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HQ 115294





April 2, 2001

VES-13-18:RR:IT:EC 115294 LLO

CATEGORY: CARRIER

Stacey L. Sovereign
Marine Spill Response Corporation
455 Spring Park Place, Suite 200
Herndon, Virginia 20170

RE: 19 U.S.C. §1466(e); 19 C.F.R. §4.14; Vessel Repair; Duty Remission; 19 U.S.C. §1401(h); Exclusions for arrivals 2 years After departure from U.S. port

Dear Ms. Sovereign:

We received your ruling request regarding the applicability of duty remission to foreign repairs on a U.S. flag vessel that will arrive at least two years since its last departure from a U.S. port under 19 U.S.C. §1466(e). Our ruling on this matter follows.

FACTS:

The barge MSRC 381, owned by Marine Spill Response Corporation was built in Jeffersonville, Indiana in 1968. It is registered in the United States. Marine Spill Response Corporation moved the barge to the U.S. Virgin Islands in 1993 and intends for it to remain there for the foreseeable future. It is asserted that its last U.S. port of call was in Puerto Rico in April of 1996 and that it had no repairs during the six months following its departure from that port. There is no indication of whether or not any repairs occurred while in the U.S. Virgin Islands, and if any repairs occurred while there, when they occurred.

ISSUE:

Whether a vessel remaining in the waters of the U.S. Virgin Islands for two years or longer has remained outside of the United States for purposes of 19 U.S.C. §1466.

LAW & ANALYSIS:

Title 19 U.S.C. §1466(a), provides in pertinent part for payment of duty in the amount of 50% ad valorem on the cost of foreign repairs to vessels documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to be employed in such trade. The vessel repair statute provides exclusions from certain duties for vessels that arrive in the U.S. two (2) years after their last departure from a United States port provided certain factors apply under 19 U.S.C. §1466(e).

In the case of U.S. flag vessels that arrive in a port of the United States two years or more after their last departure from a port in the United States, the duties imposed by 19 U.S.C. §1466(e) shall apply only with respect to fish nets, netting, and other equipment and parts thereof, repair parts and materials purchased, or repairs made during the first six months after the last departure of the vessel from a port of the United States. Additionally, if the vessel is designed and used primarily for transporting passengers or property, the two year exception is inapplicable to that vessel, if the only reason for departure from the U. S. was for the acquisition of equipment, parts, materials or repairs.

Marine Spill Response Corporation states that under 19 U.S.C. §1401(h), the U.S. Virgin Islands would not be considered a U.S. territory. With regard to the vessel repair statute, this assertion is correct. MSRC plans to dry dock MSRC 381 in April of 2001 at a non- U.S. shipyard in the Caribbean for its required dry-docking and to accomplish any necessary repairs as directed by the Coast Guard and the ABS. In order to qualify for the exclusion to the vessel repair statute permitted in 19 U.S.C. §1466(e), MSRC 381 cannot have had repairs performed on it in a U.S. port within 6 months of its departure from the United States. Secondly, its last arrival at a U.S. port must have been two years ago or longer. Finally, it cannot have departed the U.S. for the sole purpose of buying or obtaining equipment, parts materials and/or repairs, if the vessel is designed primarily for transporting passengers or property. Only those repairs made to the vessel during the first six (6) months of its extended absence are subject to duty.

HOLDING:

Vessels remaining in the waters of the U.S. Virgin Islands are not considered to have been within the United States for purposes of the vessel repair statute under 19 U.S.C. §1466(e). Additionally, only those items (with the exception of fish nets and nettings) purchased and repairs made outside of the United States during the first six months after the vessel’s last departure from the U.S. shall be declared and entered. Other prerequisites require that the vessel’s last arrival at a U.S. port have been at least two years before use of the exclusion, and that its departure from the U.S. was not for the sole purpose of acquiring equipment, parts materials and/or repairs, if the vessel is designed primarily for transporting passengers or property.

Sincerely,

Larry L. Burton
Chief
Entry Procedures and Carriers Branch

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