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HQ 113445

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May 22, 1995

VES-13-18-R:IT:C 113445 GOB

CATEGORY: CARRIER

Port Director of Customs
Attn: Vessel Repair Liquidation Unit
423 Canal Street, Room 303
New Orleans, Louisiana 70130-2341

RE: Vessel Repair Entry No. C15-0019322-7; 19 U.S.C. 1466; 19 U.S.C. 1466(d)(2); M/V GREEN RIDGE, V-24; Protest

Dear Sir:

This is in response to your memorandum dated May 12, 1995, which forwarded the protest submitted by Central Gulf Lines, Inc. ("protestant") with respect to the above-referenced vessel repair entry.

FACTS:

The record reflects that the M/V GREEN RIDGE ("the vessel") arrived at the port of Sunny Point, North Carolina on February 11, 1993 and subsequently filed the subject vessel repair entry.

In Ruling 112934 dated December 9, 1993, we denied the petition for relief with respect to the subject entry. In that ruling we stated:

...the petitioner's request for relief must be denied absent evidence indicating the origin of the parts referenced to in the LAMARCO and the General Engineering invoices.

ISSUE:

Whether the subject costs are dutiable pursuant to 19 U.S.C. 1466. If so, whether the duty is subject to remission pursuant to 19 U.S.C. 1466(d)(2).

LAW AND ANALYSIS:

19 U.S.C. 1466 provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to be employed in such trade.

19 U.S.C. 1466(d)(2) provides for the remission or refund of duties:

If the owner or master of such vessel furnishes good and sufficient evidence that-
...
(2) such equipments or parts thereof or repair parts or materials, were manufactured or produced in the United States, and the labor necessary to install such equipments or to make such repairs was performed by residents of the United States, or by members of the regular crew of such vessel.

T.D. 75-257 states in part:

...the cost of materials of United States origin which are purchased by the vessel owner in the United States is not subject to duty under 19 U.S.C. 1466, when installed on the vessel in a foreign country.

In order to receive remission under 19 U.S.C. 1466(d)(2), U.S. manufacture or production must be established, in addition to the establishment that the labor was performed by U.S. residents or members of the regular crew of the vessel.

In order to receive duty-free treatment pursuant to T.D. 75-257, U.S. origin must be established. T.D. 75-257 applies only to materials; it does not apply to labor. T.D. 75-257 pertains to nondutiability under 19 U.S.C. 1466(a); it does not pertain to remission under 19 U.S.C. 1466(d)(2).

To establish U.S. manufacture, production, or origin, an applicant must submit a statement from the vendor or manufacturer of the merchandise that such merchandise was manufactured or produced in the United States.

In Ruling 112728 dated October 8, 1993, we stated:

...it is Customs position that the cost of U.S.-resident labor is not subject to duty under 19 U.S.C. 1466 when no equipments, parts, or materials are used in conjunction with the expertise of U.S. labor. (Emphasis supplied.)

In Ruling 112728, the two-pronged test of 19 U.S.C. 1466(d)(2) was deemed to be satisfied because U.S. labor was used and there were no equipment, parts, or materials used.

The facts in the case at issue differ from the facts in Ruling 112728 in that the record indicates that equipment, parts, or materials were used in conjunction with the expertise of U.S. labor in the case at issue.

Our ruling on the petition in this case, Ruling 112934 dated December 9, 1993, stated this distinction. It stated:

...Headquarters Ruling 112728 (Oct. 8, 1993) holds that the cost of U.S.-resident labor is not subject to duty under 19 U.S.C. ?1466 if no foreign parts, equipment, or materials are used in conjunction with the expertise of U.S. labor. However, the use of U.S.-labor in conjunction with foreign parts, equipment, or materials is dutiable pursuant to 19 U.S.C. ?1466(d)(2).

With its protest, the protestant has submitted a statement from Louisiana Maintenance & Repair Co., Inc. ("LAMARCO") that "...all parts/materials furnished by LAMARCO in the above repairs were of U.S. origin, manufactured in the U.S." Such statement, in conjunction with LAMARCO's statement with respect to the use of U.S. residents, is sufficient for remission pursuant to 19 U.S.C. 1466(d)(2). Accordingly, the protest is granted with respect to the LAMARCO repairs.

The protestant has not submitted a statement from the vendor or manufacturer with respect to the U.S. manufacture or production of the equipment, parts, or materials supplied by Diesel Injection & Governor Service ("DIGS") and/or General Engineering & Machine Works. Accordingly, the protest is denied with respect to these repairs.

HOLDING:

As detailed supra, the protest is granted with respect to the LAMARCO repairs. The protest is denied with respect to the costs incurred with respect to DIGS and General Engineering & Machine Works.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs
personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, the Freedom of Information Act and other public access channels.

Sincerely,

Harvey B. Fox
Director

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