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HQ 116308

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September 27, 2004

VES-13-18 RR:IT:EC 116308 GOB

CATEGORY: CARRIER

Charles Routh, Esq.
Garvey, Schubert & Barer
1191 Second Avenue
Eighteenth Floor
Seattle, WA 98101-2939

RE: Vessel Repair; 19 U.S.C. 1466(e)

Dear Mr. Routh:

This letter is in reply to your letter of September 8, 2004, in which you request a ruling on behalf of Maersk Lines Ltd.

FACTS:

You describe the pertinent facts as follows:

On September 6, 2002, Maersk acquired the MAERSK RHODE ISLAND which was reflagged U.S. on the same date. The MAERSK RHODE ISLAND was acquired shortly after it was built and it has never been in the United States. It has been chartered to the U.S. Military Sealift Command for most of its existence. It has been outside the United States for over two years and it is anticipated that the vessel may return to the United States no sooner than 6 to 8 months from now. The vessel has not and will not acquire any fish nets or netting and did not depart from the United States for the sole purpose of obtaining any equipment, parts, materials or repairs.

You inquire with respect to the applicability of title 46, United States Code, section 1466(e) (19 U.S.C. § 1466(e)). You state that you “recognize that the six months rule applies to the RHODE ISLAND, but seek confirmation that the RHODE ISLAND is exempt from duty for any equipment, parts, materials or repairs after the six months period which starts as of September 6, 2002.”

ISSUE:

The applicability of 19 U.S.C. § 1466(e) to the situation presented.

LAW AND ANALYSIS:

Title 19, United States Code, section 1466 (a) (19 U.S.C. § 1466(a)) 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.

19 U.S.C. § 1466(e) provides as follows:

Exclusions for arrivals two or more years after last departure

In the case of any vessel referred to in subsection (a) of this section that arrives in a port of the United States two years or more after its last departure from a port in the United States, the duties imposed by this section shall apply only with respect to-
fish nets and netting; and
other equipments and parts thereof, repair parts and materials purchased, or repairs made, during the first six months after the last departure of such vessel from a port of the United States.

If such vessel is designed and used primarily for transporting passengers or property, paragraph (1) shall not apply if the vessel departed from the United States for the sole purpose of obtaining such equipments, parts, materials, or repairs.

HQ 115077, dated August 24, 2000, pertained to certain vessels which were built in a foreign country, originally documented in a second foreign country, and subsequently documented under the U.S. flag. At the time of the ruling, such vessels had never entered the U.S. We held that: such vessels were subject to the six-month duty cap of 19 U.S.C. § 1466(e) upon their arrival in a U.S. port, and the six-month period was considered to have commenced on the date of documentation under the U.S. flag. In HQ 115077 we observed that, because the vessels would be arriving in the U.S. for the first time, the requirement of previous departure from the U.S. (i.e., “. . . arrives in a port of the United States two years or more after its last departure from a port in the United States . . . “) would not be satisfied.

In HQ 111298, dated March 4, 1991, and HQ 113319, dated March 27, 1995, we held that the six-month period began when newly-foreign-constructed vessels first entered service. In HQ 113319, we stated that “[t]he fact that a U.S.-flag vessel has not previously been in the U.S. should not . . . act to deny the benefit of the six-month duty cap.”

We find that these rulings and the reasoning therein are applicable here.

We therefore find that the six-month rule of 19 U.S.C. § 1466(e) applies to the MAERSK RHODE ISLAND and that the six month period commenced on the date it was documented under the U.S. flag, September 6, 2002.

HOLDING:

The six-month rule of 19 U.S.C. § 1466(e) applies to the MAERSK RHODE ISLAND. The six-month period commenced on the date it was documented under the U.S. flag, September 6, 2002.

Please note that this ruling does not eliminate the requirement of 19 U.S.C. § 1466 and section 4.14, CBP Regulations (19 CFR 4.14; see, in particular, 19 CFR 4.14(b)(3)(ii)) to declare and enter work performed abroad at the vessel’s first port of arrival. Any final determination as to whether dutiable repairs and equipment are involved will be made after CBP’s review of the evidence required to be submitted pursuant to 19 CFR 4.14.

Sincerely,

Glen E. Vereb
Chief

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