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HQ 223889


July 8, 1992

ENT-1-03-CO:R:C:E 223889 PH

CATEGORY: ENTRY

Mr. Robert K. Gardiner
1579 East Cumberland Boulevard
Milwaukee, Wisconsin 53211

RE: Dutiability of Sailboat Documented in the United States but not Brought into the United States; Importation, What Is; General Note 1, HTSUSA; 19 CFR 101.1(h), 141.1(a)

Dear Mr. Gardiner:

In your letter of April 9, 1992, to the Carrier Rulings Branch, you requested written confirmation that documenting a foreign-built yacht with the United States Coast Guard does not constitute an importation of the yacht if the yacht remains in Europe and is not brought to the United States. Your letter has been forwarded to this Branch for direct response. Our ruling follows.

FACTS:

You state that you are contemplating the purchase of a sailboat in Sweden for your personal use. You do not plan to bring the vessel to the United States at any time. You plan to document the vessel with the United States Coast Guard, even though the vessel remains abroad. You ask whether, under these circumstances, the vessel will be considered to have been imported and will be subject to duty and luxury tax.

(Note: We assume that the luxury tax you refer to is that provided for by section 11221(a) of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508; 26 U.S.C. 4002). We defer to the Internal Revenue Service as to the applicability of this tax. This ruling is limited to the applicability of Customs duties and does not address the applicability of this tax.)

ISSUE:

Does the documentation under the flag of the United States of a yacht which is not brought into the United States constitute an "importation" of the yacht so that it is subject to Customs duties?

LAW AND ANALYSIS:

General Note 1 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) (19 U.S.C. 1202) provides that "[a]ll goods provided for in this schedule and imported into the customs territory of the United States from outside thereof are subject to duty or exempt therefrom as prescribed in general notes 3 and 4." The customs territory of the United States is defined in General Note 2, HTSUSA, as including "... only the States, the District of Columbia and Puerto Rico." Section 141.1(a), Customs Regulations (19 CFR 141.1(a)) provides that:

Duties and the liability for their payment accrue upon imported merchandise on arrival of the importing vessel within a Customs port with the intent then and there to unlade, or at the time of arrival within the customs territory of the United States if the merchandise arrives otherwise than by vessel, unless otherwise specially provided for.

This is consistent with the decisions of the Courts which have addressed the meaning of importation (see Cunard S. S. Co. v. Mellon, 262 U.S. 100, 122 (1923), "Importation ... consists in bringing an article into a country from outside"; see also The Sherwin-Williams Co. v. United States, 38 CCPA 13, C.A.D. 432 (1950), and United States v. Estate of Boshell, T.D. 41884 (Ct. of Cust. App. 1922), and cases cited therein).

In the case under consideration, a vessel would be purchased abroad and it would be documented under the flag of the United States while abroad. If the vessel is not brought into the customs territory of the United States, as defined in General Note 2, HTSUSA (see above), it would not be considered to be imported. Therefore, under the foregoing authorities, the documentation of the vessel under the flag of the United States under these circumstances (i.e., if the vessel is not brought into the customs territory of the United States) would not be considered an importation of the vessel and it would not be subject to duty. This is consistent with the Customs ruling you cited in your letter, Ruling 103386, which was published in the Customs Bulletin as Customs Service Decision (C.S.D.) 79-85.

As you apparently have been advised, if the vessel is brought to the customs territory of the United States, it may be subject to duties under the HTSUSA as provided in General Note 1, HTSUSA, and 19 CFR 141.1(a) (quoted above). In this regard, your attention is invited to subheading 8903.91.00, HTSUSA (providing a duty of 1.5% for "[s]ailboats, with or without auxiliary motor"); U.S. Note 1 to Chapter 89, HTSUSA (containing subheading 8903.91.00), providing that "[v]essels if in use in international trade or commerce or if brought into the customs territory of the United States by nonresidents thereof for their own use in pleasure cruising shall be admitted without formal customs consumption entry or the payment of duty"; and Astral Corp. v. United States, 72 Cust. Ct. 245, C.D. 4546 (1974), concerning the applicability of Customs duties to a yacht brought temporarily into the United States. (Note: In addition to Customs duties, merchandise which is formally entered or released in the United States is subject to a merchandise processing fee of 0.17 percent of the value of the merchandise (19 U.S.C. 58c; 19 CFR 24.23) and commercial cargo loaded on or unloaded from a commercial vessel in certain United States ports is subject to a harbor maintenance user fee of 0.125 percent of the value of the cargo (26 U.S.C. 4461, 4462; 19 CFR 24.24).)

HOLDING:

The documentation under the flag of the United States of a yacht which is not brought into the United States does not constitute an "importation" into the United States of the yacht and it is not subject to Customs duties as a result of such documentation.

Sincerely,

William G. Rosoff

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