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HQ 113783

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December 12, 1996

VES-5-08-RR:IT:EC 113783 GOB

CATEGORY: CARRIER

A. X. Soto
Soto Customs Service Inc.
P.O. Box 4199
Brownsville, Texas 78523-4199

RE: Harbor Maintenance Fee; 26 U.S.C. 4461, 4462; 19 CFR 24.24

Dear Mr. Soto:

This is in response to your letter of December 4, 1996.

FACTS:

You state as follows:

A vessel (semi-submersible rig) built in Japan in the year 1978, registered in the Bahamas, and owned by Transocean Offshore, Inc. of Houston, TX 75252 was loaded aboard a submersible vessel in Singapore to be transported to Brownsville, TX. This operation was executed due to time savings in transit utilizing the above mentioned method.

Upon arrival and clearance of said rig at Brownsville, TX. it will be entered into Foreign Trade Zone (FTZ) No. 62 for repairs and modifications. After the above mentioned operations are performed on said rig, it will be cleared for a foreign destination.

Since the vessel (rig) meets requirements as prescribed by section 4 and exemptions as noted in section 24.24 of the U.S. Customs Regulations, it is our belief that HMF should not be applicable.

ISSUE:

Whether the harbor maintenance fee is applicable in the above-described situation.

LAW AND ANALYSIS:

Title 26, United States Code, ?? 4461 and 4462, provide for the imposition of the HMF, including special rules regarding its administration. Specifically, the applicable statutory authority, as amended, provides in pertinent part as follows:

Section 4461. Imposition of Tax
(a) General rule.--There is hereby imposed a tax on any port use. (b) Amount of tax.--The amount of the tax imposed by subsection (a) on any port use shall be an amount equal to 0.125 percent of the value of the commercial cargo involved. (c) Liability and time of imposition of tax.-- (1) Liability.--The tax imposed by subsection (a) shall be paid by--

(A) in the case of cargo entering the
United States, the importer,... * * * Section 4462. Definitions and Special Rules.
(a) Definitions.--For purposes of this subchapter-- (1) Port Use.--The term port use' means-- (A) the loading of commercial cargo on, or (B) the unloading of commercial cargo from, a commercial vessel at a port. * * *
(3) Commercial Cargo.--

(A) In General.--The term commercial cargo' means any cargo transported on a commercial vessel,..." * * *
The applicable regulatory authority promulgated by Customs pursuant to 26 U.S.C.? 4462(h) to implement the above statutory provisions is found in ? 24.24, Customs Regulations (19 CFR ? 24.24). Specifically, ? 24.24 provides, in pertinent part: (a) Fee. Commercial cargo loaded on or unloaded from a commercial vessel is subject to a port use fee of 0.125 percent (.00125) of its value if the loading or unloading occurs at a port within the definition of this section, unless exempted under paragraph (c) of this section...

(b) Definitions. For the purpose of this section: ...
(2)Commercial cargo means, unless exempted by paragraphs (c)(1) and (2) of this section, merchandise transported on a commercial vessel...Whenever the term "cargo" is used, it means merchandise, but not passengers.

In your letter, you reference the "...exemptions as noted in section 24.24 of the U.S. Customs Regulations..." and you state "...it is our belief that HMF should not be applicable." However, you do not identify which exemption you may be referring to.

Based on the facts presented, it is our determination that the harbor maintenance fee applies in the situation described. There is no exemption therefrom which would appear to apply.

We call to your attention 19 CFR ?24.24(e)(3)(i), which provides:

(e) Collections -
...
(3) Import vessel movements-(i) Time and place of liability. Subject to the exemptions and special rules of this section, when imported cargo is unloaded from a commercial vessel at a port within the definition of this section, and destined for either consumption, warehousing, or foreign trade zone admission, the importer of that cargo, or in the case of foreign trade zones, the person or corporation responsible for bringing merchandise into the zone, is liable for payment of the port use fee at the time of unloading. The fee is based on the U.S. Customs appraised value of the shipment pursuant to 19 U.S.C. 1401a, the same basis as that used for duty payment. The fee shall be collected on all formal entries, including warehouse entries and temporary importation under bond entries, and admissions into foreign trade zones.

HOLDING:

The harbor maintenance fee applies to the transaction described in your letter.

Sincerely,

Chief,
Entry and Carrier Rulings Branch


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