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HQ 223212


September 3, 1991

CON-9-04/05/13-03-CO:R:C:E 223212 PH

CATEGORY: TEMPORARY IMPORTATION BOND

Cathy Burgess, Esq.
Winston & Strawn
1400 L Street, NW.
Washington, D.C. 20005-3502

RE: T.I.B.; Subheading 9813.00.05, HTSUSA; Unpacking, Inflation, and Inspection of Liferaft; Vessel Supplies and Equipment (19 U.S.C. 1309)

Dear Ms. Burgess:

In your letter of January 15, 1991, to the Carrier Rulings Branch of the Customs Service you requested a ruling that certain liferafts could be imported duty-free as instruments of international traffic; articles exported and returned, not advanced or imported in condition; or articles imported temporarily free of duty under bond. In a ruling dated May 20, 1991 (File: 111468), the Carrier Rulings Branch held that the liferafts under consideration would not qualify for designation as instruments of international traffic. In that ruling, the Carrier Rulings Branch advised you that it was referring your ruling request to the Entry Rulings Branch and the Special Classification Branch for action on the remaining issues about which you asked. This ruling, prepared by the Entry Rulings Branch, addresses the part of your request dealing with the temporary importation under bond of the liferafts.

FACTS:

You state that your client in this matter performs the periodic inspection and safety certification required for vessels' fire and safety equipment, including liferafts. Currently, your client brings liferafts ashore for unpacking, inflation, inspection, and return to the vessel. Because of the increasing cost of demurrage, your client has designed a "Liferaft Exchange Program" which is designed "to eliminate the commercial time pressures on liferaft service that may potentially affect liferaft safety." In this program, your client will keep approximately 15 to 20 ready, serviced liferafts in stock at its station or an approved liferaft station. Your client will exchange the serviced liferafts with outdated liferafts from its customers' vessels. These outdated liferafts will, in turn, be inspected, serviced, and prepared for the next customer.

You state that your client's customers will be vessels with flags of convenience. (By this statement, we assume you are stating that the service provided by your client is only provided to foreign-flag vessels. We so assume for purposes of this ruling.) You further state that Customs, pursuant to Chapter 98, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), permits your client to temporarily import free of duty under bond gas cylinders which your client uses in a similarly designed exchange program.

ISSUE:

May liferafts from one foreign-flag vessel which are brought ashore to be unpacked, inflated, and inspected and then exchanged for other liferafts (which are then to be serviced in like manner) of another foreign-flag vessel be imported free of duty under the transportation in bond (T.I.B.) provisions in Chapter 98, Subchapter XIII, HTSUSA?

LAW AND ANALYSIS:

Subheading 9813.00.05, HTSUSA, provides for the temporary duty-free entry of:

Articles to be repaired, altered or processed (including processes which result in articles manufactured or produced in the United States).

This is the only T.I.B. provision which could be applicable to the operation of your client. (I.e., subheading 9813.00.45, HTSUSA, which is probably the T.I.B. provision under which the gas cylinders to which you refer are imported, provides for the duty-free entry under bond of "[c]ontainers for compressed gases, filled or empty, and containers or other articles in use for covering or holding merchandise (including personal or household effects) during transportation and suitable for reuse for that purpose." Clearly this provision is not applicable to the liferafts under consideration.)

Pursuant to U.S. Note 1(a) of subchapter XIII, HTSUSA, which contains subheading 9813.00.05:

The articles described in the provisions of this subchapter, when not imported for sale or for sale on approval, may be admitted into the United States without the payment of duty, under bond for their exportation within 1 year from the date of importation, which period, in the discretion of the Secretary of the Treasury, may be extended, upon application, for one or more further periods which, when added to the initial 1 year, shall not exceed a total of 3 years ....

You state that the liferafts under consideration are brought ashore to an authorized station where they are "unpacked, inflated, inspected, and returned to the ship." You state that this service "takes a minimum of four to five hours." Based on your description, we conclude that the service provided by your client consists of only of what you describe, i.e., unpacking, inflation, and inspection. Only if the inspection uncovers a defect in the liferafts are any repairs done to the liferafts. Unpacking, inflation and inspection, by themselves, are not considered to be repairs, alterations, or processing to or of imported articles under subheading 9813.00.05, HTSUSA (see Treasury Decision (T.D.) 78-77 and Customs Service Decision (C.S.D.) 80-234; United States v. Border Brokerage Co., 48 CCPA 10 (1960, C.A.D. 754); and C.S.D. 80-81, interpreting the predecessors of subheading 9813.00.05).

In order to enter articles under subheading 9813.00.05, HTSUSA, there must be an intention at the time of entry that the articles will actually be repaired, altered, or processed. If, as appears to be true in this case, the lifeboats must be inspected after entry before your client will know if they will need to be repaired or otherwise altered or processed, the requisite intent does not exist at the time of entry (see C.S.D. 80-81, referred to above). Therefore, the liferafts under consideration may not be entered under any of the T.I.B. provisions in subchapter XIII of chapter 98 of the HTSUSA.

As an alternative to the importation procedures you suggest, your client may wish to consider establishing a Customs bonded warehouse (see 19 U.S.C. 1555 et seq. and 19 CFR Parts 19 and 144) to service the liferafts. Under 19 U.S.C. 1309(a)(2), "supplies (including equipment) ... of foreign vessels employed in the fisheries or in the whaling business, or actually engaged in foreign trade or [certain trade between the United States and its possessions or between the contiguous States and the non- contiguous States of the United States]" may be withdrawn, under the Customs Regulations (see 19 CFR 10.59 et seq.), from a Customs bonded warehouse free of duty and internal revenue tax. Liferafts are considered to be equipment for purposes of 19 U.S.C. 1309(a)(2) (see H. E. Warner, Trustee, American Mail Line, Ltd. v. United States, 28 CCPA 143 (1940, C.A.D. 136); T.D. 49815(4); and Legal Determination (L.D.) 3730-02). Please note that this procedure is only available for foreign-flag vessels engaged in the qualifying trade. We are enclosing a copy of Customs pamphlet, U.S. Customs Bonded Warehouse, for your information in this regard.
HOLDING:

Liferafts from one foreign-flag vessel which are brought ashore to be unpacked, inflated, and inspected and then exchanged for other liferafts (which are then to be serviced in like manner) of another foreign-flag vessel may not be imported free of duty under the transportation in bond (T.I.B.) provisions in Chapter 98, Subchapter XIII, HTSUSA.

Sincerely,

John Durant, Director

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