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 114071 - HQ 114265 > HQ 114265

Previous Ruling Next Ruling
HQ 114265

---

March 10, 1998

VES-13-18-RR:IT:EC 114265 GOB

CATEGORY: CARRIER

Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 415 P.O. Box 2450
San Francisco, CA 94126

RE: Vessel Repair Entry No. 110-7055251-6; PRESIDENT KENNEDY, V-94E; 19 U.S.C. 1466; Petition

Dear Madam:

This is in response to your memorandum of February 13, 1998, which forwarded the petition submitted by American Ship Management, LLC ("petitioner") with respect to the above-referenced vessel repair entry.

FACTS:

The evidence of record indicates the following. The PRESIDENT KENNEDY (the "vessel"), a U.S.-flag vessel, arrived at the port of Seattle, Washington on August 29, 1997. The subject vessel repair entry was subsequently filed. The vessel underwent certain foreign shipyard work in Taiwan.

ISSUE:

Whether the costs of the subject items are dutiable pursuant to 19 U.S.C. 1466(a) or are eligible for treatment 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.

The petitioner claims that the subject items are eligible for treatment under 19 U.S.C. 1466(h)(3).

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. [Emphases in original.]

As indicated above, the issue is whether the subject items are dutiable under 19 U.S.C. 1466(a) at a rate of duty of fifty percent ad valorem or under 19 U.S.C. 1466(h)(3) under the appropriate commodity classification of the Harmonized Tariff Schedule of the United States.

The record contains two Hong-Yang Marine Service Machinery Co., Ltd. ("Hong-Yang") invoices dated August 15, 1997. Both invoices have the same invoice number (HYW97081054) and SPO. No. (015607). The "category" of each invoice is "swimming pool pump sleeves."

The invoice which was first submitted, and upon which your office based its determination on the application, provides:

Provide machine shop service to pre-fabrication Two (2) piece of stainless steel swimming pool pump shaft sleeves as per design drawing by Chief Engineer driected [sic]. Upon completion of works deliver these onboard upon vessel arrival and docking at APL berth #69 and inspection by Chief Engineer to meet satisfaction as instruction...
Pre-fabrication of stainless steel swimming pool pump shaft sleeves as per design drawing costs.

The invoice which was subsequently submitted with the petition provides:

Provide service to supply only Two (2) pieces of stainless steel swimming pool pump shaft sleeves as per design drawing by Chief Engineer directed... Supply only Two (2) pieces of stainless steel swimming pool pump shaft sleeves as per design drawing.

After a careful consideration of the record, we determine that the record reflects a fabrication of items from materials. We have ruled previously that materials are not eligible for treatment under 19 U.S.C. 1466(h)(3). For example, in Ruling 113835 dated March 20, 1997, we stated:

In regard to the stainless steel material in question, the record indisputably reflects that as originally purchased it in fact constituted material rather than parts as defined above. Consequently, notwithstanding its subsequent fabrication by Hong-Yang into two new spindle shafts, it does not qualify as parts for purposes of subsection (h)(3).

Accordingly, relief is denied. The subject item is dutiable pursuant to 19 U.S.C. 1466(a).

HOLDING:

As detailed above, the petition is denied.

Sincerely,

Jerry Laderberg
Chief,
Entry Procedures and Carriers

Previous Ruling Next Ruling