HQ 115729 - Vessel Repair No. C15-0015720-6; Oxy 4103; V-79; 19 C.F.R. §4.14; 19 U.S.C. §1466; Parts; Equipment; Anchor Accessories - United States International Trade Commision Rulings

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HQ 115729

October 8, 2002

VES-13-12:RR:IT:EC 115729 LLO

Chief, Vessel Repair Unit
U.S. Customs Service
423 Canal Street
New Orleans, Louisiana 70130

RE: Vessel Repair No. C15-0015720-6; Oxy 4103; V-79; 19 C.F.R. §4.14; 19 U.S.C. §1466; Parts; Equipment; Anchor Accessories

Dear Sir:

This is in response to your memorandum dated June 26, 2002, which forwards for our review the petition filed regarding the above referenced vessel repair entry.

FACTS:

The Oxy 4103, a U.S. flag vessel operated by Ocean Chemical Carriers, Inc., arrived at Morehead City, North Carolina on October 18, 1998. The date of entry was October 18, 1998.

An application for relief was timely filed on February 11, 1999 after a 30 day extension to file was granted by the port. The petition for review was filed on June 12, 2002. According to the vessel repair entry and other documents in the file, the vessel underwent work in Greece.

The operator agent, Ocean Chemical Carriers, Inc., submitted an application for relief identifying a certain item as non-dutiable, and the application was acted upon by your office. This particular petition is requesting relief regarding item 18, which was denied duty free treatment in the application for review since the item was deemed equipment.

ISSUE:

Whether item 18 contained within the subject petition for review is a part under 19 U.S.C. §1466(h)(3).

LAW AND ANALYSIS:

Title 19, United States Code, 1466(a) (19 U.S.C. §1466(a)), provides in pertinent part for the payment of an ad valorem duty of 50 percent of the cost of “equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses or repairs made in a foreign country upon a vessel documented under the laws of the United States”

Section 1466(h)(3), provides that the duty imposed by §1466(a) shall not apply to—

(3) the cost of spare parts necessarily installed before the first entry into the United States, but only is duty is paid under appropriate commodity classifications of the Harmonized Tariff Schedule of the United States of each spare part purchased in of imported from a foreign country.

A similar duty provision is not available for items deemed to be equipment. Customs has defined equipment as something that constitutes an operating entity unto itself, retains at least the potential for portability, and/or may be affixed to a vessel in a non-permanent fashion, such as by means of bolts or other temporary methods which is a feature distinguishing it from being considered an integrated portion of the hull and the superstructure of the vessel. The invoices provided indicate that the following are alleged as spare parts as opposed to equipment by the petitioner:

-schackle keder
-anchor schackle
-anchor chain
-swivel.

The petitioner includes as a supplement to its petition a copy of HQ 113585, which deemed an anchor chain a part and therefore not subject to duty under 1466(h). However, notwithstanding this ruling, the above named items constitute equipment pursuant to T.D. 40934 (Southwestern Shipbuilding Co. v. United States) which specifies that the term “equipment” includes anchors, chain cables, boats, life saving apparatus, nautical instruments, signal lights and similar articles. (27 Atty. Gen. Opinions, 228, 238.)

In this situation, all of the items noted in the invoices provided are considered dutiable equipment pursuant to 19 U.S.C. §1466(a). These include the schackle keder, anchor schackle, anchor chain, and swivel. Each of these items is attached to a vessel in a non-permanent fashion, and is portable, and their classification is that of equipment.

HOLDING:

Following a thorough review of the facts in this case, as well as an analysis of the law that bears upon those facts, we have determined that the petition for review should be denied in full for the reasons set forth in the Law and Analysis portion of this ruling.

Sincerely,

Glen E. Vereb
Acting Chief
Entry Procedures and Carriers Branch

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