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HQ 112554


January 27, 1993

VES-5-CO:R:IT:C 112554 GEV

CATEGORY: CARRIER

Tompkins & Davidson
Counselors at Law
One Astor Plaza
1515 Broadway
43rd Floor
New York, New York 10036

RE: User Fee; 19 U.S.C. 58c

Dear Sirs:

This is in response to your letter dated December 4, 1992, on behalf of your client, Chandris, Inc. ("Chandris"), requesting Customs interpretation of 19 U.S.C. 58c regarding the application of, and exceptions to, the $5.00 passenger fee for the arrival of each passenger aboard a commercial vessel or commercial aircraft from a place outside the United States. Our ruling on this matter is set forth below.

FACTS:

Chandris, located in Miami, Florida, operates as an agency for the booking of travel aboard various foreign-flag commercial cruise line ships. Chandris offers numerous different cruise line itineraries (including various package programs) which include origination from and travel to various countries. Included in such passenger itinerary cruise travel are passengers who board (i.e., the point at which travel on the ship originates) Chandris' ships at the islands of St. Thomas, Martinique and Curacao, and perhaps other islands in the Caribbean Sea. All passengers who board at the aforementioned locations are, except on very rare occasions, residents of such U.S. territories or possessions, or adjacent islands. For purposes of this ruling we are assuming that each such cruise terminates in the Customs territory of the United States.

ISSUE:

Whether the $5.00 processing fee assessed on passengers arriving in the Customs territory of the United States aboard a commercial vessel or aircraft pursuant to 19 U.S.C. 58c(a)(5) is applicable to those passengers whose journeys originate in an exempt location listed 19 U.S.C. 58c(b)(1)(A).

LAW AND ANALYSIS:

Title 19, Code of Federal Regulations, 24.22(g)(1) provides, in pertinent part:

"Except as set forth in this paragraph, each passenger requiring Customs processing who is aboard a commercial vessel or commercial air- craft which arrives in the customs territory of the U.S. from a place outside thereof, shall be assessed a fee in the amount of $5 for the processing."

Section 24.22(g)(1) was promulgated pursuant to 13031 of the Consolidated Omnibus Reconciliation Act of 1985 (the COBRA, Public Law 99-272, 100 Stat. 82) codified at 19 U.S.C. 58c, whose purpose, as clearly stated in the statute and the above regula- tion, was to provide a schedule of fees for the provision of various Customs services.

The exceptions referenced in 24.22(g)(1) are set forth in 24.22(g)(2) (also promulgated pursuant to ?13031 of the COBRA). Of particular relevance to Chandris is the exemption from the assessment of the $5 fee set forth in 24.22(g)(2)(i) which provides that the fee shall not be assessed for the following:

"Persons whose journey originates in Canada, Mexico, a territory or possession of the U.S., or any adjacent island. The U.S. territories and possessions include American Samoa, Guam, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands. The adjacent islands include all of the islands in the Caribbean Sea, the Bahamas, Bermuda, St. Pierre, Miquelon, and the Turks and Caicos Islands." (emphasis added)

It is Chandris' position that the $5.00 fee is not applicable to passengers who are residents of U.S. territories or possessions, or adjacent islands (e.g., St. Thomas, Martinique, Curacao, etc.) and board a cruise vessel at those locations. Chandris contends that these passengers' journeys originate at - 3 -
locations exempt pursuant to the above authority thus rendering inapplicable the $5.00 fee. Upon further review of 19 U.S.C. 58c (the statute from which 24.22 was promulgated) as set forth below, Customs is in accord with the basic premise of this position.

Title 19, United States Code, 58c(a)(5), provides for the assessment of fees associated with passengers as follows:

"For the arrival of each passenger aboard a commercial vessel or commercial aircraft from a place outside the United States (other than a place referred to in subsection (b)(1)(A) of this section), $5."

Title 19, United States Code, 58c(b)(1)(A), provides for the limitation on the assessment of the above fees as follows:

(b) Limitation on fees

(1) "No fee may be charged under subsection (a) of this section for customs services provided in connection with --

(A) the arrival of any passenger whose journey--

(i) originated in--

(I) Canada,

(II) Mexico,

(III) a territory or possession of the
United States, or

(IV) any adjacent island (within the meaning of 1101(b)(5) of Title 8, or

(ii) originated in the United States and was limited to--

(I) Canada,

(II) Mexico,

(III) territories and possessions of the
United States, and

(IV) such adjacent islands;
(emphasis added)

With regard to 19 U.S.C. 58c(a)(5) which provides for the assessment of the fee, we believe that it must be read in conjunction with subsection (b)(1)(A) of the statute which limits the applicability of the fee not in terms of direct arrivals from those locations listed therein, but in terms of journeys originating in those locations. To construe these two subsections otherwise could lead to anomalous and improper results. For example, if the "other than..." language within the parentheses of subsection (a)(5) is not construed as stated above (e.g., mere arrival from an exempted location listed in subsection (b)(1)(A) suffices to exempt the fee) no fee would have to be collected from a traveler who flies from Paris, France to Martinique and thence to the United States because the arrival in the United States would be from an "adjacent island" referred to in subsection (b)(1)(A). We believe that such a result clearly was not intended by Congress and would be inconsistent not only with the plain wording of the statute but also with the result reached by proper application of subsection (b)(1)(A) as further explained below. Accordingly, in order to give proper effect to the statute in its entirety, it is Customs position that the "other than..." language within the parentheses of subsection (a)(5) operates only as a cross-reference to subsection (b)(1)(A) which must be looked to for the substantively operative fee exemption in this regard.

