States Government must comply with all normally applicable report of arrival, entry, and clearance procedures. These requirements are not altered merely because of such contract agreements or because of military cargoes. The only Customs requirement which is not enforced in such cases is the collection of tonnage tax and light money.

Pollution Certificates are a requirement of the United States Coast Guard which Customs enforces on behalf of that agency. For our purposes, we will consider that the exemption stated in the cited Customs Circular is specific to the oil tanker vessels which were under consideration at the time that document was drafted and, absent notification to the contrary from the Coast Guard, we will continue to require all other vessels to maintain such certification.

Sincerely,

B. James Fritz

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