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HQ 223946


September 8, 1992

CON-9-03 CO:R:C:E 223946 SR

CATEGORY: CONDITIONALLY FREE CARRIER

Robert Slomovitz, Chief
National Import Specialist Division
Branch 1
New York Seaport
New York, NY 10048-0945

RE: Subheading 9813.00.50, HTSUS; professional equipment tools of trade; temporary importation under bond; Jones Act; 41 Stat. 999; 46 U.S.C. App. Section 883.

Dear Sir:

This request for internal advice was initiated by a letter dated April 3, 1992, from Border Brokerage Company, Customs Brokers, on behalf of Fraser River Pile & Dredge Ltd. (FRPD), New Westminster, British Columbia, Canada.

FACTS:

FRPD is involved in the reconstruction project of Port of Everett Pier No. 1 in Lynwood, Washington. They will be installing concrete piles and a subsequent deck system. The FRPD currently believes that two barges will be required which will be outfitted in New Westminister, B.C., each with cranes and supplementary deck equipment. They will be towed to the project site in Washington by a Canadian tug. At the site, one barge will be prepared for installation of the concrete piles and the other used for craning and miscellaneous support as required for cutting off the concrete piles, installation of the formwork, setting reinforcing steel, pouring the concrete and upon completion of the concrete work, removal of the formwork.

The piledriving barge will be anchored by 5 anchors. The pilings will be delivered to the jobsite, possibly from Canada on a Canadian scow, and will be tied alongside the crane vessel. The crane will lift a concrete pile from the pile scow and load it in to the piledriving frame at the forward end of the vessel. The crane barge's anchor cables will be continually adjusted to aim the piling into the desired location, at which point the pile is lowered to the sea bottom and the piledriving hammer is used to install the concrete pile. When this is done another anchor
cable adjustment will be made to move the pile driver to set the next piling, and the process is repeated.

A second Canadian crane barge and an attached work barge will effect the construction of the docks. This crane barge will be used in cutting the pilings to the proper height, installing the formwork, for placing the reinforced steel, pouring concrete, and for the removal of the concrete framework once it has been cured. This vessel is continuously dropping off and removing ancillary equipment and materials to service the project site.

Once the cast-in-place concrete beams have been cured the proper length of time, a precast concrete deck system consisting of precast concrete deck panels is placed over the dock area. The precast deck panels may be from a Canadian supplier. They are usually delivered via waterborne equipment. They are put into place by using a waterborne crane.

A fender system may be installed to protect the dock from damage such as from loads caused by moorage of the vessels. This fender system may be installed from the water side of the dock. This may require installation of timber piling and ancillary bolting, etc. to be installed by one of the vessels already on the project site. In some cases, the fender system may be installed utilizing a land crane working off the completed dock area. The design and completion schedule usually dictate which method is employed.

ISSUES:

ISSUE 1

Whether the coastwise laws are violated when a non- coastwise-qualified vessel, in conjunction with a coastwise- qualified vessel, engages in pile driving and deck construction operations within coastwise waters.

ISSUE 2

Whether the equipment can be entered free of duty temporarily under bond according to subheading 9813.00.50, Harmonized Tariff Schedule of the United States (HTSUS).

LAW AND ANALYSIS:

ISSUE 1

Generally, the coastwise laws (e.g., 46 U.S.C. App. sections 289 and 883, and 46 U.S.C. App. sections 12106 and 12110)
prohibit the transportation of merchandise or passengers between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in and documented under the laws of the United States, and owned by persons who are citizens of the United States.

The coastwise law pertaining to the transportation of merchandise, section 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. section 883, often called the Jones Act), provides that:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to be transported), between points in the United States . . . embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any other vessel than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States . . .

The coastwise laws generally apply to points in the territorial sea, defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in the internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ. These laws have also been interpreted to apply to transportation between points within a single harbor.

The meaning of the term "transportation" was recently established in the case of International Raw Materials, Ltd. v. Baker, Memorandum Opinion of May 20, 1988 (E.D. Pa, Civil Action No. 87-2005), which held that "'transportation' of merchandise occurs when the merchandise is laden at one point and unladen at another point." See 19 CFR 4.80b (1979). The Customs Service has consistently held that a non-coastwise-qualified vessel used as a moored facility within territorial and internal waters does not engage in the coastwise trade and consequently does not violate the coastwise laws, or any other law administered by the Customs Service, provided that the vessel remains stationary. E.g., C.S.D. 89-107, 23 Cust. B. & Dec., No. 44, 8, 9 (1989). If, however, the vessel is not stationary while in use, then such operations would be prohibited by the coastwise laws.

