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HQ 114356

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May 21, 1998

VES-13-18-RR:IT:EC 114356 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. C27-0167431-2; MAHIMAHI, V-20; 19 U.S.C. 1466; Petition

Dear Madam:

This is in response to your memorandum of May 5, 1998, which forwarded the petition submitted by Matson Navigation Company ("petitioner") with respect to the above-referenced vessel repair entry.

FACTS:

The evidence of record indicates the following. The MAHIMAHI (the "vessel"), a U.S.-flag vessel owned and operated by the petitioner, arrived at the port of Los Angeles, California on February 16, 1998. The subject vessel repair entry was subsequently filed. The vessel underwent certain foreign shipyard work in Japan on February 6-7, 1998.

In a letter dated April 1, 1998, your office ruled on the application for relief.

The item at issue is described on the invoice as a "color monitor TV screen."

ISSUE:

Whether the cost of the subject item is dutiable pursuant to 19 U.S.C. 1466(a) or is eligible for treatment pursuant to 19 U.S.C. 1466(h)(3)?

LAW AND ANALYSIS:

19 U.S.C. 1466 provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to, and equipment purchased in a foreign country for, 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.

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.

We have considered this issue carefully. We conclude that the subject color monitor TV screen is equipment of the vessel which is dutiable under 19 U.S.C. 1466(a).

We believe that the color monitor TV screen is "a piece of equipment" within the meaning of vessel equipment in 19 U.S.C. 1466(a). We further believe that the color monitor TV screen is not a part, or a spare part, within the meaning of 19 U.S.C. 1466(h)(3). While the color monitor TV screen may be a component of the "NDC-900 navigation control unit," as the petitioner states, that fact does not make the item a part, or spare part, within the meaning of 19 U.S.C. 1466(h)(3).

The petitioner states that "Customs ... appears to be taking a very narrow and restrictive view with the implementation of the GATT Agreement."

Exceptions to statutory provisions are to be interpreted strictly. See, for example, Sturm, A Manual of Customs Law (1974 ed., pp. 173-174):

Where Congress has carved out special privileges or exemptions from the general provisions levying duties upon imported articles, the courts have strictly construed such exceptions and have resolved any doubt in favor of the government. Swan & Finch Company v. United States, 190 U.S. 143, 23 SCR 702, 47 L. Ed. 984 (1903); Pelz-Greenstein Co. v. United States, 17 CCPA 305, T.D. 43718 (1929)...
...
An exception which carves out something which would otherwise be included must be strictly construed. Goat & Sheepskin Import Co., et al. v. United States, 5 Ct. Cust. Appls. 178, T.D. 34254 (1914); [additional citations omitted].

HOLDING:

As detailed above, the petition is denied. The subject item is dutiable under 19 U.S.C. 1466(a).

Sincerely,

Jerry Laderberg
Chief,
Entry Procedures and Carriers

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