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HQ 114612

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June 15, 1999

CON-13-03-RR:IT:EC 114612 CC

CATEGORY: ENTRY

Port Director
U.S. Customs Service
1000 2nd Avenue, Suite 2100
Seattle, WA 98104
Attn: Kathleen Sarten

RE: Internal Advice; Seattle Trade Talk 98-42, Tacoma Area Port Information Notice 98-22

Dear Madam:

This is reference to your request for internal advice, dated February 18, 1999, concerning the issuance of Seattle Trade Talk 98-42.

FACTS:

On December 14, 1998, the port directors of Seattle and Tacoma issued Seattle Trade Talk 98-42. The purpose of that information bulletin was to provide guidance and an explanation of the requirements concerning the withdrawal of alcoholic beverages and cigarettes as supplies for fishing and other commercial vessels.

Prior to the issuance of the bulletin, you and members of your staff met with area ship chandlers, including representatives of Fairn and Swanson, Inc. (hereinafter the requester), to address their concerns. Following the meeting the requester sent a letter to you expressing its specific concerns about the proposed bulletin. You responded to all of these concerns in a letter sent to the requester.

After issuance of the bulletin, the requester, in a letter to us dated January 29, 1999, expressed its concerns and requested that we review and make a legal determination concerning Seattle Trade Talk 98-42. We responded in a letter dated February 9, 1999, 114597, stating that a ruling could not be issued in response to the request, but that it was a matter that could be considered a request for internal advice. Consequently, we forwarded the matter to you, and you responded with a request for internal advice, along with your comments on the matter.

ISSUE:

Whether the matters raised concerning Seattle Trade Talk 98-42 are violative of any U.S. laws or regulations.

LAW AND ANALYSIS:

The statute providing for the exemption from Customs duties for the withdrawal of vessel supplies is found in 19 U.S.C. § 1309. 19 U.S.C. § 1317 provides for the withdrawal of tobacco products as vessel supplies. The Customs regulations concerning vessel supplies are found in 19 CFR §§ 10.59-10.65.

On November 1, 1996, Customs Directive 099 3260-050 was issued concerning “Withdrawals of alcoholic beverages and cigarettes for vessel supplies.” The purpose of that directive was to establish guidance for withdrawals of alcoholic beverages and cigarettes from bonded warehouses and foreign-trade zones for use on board fishing vessels without the payment of duty or tax. As stated above, the ports of Seattle and Tacoma issued Trade Talk 98-42 to provide further guidance for the withdrawal of alcoholic beverages and cigarettes as vessel supplies at those ports. The requester has 13 matters that it questions in Trade Talk 98-42, which it numbers as items 1 through 13.

Item 1:

It is stated that Customs Directive 099 3260-050 concerns solely fishing vessels, while Trade Talk 98-42 concerns both fishing and deep sea vessels. The requester believes that any directive or bulletin issued concerning vessel supplies for fishing and deep sea vessels should be issued separately because there is confusion in the notice concerning what applies to fishing vessels as opposed to other types of vessels. Some of the requirements for the withdrawal of vessel supplies from a bonded warehouse are the same for both fishing and deep sea vessels. In addition, we believe that the bulletin clearly delineates what applies to fishing vessels as opposed to other vessels. Consequently, we see no prohibition to address both types of vessels in the notice.

Item 2:

It is stated that this item, which concerns general conditions for the eligibility to withdraw vessel supplies, confuses the requirements between fishing vessels and other types of vessels. The requirements are general and do not apply to just one type of vessel; therefore, we fail to see where the confusion lies. In addition, those conditions appear to be consistent with 19 CFR §§ 10.59 and 10.65.

Item 3:

The language for Item 3 is the following:

There is no policy, by either owner, master or insurance carrier for the vessel, prohibiting drinking or smoking aboard the vessel. If there is such a policy against smoking, drinking or both, the vessel will be ineligible to withdraw or receive tax free or duty free cigarettes or alcohol, as appropriate, in violation of such a policy. A statement declaring that there is no policy prohibiting smoking or drinking of alcoholic beverages aboard the vessel, affirmed in writing by the Master of the vessel will establish eligibility with respect to this requirement.

It is clear that if a vessel has a policy against smoking or drinking, then alcohol or cigarettes could not be withdrawn as vessel supplies. The requester objects to requiring the Master to affirm in writing that there is no such policy because such is not required under the laws, regulations, directives, etc., as a condition to withdraw. We see nothing in the applicable laws or regulations that would require the Master to make such an oath. Consequently, we believe that the laws and regulations at this time to not support requiring a Master to make such an oath. We note that if there is a policy against smoking or drinking on a vessel, the withdrawal of cigarettes or alcohol as vessel supplies would be inappropriate.

Item 4:

The language for Item 4 is the following:

The Master of a vessel entitled to exemption from Customs duties and internal revenue tax for alcoholic beverages and cigarettes under 19 CFR 10.59(a) must certify the condition met by his vessel under that regulation, i.e., actually engaged in the foreign trade....

19 CFR § 10.59(a) makes it clear that a vessel must be engaged in foreign trade or other prescribed trade listed in the regulation in order that a withdrawal for vessel supplies is permitted. The Customs form used for a Master’s oath, CF 1300, is entitled “Master’s Oath of Vessel in Foreign Trade.” Requiring a master to certify that the vessel is engaged in foreign trade is not inconsistent with the declarations required in the oath or the Customs regulations. Consequently, we find that this requirement is not prohibited.

