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HQ 952158


January 25, 1993

CLA-2 CO:R:C:M 952158 LTO

CATEGORY: CLASSIFICATION

TARIFF NO.: 8901.90.00

Mr. Robert Hensley
Hannah Marine Corporation
Route 83 and Archer Avenue
Lemont, Illinois 60439

RE: Barges; EN 89.01; The Conqueror; Section 27 of the Act of June 5, 1920, as amended (Jones Act)

Dear Mr. Hensley:

This is in response to your letters of July 10, 1992, and September 17, 1992, requesting the classification of two barges under the Harmonized Tariff Schedule of the United States (HTSUS). You have also asked whether those same vessels qualify for documentation under the coastwise laws of the U.S.

FACTS:

The articles in question are non-self-propelled barges. "Hull No. 1" was built as a steamship bulk carrier in the U.S., and flagged U.S. It was later converted into a "barge," and flagged foreign. The vessel has suffered hull damage caused by a marine casualty. "Hull No. 2" is a deck cargo barge that also was built and flagged in the U.S., and subsequently sold foreign. You state that you plan to purchase these vessels from foreign interests, bring them to the U.S., and then repair, refurbish, reflag and use them as dry bulk carriers in the coasting trade.

ISSUE:

1. Whether the vessels in question are classifiable as barges for the transportation of person or goods under Heading 8901, HTSUS.

2. Whether the vessels qualify for documentation under the coastwise laws of the U.S.

LAW AND ANALYSIS:

In regard to the dutiability of the vessels in question upon their arrival in the U.S., it was long ago determined that commercial vessels, being instrumentalities rather than articles of commerce, are not subject to duty upon being brought into this country. See The Conqueror, 166 U.S. 110 (1897). This result was also seen in General Headnote 5(g) of the Tariff Schedules of the United States, predecessor to the HTSUS.

The General Rules of Interpretation (GRI's) to the HTSUS govern the classification of goods in the tariff schedule. GRI 1 states in pertinent part that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes . . . ."

Heading 8901, HTSUS, provides for "[c]ruise ships, excursion boats, ferry boats, cargo ships, barges and similar vessels for the transportation of persons or goods."

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the Customs Co-operation Council's official interpretation of the Harmonized System. While not legally binding, the ENs provide a commentary on the scope of each heading of the Harmonized System, and are generally indicative of the proper interpretation of these headings.

EN 89.01, pg. 1450, states that Heading 8901, HTSUS, covers "all vessels for the transport of persons or goods," and includes "[b]arges of various kinds, lighters and pontoons being flat- decked vessels used for the transport of goods and, sometimes, of persons." The vessels in question are "barges," and are classifiable under Heading 8901, HTSUS. Specifically, they are classifiable under subheading 8901.90.00, HTSUS, which provides for other vessels for the transport of goods.

In regard to the qualification of these vessels for documentation under the coastwise laws of the U.S., 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. 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 of the United States and owned by persons who are citizens of the United States . . .

Customs has consistently interpreted the coastwise transportation prohibition to apply to all vessels except United States-built, owned, and properly documented vessels (See 46 U.S.C. 12106, 12110, 46 U.S.C. App. 883, and 19 CFR 4.80).

The mere fact that a vessel was built in this country and enjoys American ownership does not serve to qualify it for coastwise documentation. Pursuant to the first proviso to section 883:

. . . no vessel having at any time acquired the lawful right to engage in the coastwise trade, by having been built in or documented under the laws of the United States, and later sold foreign in whole or in part, or placed under foreign registry, shall hereafter acquire the right to engage in the coastwise trade.

This means that while there exists no restriction on the documentation of the vessels in question under the United States flag, the vessels may not be documented for the coastwise trade.

HOLDING:

The barges are classifiable under subheading 8901.90.00, HTSUS, which provides for "[c]ruise ships, excursion boats, ferry boats, cargo ships, barges and similar vessels for the transport of persons or goods . . . [o]ther vessels for the transport of goods and other vessels for the transport of both persons and goods." The corresponding rate of duty for articles of this subheading is free.

The barges in question may not be documented for the coastwise trade.

Sincerely,

John Durant, Director

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