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 > 1999 HQ Rulings > HQ 084703 - HQ 114238 > HQ 114050

Previous Ruling Next Ruling
HQ 114050

---

October 13, 1998

VES-13-18-RR:IT:EC 114050 LLB

CATEGORY: CARRIER

Chief, Liquidation Section
U. S. Customs Service
P. O. Box 2450
San Francisco, California 94126

RE: Vessel Repair; Petition for Review; M/V PRESIDENT ADAMS, Voyage 87E; Entry No. 110-7994476-2; Prefabricated Steel; Spare Parts; 19 U.S.C.1466(h)(3)

Dear Sir:

This letter is in response to your memorandum dated July 24, 1997, which forwarded for our review a Petition for Review relating to the above-referenced vessel repair entry. Our ruling follows.

FACTS:

The vessel PRESIDENT ADAMS, a United States-flag vessel owned and operated by American President Lines (APL) of Oakland, California, arrived at the port of Seattle, Washington, on March 13, 1997. According to the vessel repair entry and other documents in the file, the vessel underwent certain work in Hong Kong, B.C.C. during the course of its foreign voyage.

The vessel operator submitted an Application for Relief identifying certain elements as covered under subsection (h) of the vessel repair statute, which Application was denied by the Vessel Repair Liquidation Unit. You request that we review the subject Petition for Review and provide you with our determination as to the dutiability of the foreign expenditures. The matter at issue is the dutiability of six sheets of so-called prefabricated steel plate which were welded into the bulkhead of one of the starboard tanks of the vessel. It is claimed that the plates are properly considered to be spare parts which were necessarily installed prior to their importation into the United States.

ISSUE:

Whether the work described in the Law and Analysis portion of this ruling is dutiable under the vessel repair statute (19 U.S.C. 1466).

LAW AND ANALYSIS:

Section 466(a), Tariff Act of 1930, as amended (19 U.S.C. 1466(a)) provides, in pertinent part, that:

The equipments, or any part thereof ... 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 to engage in the foreign or coasting trade, or a vessel intended to be employed in such trade, shall, on the first arrival of such vessel in any port of the United States, be liable to entry and the payment of an ad valorem duty of 50 per centum on the cost thereof in such foreign country.

Section (h)(3) of the vessel repair statute (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 found that 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.
The applicant has not established that the prefabricated steel is a part under 19 U.S.C. 1466(h)(3). Therefore, the steel is dutiable under 19 U.S.C. 1466(a). Our determination and analysis is the same here as in Ruling 113883 dated April 1, 1997.

HOLDING:

Following a thorough analysis of the facts as well as of the law and applicable precedents, we have determined that the Petition for Review should be denied as specified in the Law and Analysis portion of this ruling.

Sincerely,

Jerry Laderberg
Chief,
Entry Procedures and Carriers

Previous Ruling Next Ruling