Item 5:

The language for Item 5, concerning fishing vessels, is the following:

The vessel must be employed in substantially continuous fishing activity. This is demonstrated by presenting a current fishing license identifying the time or season the vessel will be engaged in fishing. Alternatively, certified copies of receipts from the recent sale of fish caught or processed by the fishing vessel may be used to substantiate fishing activity.

The requester argues that a warehouse proprietor should not be required to present evidence of substantially continuous fishing activity because typically that evidence rests typically with the Master of the vessel. 19 CFR § 10.59(e) states, in pertinent part, that the withdrawal of alcohol as supplies for fishing vessels will be allowed “... if the port director is satisfied from the quantity requested, in the light of (1) whether the vessel is employed in substantially continuous fishing activities, and...” The language of the regulation indicates that it is not a requirement that a vessel be employed in substantially continuous fishing activity, only that it be licensed as a fishing vessel. Consequently, the language that the vessel must be employed in substantially continuous fishing activity should be stricken. We note that evidence concerning substantially continuous fishing activity may have to be presented, including, e.g., a current fishing license, to support the quantity of cigarettes and alcohol being withdrawn as vessel supplies. Since Item 5 does not state who must present such evidence when needed, we do not believe that stating that such evidence may need to be presented is contrary to the applicable regulations.

Item 6:

The language for Item 6 is the following:

The withdrawer for the vessel must agree, by Master’s signature, to conform with all Coast Guard restrictions regarding the consumption of alcohol on a commercial vessel, including those identified in 46 U.S.C. 2303 and 33 CFR 95.020.

The cited statute concerns duties related to marine casualty assistance and information, while the cited regulation concerns operating a vessel while intoxicated. Those are matters within the jurisdiction of the United States Coast Guard. Therefore, they should not be contained in the bulletin concerning the withdrawal of vessel supplies.

Item 7:

The language for Item 7 is the following:

The guidelines for the amount of alcoholic beverages and cigarettes which can be delivered to fishing vessels are contained in Attachment 1, page 3. The quantities are listed per month. Many vessels sail for a specific number of weeks, rather than months. The BW proprietor or FTZ operator is responsible for determining the correct amount of alcoholic beverages and cigarettes in accordance with the referenced list.

The requester argues that the bulletin reduces the quantity of alcohol and cigarettes that was previously allowed to be withdrawn as vessel supplies at the ports of Seattle and Puget Sound. The requester states that this was an arbitrary change and was only done in order to be more consistent with Customs Directive 099 3260-050, which only serves as guidelines. Both the regulations and Customs Directive 099 3260-050 make it clear the port director determines what quantities may be withdrawn as vessel supplies in a specific instance. In addition, the bulletin lists the quantities which may be withdrawn as guidelines. Consequently, since they are guidelines and not a requirement and the final decision on a withdrawal rests with the port director, we find nothing contrary to the applicable law and regulations in this item.

Item 8:

For this item, the guidelines for withdrawal of cigarettes and alcohol for vessel supplies for qualifying vessels other than fishing vessels are listed. Our response is the same as of that for Item 7: these are guidelines and the final decision on a withdrawal rests with the port director. Consequently, we find nothing contrary to the applicable law and regulations in this item.

Item 9:

The language for Item 9 is the following:

The BW proprietor or FTZ operator responsible for the delivery of any bonded stores must notify the appropriate Customs office in the port of lading of the date and time of the intended lading sufficiently in advance to allow Customs to exercise the option to arrive at the vessel and supervise the lading of the merchandise.

The requester believes the responsibility to deliver and notify Customs of the intended lading rests with the appropriate cartman or carrier that delivers the merchandise rather than the BW proprietor or FTZ operator. The requirement for notifying Customs of an intended lading is contained in 19 CFR § 4.30, which states that an application for a permit for lading shall be filed on Customs Form 3171. In addition, 19 CFR § 4.30 states that the application shall be filed by the master, owner, or agent of the vessel. Consequently, the regulations do not provide that notice of an intended lading must be made by the BW proprietor or FTZ operator.

Items 10 and 11:

Items 10 and 11 concern records that should be kept by the BW proprietor or FTZ operator for audits. We have previously discussed whether these records are consistent with the regulations. We note that in both items a statement or oath is required by the master. We find nothing in the regulations that require those statements.

Item 12:

This item is covered in Item 9.

Item 13:

The language for Item 13 is the following:

The guidelines used to determine the quantity of bonded supplies for which a fishing vessel is eligible are listed in the table on page 3 of the attached directive. In no case may more than six months of supplies be authorized or delivered. The bonded facility is responsible for ensuring that these factors are applied when preparing the CF 5125 for presentation to Customs.

There is nothing in the law or regulations that would limit the withdrawal to less than six months of supplies.

HOLDING:

Trade Talk 98-42 is consistent with U.S. laws and regulations or violative thereof as outlined in the Law and Analysis portion of this ruling.

You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the

Customs Home Page on the World Wide Web at www.customs.ustreas..gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Jerry Laderberg

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