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HQ 113991

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July 2, 1997

VES-13-18-RR:IT:EC 113991 GOB

CATEGORY: CARRIER

Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 107 P.O. Box 2450
San Francisco, CA 94126

RE: Vessel Repair Entry No. 110-7994470-5; 19 U.S.C. 1466(a) and (h)(3); PRESIDENT KENNEDY, V-88E; Petition

Dear Madam:

This is in response to your memorandum dated June 10, 1997, which forwarded the petition submitted by American President Lines, Inc. ("APL" or "petitioner") with respect to the above-referenced vessel repair entry.

FACTS:

The PRESIDENT KENNEDY ("vessel"), a U.S.-flag vessel, arrived at the port of Seattle, Washington on January 30, 1997. The subject vessel repair entry was timely filed. The vessel underwent certain foreign shipyard work in Korea and the Republic of China in January of 1997.

The petitioner asserts that part of the fifth item listed on the vessel repair entry should be dutiable under 19 U.S.C. 1466(h)(3), rather than under 19 U.S.C. 1466(a). The petitioner described the item on the vessel repair entry as "store crane monorail track replacement."

By letter of May 9, 1997, your office determined that the subject item did not come within the scope of 19 U.S.C. 1466(h)(3), but was dutiable under 19 U.S.C. 1466(a).

ISSUE:

Whether the subject item is dutiable pursuant to 19 U.S.C. 1466(a) or pursuant to 19 U.S.C. 1466(h)(3).

LAW AND ANALYSIS:

19 U.S.C. 1466(a) 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(h)(3) provides:

The duty imposed by section (a) of this section shall not apply to -
...
(3) the cost of spare parts necessarily installed before the first entry into the United states, but only if duty is paid under appropriate commodity classifications of the Harmonized Tariff Schedules of the United States upon first entry into the United States of each such spare part purchased in, or imported from, a foreign country.

For the purpose of 19 U.S.C. 1466(h), we have defined a "part" as follows:

A part is determined to be something which does not lose its essential character or its identity as a distinct entity but which, like materials, is incorporated into a larger whole. It would be possible to disassemble an apparatus and still be able to identify a part. The term part does not mean part of a vessel, which practically speaking would encompass all elements necessary for a vessel to operate in its designed trade. Examples of parts as defined are seen in such items as piston rings and pre-formed gaskets, as opposed to gaskets which are cut at the work site from gasket material. (Emphasis in original.)

As stated above, the petitioner claims that the fifth item listed on the vessel repair entry should be dutiable under 19 U.S.C. 1466(h)(3), rather than under 19 U.S.C. 1466(a). The petitioner described the item on the vessel repair entry as "store crane monorail track replacement." The foreign vendor's invoice (invoice no. HYD9701745) describes the item as "prefabrication of trolley track 11 meters @5,600.-"

We note that the same vendor's invoice describes certain work which was performed, e.g., "provide service of qualified fitter/welder ... to attend onboard to put up staging, crop out bad section of track, and smoth [sic] surface then weld in new track ..." The file indicates (correctly, in our view) that this work (i.e., the work described in the previous sentence) is dutiable under 19 U.S.C. 1466(a) and is not the subject of the subject petition.

After a consideration of the issue, we find that the subject item (described as "prefabrication of trolley track..." and "store crane monorail track replacement") is a part and is dutiable pursuant to 19 U.S.C. 1466(h)(3).

HOLDING:

The subject item (described as "prefabrication of trolley track..." and "store crane monorail track replacement") is a part and is dutiable pursuant to 19 U.S.C. 1466(h)(3).

Sincerely,

Jerry Laderberg
Acting Chief,

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