HQ 114120 - Foreign-flag Yacht; Cruising License; 46 U.S.C. App. ? 104 - United States International Trade Commision Rulings

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HQ 114120

October 8, 1997

VES-4-01-CO:RR:IT:EC 114120 GEV

CATEGORY: CARRIER

Kurt E. Bosshart, Esq.
Alley, Maass, Rogers & Lindsay, P.A.
1600 S.E. 17th Street Causeway
Suite 404
Ft. Lauderdale, Florida 33316

RE: Foreign-flag Yacht; Cruising License; 46 U.S.C. App. ? 104

Dear Mr. Bosshart:

This is in response to your letter of September 19, 1997, requesting a ruling regarding the proposed use of your client's foreign-flag yacht while it is in the United States. Our ruling on this matter is set forth below.

FACTS:

The SOUTHERN CROSS III is a Japanese-built, British-flag yacht shipped to the United States by freighter. The vessel, for which application for a cruising license will be made, is not being offered for sale or charter while in the United States and will otherwise conform with all applicable Customs Regulations. It is owned by Southern Cross III, Ltd., a Jersey, Channel Island-registered company, the beneficial owner of which is a non-U.S. resident and citizen.

The primary purposes of the vessel's shipment to the United States are to complete needed repair and refit work in a Florida repair yard and for pleasure cruising. With respect to the latter, the beneficial owner would like to host a reception on board the vessel for the following guests:

(1) employees of Bounty International, a luxury home and yacht sales company located in Fort Lauderdale, Florida, showcasing yachts and homes worldwide;

(2) clients of Bounty International; and

(3) personal friends of the beneficial owner.

In regard to the aforementioned guests, it is stated that Bounty International is wholly owned by the beneficial owner, but is not offering the subject vessel for sale. The brokerage specializes in yachts of much smaller size and caliber than the yacht under consideration. The clients of Bounty International are individuals who have purchased through the brokerage and would be entertained, in an effort to maintain their goodwill and encourage repeat sales through Bounty International. The personal friends of the beneficial owner are his private guests from whom no business expectation is derived.

In addition to the guests of the above-described reception, the beneficial owner would also like to conduct a wedding ceremony aboard the vessel for an employee of Bounty International. We note that the wedding reception will be conducted elsewhere.

ISSUE:

Whether the uses of the foreign-flag yacht discussed above contravene the issuance of a cruising license pursuant to 19 CFR

LAW AND ANALYSIS:

Section 4.94, Customs Regulations (19 CFR ? 4.94) addresses the issuance of cruising licenses which exempt foreign yachts from formal entry and clearance procedures (e.g., filing manifests, obtaining permits to proceed and exemptions from the payment of tonnage tax and entry and clearance fees) at United States ports. Section 4.94 was promulgated pursuant to title 46, United States Code Appendix, ? 104 (46 U.S.C. App. ? 104) which authorizes the issuance of cruising licenses to pleasure vessels of countries which extend reciprocal privileges to United States vessels. Great Britain is on the list of countries appearing in

It should be noted, however, that 46 U.S.C. App. 104 provides that on the basis of reciprocity, foreign yachts may be granted cruising licenses provided they are "...used and employed exclusively as pleasure vessels..." (Emphasis added) Upon reviewing the proposed activities to be conducted on board the SOUTHERN CROSS III with specific regard to the guests in question, it is our determination that the entertainment of the clients of Bounty International is for other than purposes of pleasure. Accordingly, while the remainder of the aforementioned guests may be on board the SOUTHERN CROSS III during the proposed reception and wedding without contravening the issuance of a cruising license, the same cannot be said for the clients of Bounty International.

HOLDING:

With the exception of the on board entertainment of the clients of Bounty International, the uses of the foreign-flag yacht discussed above do not contravene the issuance of a cruising license pursuant to 19 CFR ? 4.94.

Sincerely,

Jerry Laderberg

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