HQ 116483 - 19 U.S.C. §1466; Vessel Repair Entry C20-0058610-0; Protest 2002-02-101137; MOKIHANA, V-57 - United States International Trade Commision Rulings

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HQ 116483

June 20, 2005
VES-3-18-RR:IT:EC 116483 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 C20-0058610-0; Protest 2002-02-101137; MOKIHANA, V-57

Dear Sir:

This is in response to your memorandum of June 3, 2005, forwarding for our review the protest filed by Matson Navigation Company, Inc. (“protestant”) with respect to Vessel Repair Entry C20-0058610-0. Our ruling follows.

FACTS:

The MOKIHANA (the “vessel”), a U.S.-flag vessel owned by the protestant,

The CF 226 reflects that Matson Navigation Company, Inc. is the owner of the vessel. The supplemental submission states that Matson Navigation Company, Inc. is the operator of the vessel. incurred foreign shipyard costs. The vessel arrived in the port of Los Angeles on January 14, 2002. A vessel repair entry was timely filed. Pursuant to a letter from the New Orleans Vessel Repair Unit (“VRU”), the application for relief was denied as untimely. The determination of duty occurred on August 30, 2002.

The ensuing protest, received on November 27, 2002, pertained to duty charged on all repair items used by the regular crew of the vessel during the voyage. The VRU did not finalize the protest, as well as other similar Matson protests and vessel repair entries involving spare parts used by the vessel’s crew, pending the passage of the “Miscellaneous Trade and Technical Corrections Act of 2004” (Public Law No. 108-429).

ISSUE:

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

LAW AND ANALYSIS:

Initially, we note that the information in the file indicates that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests. 19 U.S.C. 1514(c)(3) and 19 CFR 174.12(e). We further note that counsel for the protestant filed a supplemental submission dated April 19, 2005 with the VRU, pursuant to section 1554 of the “Miscellaneous Trade and Technical Corrections Act of 2004.”

Title 19, United States Code, § 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 of repairs made in a foreign country upon a vessel documented under the laws of the United States . . . “

Section 1554 of the Miscellaneous Trade and Technical Corrections Act of 2004, signed by the President on December 3, 2004, amended the vessel repair statute by adding the following exemption to §1466(a) found in 19 U.S.C. 1466(h):

(4) the cost of equipment, repair parts, and materials that are installed on a vessel documented under the laws of the United States and engaged in the foreign or coasting trade, if the installation is done by members of the regular crew of such vessel while the vessel is on the high seas.

Declaration and entry shall not be required with respect to the installation, equipment, parts, and materials described in paragraph (4).

This newly-enacted legislation further provides for a retroactive effective date for that equipment, repair parts, and materials installed on or after April 25, 2001.

As noted above, the subject protest was received by the VRU on November 27, 2002 and counsel for the protestant filed a supplemental submission dated May 9, 2005. The protestant seeks relief pursuant to 19 U.S.C. §1466(h)(2), which provides that:

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 and use on such vessel, as needed, in the United States, at sea, or in a foreign country, but only is 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 . . .

You have asked us to review the items described below. We will use the exhibit numbers used in the supplemental submission.

Exhibit 7, TR # 334, Goodall invoice # 114202. The inventory adjustment log shows this item to be part 3 240-D/NP, an "expansion joint, 8" x 8", 240-D/NP, Proco cooler, M/E jacket water." The invoice describes the item as part 62061208000 - "E612exp jt twin sph 8"ID x 13" FF." (The purchase order also shows an Proco Products expansion joint 8" x 13" but this item is not reflected on the invoice.) These descriptions do not match. Therefore, the protestant has not established the nondutiability of this item. We find that this item is dutiable.

Exhibit 8, TR #341, Torrance Diesel invoice #1218105. The inventory adjustment log shows the withdrawal of eight pieces of part M21149, but the invoice shows the purchase of four pieces. Therefore, we find that four pieces are dutiable and four pieces are nondutiable.

Exhibit 10, TR #654, Torrance Diesel invoice #1218037. The inventory adjustment log shows the withdrawal of one remote thermometer with capillary tube, part #M92062. The pertinent invoice shows the purchase of this thermometer. However, we regard thermometers as vessel equipment, which are not eligible for relief under 19 U.S.C. 1466(d)(2). See HQ 115953 dated June 6, 2005, where we stated:

In this case, items 355, 356, and 559 are listed as pressure gauges, and item 626 is listed as a thermometer. It is CBP's position that all of these articles are equipment rather than parts. (See . . . HQ 114259, dated October 15, 1998). Consequently, relief under §1466(h)(2) is not available.

Accordingly, we find that this item is dutiable.

Exhibit 12, TR 661, Harbor Ship invoice #032625. The subject invoice is dated January 16, 2002, which is two days after the arrival of the vessel. An invoice dated after the date of arrival of a vessel is not probative evidence with respect to a claim that an item listed thereon is eligible for an exemption from any provision of 19 U.S.C. §1466 with regard to the subject voyage. Accordingly, the protestant’s claim for relief under 19 U.S.C. §1466(h)(2) with respect to this item is unsubstantiated.

You also request our review with respect to TR #114, 319, 320, 326, and 328, listed on pages two and three of the supplemental submission. You state that no documentation was provided with respect to these items and their eligibility for a particular exemption from duty under 19 U.S.C. §1466, including subsection (h)(2). We concur. With respect to TR # 114, 319, 326, and 328, the submission provides in the invoice column: "No P.O. in Safenet / Came with Vessel." This is not adequate to establish relief. With respect to TR # 320, no information is provided with respect to the invoice. This is not adequate to establish relief. Therefore, we find that these items are dutiable.

HOLDING:

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

You are instructed to GRANT the protest with respect to four pieces of part #M21149, as described in Exhibit 8, above. You are instructed to DENY the protest with respect to all other items discussed in this ruling.

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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