United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1998 HQ Rulings > HQ 003906 - HQ 114067 > HQ 113655

Previous Ruling Next Ruling
HQ 113655

---

March 20, 1998

VES-13-18-RR:IT:EC 113655 CC

CATEGORY: CARRIER

Chief, Vessel Repair Liquidation Unit
U.S. Customs Service
423 Canal St.
New Orleans, LA 70130

RE: Vessel Repair Entry No. C14-0025569-6; STONEWALL JACKSON; V-70; Parts; T.D. 75-257; 19 U.S.C. ? 1466(h)(2)

Dear Sir:

This is in response to your memorandum of August 29, 1996, forwarding a petition for review of your decision denying an application for relief from duties assessed pursuant to 19 U.S.C.

FACTS:

The STONEWALL JACKSON is a U.S.-flag vessel owned and operated by Waterman Steamship Corporation. During the foreign leg of the voyage, various spare parts were purchased and placed on board. The petitioner states that the subject parts were purchased in the United States from domestic vendors and then shipped overseas. The vessel subsequently returned to the United States, at the port of Newport News, Virginia, on July 14, 1993. A vessel repair entry was timely filed.

An application for relief was also timely filed. For one item, Allborg Ciserv Invoice, the basis for relief was 19 U.S.C. the following items the basis for relief was that the U.S. parts are remissible under section 4.14(c)(3)(ii) of the Customs Regulations (19 CFR ? 4.14(c)(3)(ii)): American Bearing and Supply, Inc., Invoice; Drive Systems, Inc., Invoice; Reuland Electric Invoice; and Crescent Lock Company Invoice.

In a letter, dated July 12, 1996, from the Chief, New Orleans Vessel Repair Liquidation Unit, the item concerning the Allborg Ciserv Invoice was denied because 19 U.S.C. ? 1466(h)(2) had expired at the time vessel repair entry was filed. The remaining items listed above were denied because there was insufficient evidence provided to show that the subject parts were manufactured in the United States.

A petition for review was timely filed on August 8, 1996. The petitioner claims that "a vendor invoice is sufficient proof of origin when the purchase involves spare parts supplied by domestic third party vendors." In support of its claim, the petitioner has resubmitted copies of the requisite invoices from domestic vendors.

ISSUE:

Whether evidence presented is sufficient to prove that the subject vessel parts for which the petitioner seeks relief are not subject to duty under 19 U.S.C. ? 1466.

LAW AND ANALYSIS:

19 U.S.C. ? 1466(a) provides, in pertinent part, for the payment of an ad valorem duty of 50 percent of the cost of "[t]he equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States...."

For the Allborg Ciserv Invoice, the basis for relief is 19 U.S.C. ? 1466(h)(2), which provides that duty imposed by subsection (a) [19 U.S.C. ? 1466(a)] shall not apply to the following:

[T]he cost of spare repair parts or materials (other than nets or nettings) which the owner or master of the vessel certifies are intended for use aboard a cargo vessel, documented under the laws of the United States and engaged in the foreign or coasting trade, for installation or use on such vessel, as needed, in the United States, at sea, or in a foreign country, but only if duty is paid under appropriate commodity classifications of the Harmonized Tariff Schedule of the United States upon first entry into the United States of each such spare part purchased in, or imported from, a foreign country.

19 U.S.C. ? 1466(h) originally became effective on August 20, 1990 by section 484E(a) of Public Law 101-382. That provision expired on December 31, 1992. By section 112(b) of Public Law 103-465, that provision was reenacted and became effective on January 1, 1995. (For a more detailed discussion, see Headquarters Ruling (HQ) 113608, dated January 26, 1996 or HQ 113653, dated July 7, 1997.) Since the subject vessel repair entry was made in 1993, 19 U.S.C. ? 1466(h) was not in effect and is inapplicable to the subject entry. Consequently, the claim for the Allborg Ciserv Invoice is denied.

For the remaining items the basis for relief is 19 CFR ? 4.14(c)(3)(ii), which provides that U.S.-manufactured parts purchased by the vessel owner in the United States and installed with

U.S. labor or by members of the vessel's regular crew are subject to remission. Customs has applied 19 U.S.C. ? 1466(h) to allow duty-free treatment for U.S.-manufactured parts. (See, e.g., 110980, dated April 16, 1991, and HQ 113652, dated January 3, 1997.) As stated above, when the subject vessel repair entry was made, 19 U.S.C. ? 1466(h) had expired and was not in effect. Thus 19 U.S.C. ? 1466(h) is not applicable and the provisions of Treasury Decision (T.D.)
75-257, which were applicable regarding alleged U.S.-manufactured parts prior to the enactment of 19 U.S.C. ? 1466(h), are controlling. Concerning T.D. 75-257, we have stated the following:

That decision provides that when materials of U.S.-manufacture are purchased by the vessel owner in the United States for installation abroad by foreign labor, the labor cost alone is subject to duty under 19 U.S.C. ? 1466. When those same materials are purchased by the owner overseas or purchased in the United States by parties other than the owner, the cost of the materials themselves (even though of U.S.-manufacture) was also subject to vessel repair duty. With respect to claims for relief under T.D. 75-257, it is Customs policy to require direct evidence of U.S. manufacture (e.g., an affidavit by the manufacturer) as well as U.S. purchase (e.g., bill of sale or domestic invoice) for relief to be granted.

See HQ 111272, dated November 2, 1990, and HQ 113652, dated January 3, 1997.

In application of T.D.-257, we have ruled that to establish U.S.-manufacture, a party must submit evidence from the vendor or manufacturer of the merchandise that such merchandise was manufactured or produced in the United States. (See, e.g., HQ 113296, dated January 12, 1995, or HQ 113384, dated April 12, 1995.) For the American Bearing and Supply, Inc., Invoice; Drive Systems, Inc., Invoice; and Reuland Electric Invoice, certification from the vendor attesting that the subject parts were of U.S.-manufacture has been provided. Consequently, relief should be granted for those three items. For the Crescent Lock Company Invoice, no evidence has been provided of U.S.-manufacture. Consequently, relief is denied for that item.

HOLDING:

The petition should be denied in part and granted in part as detailed in the Law and Analysis section of this ruling.

Sincerely,

Jerry Laderberg
Chief
Entry Procedures and Carriers

Previous Ruling Next Ruling