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HQ 116254

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August 2, 2004

VES-3-18-RR:IT:EC 116254 GOB

CATEGORY: CARRIER

Chief, Vessel Repair Unit
U.S. Customs and Border Protection
423 Canal Street
New Orleans, LA 70130

RE: 19 U.S.C. 1466; Vessel Repair Entry C20-0058640-7; Protest 2002-03-100854; PHILADELPHIA, V-1

Dear Sir:

This is in response to your memorandum of June 8, 2004, forwarding for our review the protest filed by counsel on behalf of Amerada Hess Corporation with respect to Vessel Repair Entry C20-0058640-7. Our ruling follows.

FACTS:

The ITB PHILADELPHIA (the “vessel”) is a U.S.-flag vessel. It incurred foreign shipyard costs in Canada. The vessel arrived in Houston, Texas on October 6, 2002. A vessel repair entry was timely filed.

ISSUE:

Whether the costs for which the protestant seeks relief are dutiable under 19 U.S.C. § 1466.

LAW AND ANALYSIS:

Title 19, United States Code, § 1466 (19 U.S.C. 1466) provides for the payment of duty at a rate of fifty 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.

Proclamation 5923 of December 14, 1988, to implement the United States-Canada Free-Trade Agreement, provided in pertinent part as follows:

I have determined that it is necessary or appropriate to provide for the staged reductions [free as of 1998 and thereafter] in the rate of duty on such equipments, or any part thereof, originating in the territory of Canada and the expenses of repairs made in the territory of Canada upon U.S.-documented vessels . . .

You request our review with respect to the following items.

Exhibit 42. This item involves materials which were manufactured in Canada. We find that this item is nondutiable pursuant to the U.S.-Canada Free Trade Agreement.

Exhibit 95. This item involves parts and/or materials which were purchased in the United States. We find that this item is nondutiable.

Exhibit 147. The documentation submitted states that these materials were either manufactured in the U.S. or imported and duty-paid. We find that these costs are nondutiable. See HQ 111619 dated October 21, 1991.

Exhibit 173. We find that the “seal repair kit,” which the invoice indicates was manufactured in the U.S., is nondutiable. We find that the “seal kit” and the third item (“ p ring for 560 560mm mk2 for unnet”) are dutiable; the exemption under 19 U.S.C. 1466(h)(2) is not applicable because these items are equipment; the exemption applies to parts and materials.

Exhibits 205-239 (freight charges). We find that the freight charges are nondutiable pursuant to U.S.-Canada Free-Trade Agreement.

Exhibits 243, 245, 246, 255, 256, and 267. The costs at issue are for labor provided by U.S. residents (exhibit 256 involves the cost of labor of one U.S. resident of the U.S. and one resident of Canada). We find these costs are nondutiable. See, for example, HQ 114650 dated April 11, 2000.

Exhibit 254 (steel gaugings for completion of Special Survey #4). We find that this cost is nondutiable pursuant to the U.S.-Canada Free Trade Agreement.

Exhibits 260, 261, 262, 263, 264, and 265. The costs herein are for various technicians who are residents of the United Kingdom and Poland. Their work was performed in Canada. We find that these costs are nondutiable pursuant to the U.S.-Canada Free Trade Agreement.

HOLDING:

The costs for which the protestant seeks relief are nondutiable or dutiable under 19 U.S.C. § 1466 as discussed in the Law and Analysis section of this ruling.

You are instructed to grant the protest in part and deny the protest in part.

In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Glen E. Vereb
Chief

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