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HQ 113717

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August 21, 1997

VES-13-18-RR:IT:EC 113717 GG

CATEGORY: CARRIER

Chief, Vessel Repair Liquidation Branch
U.S. Customs Service
P.O. Box 2450
San Francisco, CA 94126

RE: Vessel repair; M/V PRESIDENT ADAMS; vessel repair entry # 110-7992184-4; 19 U.S.C. ?1466(h)(3); antidumping duties

Dear Sir:

This is in response to your memorandum VES-13-SF:TC:L (BZ), dated September 13, 1996, in which you request internal advice on the applicability of the antidumping duty laws to vessel repair entries. Our reply follows.

FACTS:

The U.S. flag vessel M/V PRESIDENT ADAMS underwent certain repair and maintenance work while overseas. Upon its return to the United States, the vessel owner filed the requisite vessel repair entry. In reviewing the Customs Form 7501-A that was attached to the Customs Form 226, the import specialist realized that certain ball bearings that had been installed in a motor fell under an antidumping duty determination.

ISSUE:

Whether spare parts that were necessarily installed on a vessel pursuant to 19 U.S.C. ?1466(h)(3), are subject to antidumping duties upon first entry into the United States?

LAW AND ANALYSIS:

Title 19, United States Code, Section 1466(a), provides for the payment of duty at a rate of 50 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 application of 19 U.S.C. ?1466(a) is limited by subsection (h)(3) (19 U.S.C. ?1466(h)(3)), which states that the duty imposed by subsection (a) shall not apply to:

...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 Schedule of the United States of each such spare part purchased in, or imported from, a foreign country.

Antidumping duties are considered to be regular customs duties except for purposes relating to drawback. 19 U.S.C. or withdrawn from warehouse, for consumption. See Titanium Metals Corporation v. United States, 901 F.Supp. 362, 364 (CIT 1995) . The term "entered for consumption" means that an entry summary for consumption has been filed with Customs in proper form, with estimated duties attached. 19 CFR ?141.0a. The court in Titanium Metals Corporation upheld the position taken by the Department of Commerce and the U.S. Customs Service that TIB entries are not entered for consumption for purposes of the countervailing and antidumping duty laws. In doing so, it applied the reasoning it had used in the earlier case of Trans-Border Customs Services, Inc. v. United States, 843 F.Supp. 1482 (CIT 1994), to arrive at the conclusion that the temporary nature of TIB entries was inconsistent with the concept of entry for consumption. Specifically, it cited the following language appearing in Trans-Border:

Congress' rationale for subchapter XIII of the HTSUS is that an article temporarily imported, and subsequently exported, does not actually enter the U.S. market and thus should be exempt from duty because it is not in reality an importation for consumption. Id. at 1487.

Applied here, it is clear that spare parts entered under a vessel repair entry are not entered for consumption for antidumping duty purposes. This is because they stay on board ship and never "actually enter the U.S. market". Consequently, although they remain subject to the rate of duty applicable to the appropriate commodity classification of the Harmonized Tariff Schedule, they do not fall under the jurisdiction of the antidumping duty laws.

HOLDING:

Spare repair parts necessarily installed on a vessel under 19 U.S.C. ?1466(h)(3), are not subject to the assessment of antidumping duties upon first entry into the United States.

Sincerely,

Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch

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