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HQ 113696

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July 27, 1997

VES-13-18-RR:IT:EC 113696 GG

CATEGORY: CARRIER

Port Director of Customs
Vessel Repair Unit
423 Canal Street
Room 303
New Orleans, LA 70130-2341

RE: Vessel Repair Entry No.'s C16-0008656-0 and C16-0008660-2; M/V OOCL INSPIRATION, Voyages 267 and 268; Parts; Retroactivity of 19 U.S.C. ?1466(h)(2)

Dear Sir:

This is in response to your memorandum VES-13-18-G:NO:VR MTB, dated August 7, 1996, forwarding a petition for review of your decision denying an application for relief from duties assessed pursuant to 19 U.S.C. ?1466. Our decision follows.

FACTS:

The OOCL INSPIRATION is a U.S.-flag vessel owned and operated by Sea-Land Services, Inc. ("Sea-Land"). During two voyages in 1994, crew members installed two main engine cylinder liners. These cylinder liners were supplied to the ship via Sea-Land's storage vendor in Rotterdam, Van de Wetering B.V. ("Wetering"). The parts were of Scandinavian origin and had originally been purchased by Sea-Land in the United States. Sea-Land had shipped the liners to Wetering from New Jersey in 1992.

Sea-Land filed timely vessel repair entries in March and April of 1994 at the termination of each voyage during which the cylinder liners were installed. The vessel operator filed applications for relief from vessel repair duties on April 28 and June 3, 1994. Customs denied the applications with respect to the cylinder liners in a letter issued on November 10, 1994. The reason given for the denial was that the parts were not of United States origin. Sea-Land submitted a petition for review of the denial on December 21, 1994, after requesting and receiving a 30-day filing extension from Customs. In its petition, Sea-Land takes the position that both past and current law and the intent behind the vessel repair statute mandate that the cylinder liners be exempted from vessel repair duty.

ISSUE:

Whether the main engine cylinder liners in question are subject to vessel repair duties?

LAW AND ANALYSIS:

Title 19, United States Code, ?1466(a) (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 "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..."

The vessel repair duty is not assessed on repair parts or labor when the repair parts are manufactured or produced in the United States and installed by U.S. residents or members of the regular ship's crew. 19 U.S.C. ?1466(d)(2). The cylinder liners, although put in by OOCL INSPIRATION crewmembers, do not qualify for remission under this provision because the parts were made in Scandinavia.

The vessel repair statute was amended by Public Law 101-382 in 1990 to exempt from vessel repair duty the cost of previously imported, duty-paid spare repair parts or materials that are installed on U.S. flag vessels. This amendment, designated as 19 U.S.C. ?1466(h)(2), provides:

(h) The duty imposed by subsection (a) of this section shall not apply to--

(2) the cost of spare 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 coastwise 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.

Import duties were assessed and paid on the cylinder liners when they were first imported into the United States before being purchased by Sea-Land. Therefore, their cost will not be subject to vessel repair duty if (h)(2) is determined to apply to the 1994 entries at issue.

The effective date of this amendment was stated to be as follows:

Effective Date.--The amendment made by this section shall apply to--

(1) any entry made before the date of enactment of this Act [August 20, 1990] that is not liquidated on the date of enactment of this Act, and
(2) any entry made--
(A) on or after the date of enactment of this Act, and (B) on or before December 31, 1992.

The two entries in question were made in March and April of 1994, which was subsequent to the expiration date of subsection (h) (i.e., December 31, 1992). Although subsection (h) was reenacted on December 8, 1994 (see Public Law 103-465), the implementing legislation contained no provision regarding retroactive treatment for this or any other such entry. In general, legislation will not be given retroactive effect absent a clear Congressional intent to the contrary. See Hughes Aircraft v. United States, 138 L. Ed. 2d 135 (U.S. June 16, 1997) (No. 95-1340). Consequently, no statutory authority exists upon which to grant the petitioner the relief that is sought.

HOLDING:

The cost of the cylinders liners is dutiable under 19 U.S.C.

Accordingly, the petition is denied in its entirety.

Sincerely,

Jerry Laderberg
Chief

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