HQ 0112512 - Vessel Repair; Government Owned Vessels; Military Sealift Command; MSC; Undocumented Vessels; USNS ANTARES; Entry No. C15-0012343-0. - United States International Trade Commision Rulings

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HQ 112512

May 27, 1993

VES-13-18 CO:R:IT:C 112512 JBW

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations c/o Regional Commissioner
New Orleans, LA 70130-2341

RE: Vessel Repair; Government Owned Vessels; Military Sealift Command; MSC; Undocumented Vessels; USNS ANTARES; Entry No. C15-0012343-0.

Dear Sir:

This letter is in response to your memorandum that forwards for our review and ruling the above-referenced vessel repair entry.

FACTS:

The record reflects that the subject vessel, the USNS ANTARES, arrived at the port of Wilmington, N.C., on May 26, 1991. Vessel repair entry, number C15-0012343-0, was filed on May 31, 1991. The entry indicates that the vessel is owned by the United States of America, Department of the Navy, Military Sealift Command (MSC). A letter accompanying the application shows that the vessel is one of eight Fast Sealift Ships owned by the Navy. Letter of Richard Haynes, Counsel for the Military Sealift Command, dated August 5, 1992. The letter further states that all the FSS ships owned by the Navy are undocumented and are prohibited from engaging in commerical trade.

ISSUE:

Whether undocumented MSC FSS vessels are intended to engage in the foreign or coasting trade, thereby subjecting such vessels to the provisions of 19 U.S.C. 1466.

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, provides in pertinent part for payment of duty in the amount of fifty 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 the foreign or coastwise trade. The Customs Regulations apply this provision to government-owned or chartered vessels "if documented with a registry, coastwise trade, or Great Lakes trade endorsement, or if undocumented, intended to engage in foreign, coastwise, or Great Lakes trade." 19 C.F.R. 4.14(a)(2)(ii) (1992)(emphasis added).

To conclude that the repairs made to the undocumented ANTARES are subject to duty, we must first determine whether the vessel was intended to engage in the foreign or coastwise trade. Foreign Trade is defined as the "[c]ommercial interchange of commodities between countries; export and import trade." Black's Law Dictionary 583 (5th Ed. 1979). Further, trade connotes buying and selling for profit. American Heritage Dictionary of the English Language 1284 (2d Ed. 1985). The Customs Service has held that government-owned, but privately operated vessels engaged exclusively in the carriage of government cargo are not engaged in the foreign or coasting trade within the meaning of 19 U.S.C. 1466. C.I.E. 202/48, dated June 4, 1948. Moreover, undocumented government vessels that are not intended to engage in the foreign or coasting trade are not required to file a vessel repair entry. Id.; C.I.E. 2335/66, dated November 30, 1966.

Whether an undocumented vessel is intended to engage in trade must be established through the submission of evidence on the use of the vessel. MSC has submitted documents to demonstrate that its FSS ships are not permitted to engage in commercial trade. Specifically, the General Counsel of the MSC has stated by letter that the FSS ships are engaged exclusively in the carriage of Department of Defense cargo in connection with the military contingency operations and military exercises. Consequently, the subject vessel was not in commerical trade at the time of its arrival.

Based on these authorities, we find that undocumented MSC FSS vessels are not intended to engage in the foreign or coasting trade. Such vessels are therefore not subject to vessel repair duties under 19 U.S.C. 1466. The USNS ANTARES, being an active FSS ship, is not subject to duty under 19 U.S.C. 1466.

This determination applies only to undocumented FSS vessels owned by MSC. Documented vessels that are owned or operated by MSC continue to be subject to vessel repair duties under 19 U.S.C. 1466.

HOLDING:

Undocumented MSC FSS vessels do not carry commercial cargo and are therefore not intended to engage in the foreign or coasting trade. Such vessels are therefore not subject to the provisions of 19 U.S.C. 1466. The USNS ANTARES, being an active FSS ship, is not subject to duty under 19 U.S.C. 1466.

Sincerely,

Acting Chief

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