Vessels moving merchandise or passengers between such a stationary platform and another coastwise point must be
documented for the coastwise trade. 46 U.S.C. App. sections 289 and 883 (1982 & Supp. III 1985). Furthermore, such barges may not have any passengers or merchandise aboard during movement following the completion of the project, provided these sites are points subject to the application of the coastwise laws. C.S.D. 89-107. Finally, United States law requires that a coastwise- qualified vessel tow the vessels under consideration between coastwise points. 46 U.S.C. App. section 316(a)(West Supp. 1990).

Concerning the proposed operations involving the non- coastwise-qualified pile driving barge, it is stated that said barge will carry: (1) a crane that will be both laden and unladen foreign, (2) pilings taken aboard the barge immediately prior to being driven, without barge movement, at the same site, (3) concrete, concrete forms, and other tools, and (4) anchors and steel spuds to hold the vessel in position. Of necessity, the barge must move the crane from one coastwise point to another, but as the crane is to remain on board at all times, transportation of it will not constitute a prohibited coastwise movement. As the crane will not be repositioned while transporting any pilings, the individual loading onto and from the crane barge is also permitted by Section 883. As to the concrete forms, anchors, steel spuds and other tools, to the extent that they are laden on the barge and the barge is subsequently moved to another point where the materials leave the barge, such activity would be violative of Section 883.

However, the proposed operations in which a coastwise- qualified "supply barge" which, after being secured to the crane barge, will act as a replenishing barge to deposit and replace various supplies consumed aboard the crane barge, present no violation of Section 883.

The operations in which a non-coastwise-qualified "crane barge" will, inter alia, cut pilings to size, install steel and concrete, and attach dock components to the piers under construction will constitute a violation if the crane barge transports tools or materials from one point to a second point at which they are removed from the barge. It is further anticipated that this vessel will transport parts of pilings to shoreside from the worksite for discharge. This movement of materials from one point to another using a non-coastwise-qualified vessel violates Section 883.

Regarding the transfer of concrete by the shore-based crane to the work barge for eventual off-loading at the work site, such an operation will only be allowed if the materials are laden at one coastwise point and unladen at the same point without
movement by the vessel. Any unlading at a different coastwise point constitutes a violation of the 883.

ISSUE 2

The equipment can be brought in free of duty temporarily under bond according to subheading 9813.00.50, HTSUS, which provides for professional equipment, tools of trade, repair components for equipment or tools admitted under this heading, all the foregoing imported by or for nonresidents sojourning temporarily in the United States and for the use of such nonresidents. U.S. Note 1(b) of Subchapter XIII states that "[f]or articles admitted into the United States under heading 9813.00.50, entry shall be made by the nonresident importing the articles or by an organization represented by the nonresident which is established under the laws of a foreign country or has its principal place of business in a foreign country".

Articles that are admitted temporarily free of duty under subheading 9813.00.50, HTSUS, must meet the requirements of U.S. Note 1(a), Section XIII, HTSUS, which provides as follows:

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 . . .

If the equipment brought in under subheading 9813.00.50, HTSUS, consists of goods originating in Canada, then the bond requirement is waived under the Canadian Free Trade Agreement as shown in the Special Duty Rate Column for subheading 9813.00.50, HTSUS.

HOLDING:
ISSUE 1

The proposed operations discussed above are approved in part and prohibited in part under the Jones Act.

ISSUE 2

The equipment may be admitted into the United States temporarily free of duty temporarily under bond according to the
terms of subheading 9813.00.50, HTSUS, which provides for professional equipment, tools of trade, repair components for equipment or tools, imported by or for nonresidents sojourning temporarily in the United States for the use of such nonresidents. In order to gain the benefit of duty-free treatment, the importer must meet all of the accountability requirements under the U.S. Notes of Subchapter XIII to the satisfaction of the District Director; however, if the merchandise is of Canadian origin then the bond requirement is waived in accordance with the Canadian Free Trade Agreement.

Sincerely,

John Durant

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