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HQ W116710

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August 18, 2006

VES-3-18-RR:BSTC:CCI W116710 GOB

CATEGORY: CARRIER

Supervisory Entry Officer c/o Vessel Repair Unit
U.S. Customs and Border Protection
1515 Poydras Street, Suite 1700
New Orleans, LA 70112

RE: 19 U.S.C. §1466; Vessel Repair Entry C20-0063462-9; Protest 2002-06-100100; M/V CYNTHIA FAGAN

Dear Madam:

This is in response to your memorandum of August 9, 2006, forwarding for our review the protest filed on behalf of Teco Ocean Shipping, Inc. (“protestant”) with respect to Vessel Repair Entry C20-0063462-9. Our ruling follows.

FACTS:

The M/V CYNTHIA FAGAN (the “vessel”), a U.S.-flag vessel, incurred foreign shipyard costs. The vessel arrived in the United States on July 11, 2005. A vessel repair entry was filed.

By letter of April 7, 2006, your office granted in part and denied in part the application for relief.

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).

Title 19, United States Code, section 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.

Title 19, United States Code, section 1466 (h)(2) (19 U.S.C. § 1466(h)(2)) provides 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 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 . . .

The items at issue are as follows. Items 6 and 7 contain multiple charges which are identified as “Core Deposit.” The Parts Manager of the vendor of the subject goods, Ring Power Corporation, states as follows with respect to the two pertinent invoices and the “Core Deposit” charges thereon:

All above charges are for spare parts. They are associated with the parts listed on the invoice directly above each entry and are additional charges for the spare parts related to the returned exchange parts which may or may not be reusable.

We find that the evidence of record indicates that the charges identified as “Core Deposit” are costs associated with parts which are nondutiable under 19 U.S.C. 1466 § (h)(2). We find that the “Core Deposit” charges are nondutiable under 19 U.S.C. 1466 § (h)(2).

HOLDING:

The costs discussed in this ruling are nondutiable 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 the costs discussed herein.

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 final duty determination 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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