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HQ 116448

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May 4, 2005

VES-13-18-RR:IT:EC 116448 GOB

CATEGORY: CARRIER

Judy L. Collins
Executive Vice President and CFO
American Ship Management, LLC
2175 N. California Blvd.
Suite 1000
Walnut Creek, CA 94596

RE: Vessel Repair; 19 U.S.C. 1466(h)(2) and (3); Parts; Crankshaft; Bedplate; M/V PRESIDENT WILSON

Dear Ms. Collins:

Your letter of March 22, 2005 to the Customs and Border Protection (“CBP”) Vessel Repair Unit in New Orleans has been forwarded to this office for response with respect to issues under title 19, United States Code, section 1466. Your questions with respect to classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) will be addressed by the CBP National Commodity Specialist Division.

FACTS:

In your letter, you state in pertinent part as follows:

. . . we ask CBP for an advance ruling on remission for this item [crankshaft], insofar as whether the item is a “part” under the intent of the respective “(h)” provision[s] of the Repair Statute. . . .

We maintain that the crankshaft is a “Part” within the definition and intent of both 19 USC 1466(h)(2) and 19 USC 1466(h)(3). . . . . . .
In support of our position that a crankshaft is a “Part” within the meaning of the Repair Statute (h2 and h3), we note that a crankshaft is not an operating entity into itself. To operate it requires both incorporation into the engine itself and is dependent upon many other components such as bearing[s], connecting rods, pistons and of course internal combustion to operate in its designated capacity. As such a crankshaft is clearly a component of a diesel machine, representing something that does not lose its identity when incorporated into the engine . . . and is readily identifiable as a “part” when the engine is disassembled. . . . . . .
Our point of view on appropriate treatment of the bedplate under 19 USC 1466 (h2 and h3) as “Parts” [is] identical to our opinion of . . . the crankshaft. . . .
In support of our position that a bedplate is a “Part” within the meaning of the Repair Statute (h2 and h3), we note that a bedplate, like the crankshaft, is not an operating entity into itself. To operate it requires both incorporation into the engine itself (as it is fundamentally the base of the engine, forming the lower portion of the crankcase) and is dependent upon many other components such as crankshafts, bearing[s], connecting rods, pistons and of course internal combustion to operate in its designated capacity. As such a bedplate is clearly a component of a diesel machine, representing something that does not lose its identity when incorporated into the engine . . . and is readily identifiable as a “part” when the engine is disassembled. . . .

You describe the items as follows:

. . . a diesel engine crankshaft is a heat treated steel component machined to an advanced degree of precision, made to exacting tolerances for the coupling of connecting rods and main bearings for the transmission and transfer of the internal combustion forces created by the engine into the usable power medium (through flywheel to down line-shaft generation) electricity. . . .
The bedplate itself is a steel casting subsequently finished to a high degree of completion and is generally speaking in all ways ready to accept the finished crankshaft, bearing housings, foundation bolts and other associated components.

You have provided diagrams of the crankshaft and bedplate. We further note that your questions are asked within the context of work to be performed on the M/V PRESIDENT WILSON.

ISSUE:

Whether a crankshaft and bedplate are “parts” for the purpose of 19 U.S.C. 1466(h)(2) and (3)?

LAW AND ANALYSIS:

Title 19, United States Code, section 1466(a) (19 U.S.C. § 1466(a)) provides, inter alia, for the payment of duty at a rate of fifty percent ad valorem on the cost of equipment, repair parts or materials used in 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.

Title 19, United States Code, section 1466(h) provides in pertinent part as follows:

The duty imposed by subsection (a) of this section shall not apply to- ...
(2) the cost of spare repair parts or materials (other than nets or nettings) which the owner or master of the vessel certifies are intended for use aboard a cargo vessel, documented under the laws of the United States and engaged in the foreign or coasting trade, for installation or use on such vessel, as needed, in the United States, at sea, or in a foreign country, but only if duty is paid under appropriate commodity classifications of the Harmonized Tariff Schedule of the United States upon first entry into the United States of each such spare part purchased in, or imported from, a foreign country, or

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

For the purpose of 19 U.S.C. 1466, we have used the following definitions:

Equipment – An article which constitutes an operating entity unto itself. Equipment retains at least the potential for portability. Equipment 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 superstructure of a vessel. Examples would include winches and generators.

Part – An article which does not lose its essential character or its identity as a distinct entity but which, like materials, is incorporated into a larger whole. It would be possible to disassemble an apparatus and still be able to identify a part. Examples would include piston rings and pre-formed gaskets.

Material – An item which is consumed in the course of its use and/or loses its identity as a distinct entity when incorporated into the larger whole, e.g., paint and sheets of steel.

The International Maritime Dictionary by Rene de Kerchove (2nd ed., 1961) provides the following definitions:

CRANK SHAFT. A shaft turned by cranks which changes reciprocating motion into circular motion, as in steam engines and internal combustion engines.

BEDPLATE. Also called base plate, sole plate. 1. A foundation framework for a marine steam engine, consisting of longitudinal and cross girders of cast steel, secured to the engine keelsons, which are built up with the ship’s hull. The engine frame columns, and main bearings land on the bedplate. Base plates for propelling engines of merchant ships are made of cast iron, cast steel or welded plate girders. They have either a flat or a dropped bottom. 2. A similar boxlike foundation on a deck, supporting an auxiliary engine.

An Internet site (http://autorepair.about.com/library/glossary/bldef-100.htm) provides the following definition of “crankshaft”:

The main driving shaft of an engine that receives reciprocating motion from the pistons and converts it to rotary motion. Together, the crankshaft and the connecting rods transform the pistons’ reciprocating motion into rotary motion.

We note that a number of Internet sites appear to regard the crankshaft as an auto part.

The Random House Dictionary of the English Language (unabridged ed., 1973) provides the following definition of bedplate:

A plate, platform, or frame supporting the lighter parts of a machine. Also called base plate.

After a careful consideration of this matter, we determine that the crankshaft and bedplate described in your ruling request are “parts” for the purpose of 19 U.S.C. 1466(h)(2) and (3). Both items appear to fall more squarely within the definition of “part,” stated above, than the definition of equipment or material. We have consulted with National Commodity Specialist Division officials, who agree with these determinations.

HOLDING:

The above-described crankshaft and bedplate are “parts” for the purpose of 19 U.S.C. 1466(h)(2) and (3).

This ruling is advisory in nature. It does not relieve the vessel owner or operator from any of its reporting responsibilities within 19 U.S.C. 1466 and the CBP regulations promulgated thereunder (19 CFR 4.14), nor does it substitute for CBP’s final determinations as to duty liability under 19 U.S.C. 1466.

Sincerely,

Glen E. Vereb
Chief

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