As noted above, the two fee exemption provisions in subsection (b)(1)(A) are set forth with reference to where the "journey" of the arriving passenger "originated" (i.e., under subsection (i) thereof the journey simply must originate in Canada, Mexico, a territory or possession of the United States, or any adjacent island (the "exempt locations"), and under subsection (ii) thereof the journey must originate in the United States but with further qualification that the journey must be limited to the named exempt locations). In a case involving a traveler who embarks on a cruise which terminates in the United States, it is Customs position that at a minimum the entire cruise itinerary must be considered the "journey" for purposes of subsection (b)(1)(A) for the following reasons: (1) subsection (ii) thereof clearly contemplates a journey involving more than one stage or leg (i.e., the journey must encompass a departure from, and return to, the United States with an intermediate stop in one exempt location and could include stops in more than one exempt location); and (2) if only the last leg of a cruise were to constitute a journey, subsection (i) thereof could be used to nullify the intended effect of the limitation in subsection (ii). Thus, in a case where a cruise originates in the United States and includes a stop in a non- exempt location and a final stop in the U.S. Virgin Islands prior to arrival back in the United States, the fees would have to be collected because the journey does not meet the standard for exemption under subsection (b)(1)(A)(ii) (i.e., the journey originated in the United States and was not limited to an exempted location). On the other hand,- 5 -
if, as is the case with the Chandris passengers under consideration, a cruise originates in an exempt location (e.g., Martinique, St. Thomas, or Curacao) and arrives in the United States after multiple intermediate stops which include a non-exempt location, no fees would have to be collected because the journey in this case is covered by the terms of subsection

However, Customs notes that the term "journey" as used in subsection (b)(1)(A) may encompass more than merely a cruise under certain factual circumstances, with the result that the place where the cruise originated may not always control the application of the two fee exemption provisions contained in that statutory provision. In this regard, 19 U.S.C. 58c(d)(1) requires, inter alia, (1) that the $5 fee prescribed under subsection (a)(5) be collected by "[e]ach person that issues a document or ticket to an individual for transportation by a commercial vessel or commercial aircraft into the customs territory of the United States" and (2) that such collection take place "at the time the document or ticket is issued." Since collection of the fee is dependent on, and must take place at the same time as, issuance of the ticket or travel document which results in the passenger's arrival in the United States, the term "journey" must include all stages of an itinerary under circumstances where travel is sold, and one or more tickets or travel documents are issued by one party (including related parties) covering multiple destinations and/or covering multiple or different modes of transportation.

An example of applying Customs interpretation of the term "journey" as discussed above is as follows. If a traveler purchased a travel package in New York City from a travel agent and the transportation document(s) or ticket(s) issued by that travel agent covered air transportation from New York City to San Juan, Puerto Rico and a one week cruise out of San Juan with stops in the U.S. Virgin Islands, Antigua, Martinique, Grenada, and Caracas, Venezuela before returning to San Juan and return air travel to New York City, the travel agent would not be exempt from having to collect the fee because the journey originated in the United States (i.e., New York City) as provided in the exemption set forth in subsection (b)(1)(A)(ii), and the journey also included Caracas, Venezuela. Thus the journey was not limited to the specified locations as further required by that statutory provision. On the other hand, if that same traveler obtained from the travel agent in New York City only the air transportation to and from San Juan and subsequently purchased the same cruise itinerary directly from the cruise line while in San Juan, neither the travel agent in New York City nor the cruise line in San Juan would be expected to collect the $5 fee because (1) the airline ticket issued by the travel agent did not cover transportation into the Customs territory of the United States, and (2) although the cruise would be considered a

"journey" for purposes of the passenger fee provisions because the issuance of the cruise transportation document results in an arrival in the Customs territory of the United States (i.e., Puerto Rico), that journey also originated in Puerto Rico and thus falls within the fee exemption set forth in subsection (b)(1)(A)(i).

Parenthetically, we note references in your submission to 8 U.S.C. 1356(d) and (e)(1) (and regulations promulgated pursuant thereto in title 8, Code of Federal Regulations) which respectively provide for the assessment of, and exemption from, a $5 fee in connection with passenger inspection services provided by the U.S. Immigration and Naturalization Service. Notwithstanding similar language appearing in both 8 U.S.C. 1356 and 19 U.S.C. 58c, Customs declines to render an interpretation of any statute administered by another Federal agency.

HOLDING:

The $5.00 processing fee assessed on passengers arriving in the Customs territory of the United States aboard a commercial vessel or aircraft pursuant to 19 U.S.C. 58c(a)(5) is not applicable to those passengers whose journeys originate in an exempt location listed in 19 CFR 24.22(g)(2)(i).

Accordingly, in a case involving a cruise which terminates in the Customs territory of the United States, the $5.00 fee is not applicable to a passenger booked on a cruise by Chandris who boards a Chandris cruise ship at any exempt location which would be considered the origination point of the passenger's journey unless such boarding does not represent the origination point of the passenger's travel itinerary and such itinerary origination point is other than one of the exempt locations.

Sincerely,

Stuart P. Seidel

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