HQ 111298
March 4,1991
VES-13-18-CO:R:IT:C 111298 LLB
Chief, Technical Branch
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90731
RE: Vessel repair; Equipment purchases; Six-month rule; Jack-up
drill rig; Entry No. M89-0900741-0; Application for Relief;
Vessel ADRIATIC VIII, V-1
Dear Sir:
Reference is made to your memorandum of September 4, 1990,
which forwards for our consideration the Application for Relief
from vessel repair duties filed by Global Marine Drilling Company
of Anchorage, Alaska, concerning the above-captioned vessel
repair entry.
FACTS:
The vessel ADRIATIC VIII left the construction yard as a new
vessel on March 31, 1983, and remained continuously outside the
United States until the time it arrived in the port of
Anchorage, Alaska, on June 6, 1990, and filed the vessel repair
entry presently under consideration.
ISSUE:
Whether materials purchased prior to but delivered or
installed after the expiration of the six-month period commencing
on March 31, 1983, may qualify for remission of vessel repair
duties assessed in the present case.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466(a), provides in
pertinent part for payment of duty in the amount of 50 percent ad
valorem on the cost of foreign repairs to vessels documented
under the laws of the United States to engage in the foreign or
coastwise trade, or vessels intended to be employed in such
trade.
The vessel repair statute provides in subsection (e) (19
U.S.C. 1466(e)), that when a vessel covered by the vessel repair
statute:
...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 [section 1466] shall apply only with
respect to... [purchases and repairs] made
during the first six months after the last
departure of such vessel from a port of the
United States.
In this case, the vessel arrived in the U.S. for the first
time and cannot meet the literal requirement of having
previously departed from the United States. The intent of the
provision is that duty be collected on repairs to vessels which
may have been taken abroad for the purpose of obtaining foreign
repairs, thus the six-month limitation on dutiability during
periods of extended absence from the United States. The fact
that a U.S.-flag vessel has not previously been in the U.S.
should not, however, act to deny the benefit of the six-month
duty cap. In the present case, the date of first entry of the
newly constructed vessel into service is the date on which we
consider the statutory six-month period to have begun for duty
purposes.
In this case, relief is sought concerning six purchases for
which the operator issued purchase orders prior to September 31,
1983, the six month anniversary of the initial entry into service
by the vessel. Subsection (e) of the statute applies vessel
repair duty to repair parts purchased or repairs made during the
first six months of an extended absence. The statutory language
is read disjunctively to apply, as the situation dictates, to
either purchases or installations. (Customs Ruling Letter 109300,
July 1, 1988).
HOLDING:
Following a thorough review of the facts in this matter, and
after an analysis of the law and relevant precedents, we have
determined that the Application should be denied for the reason
that the purchases under consideration were made within the first
six months of the relevant time period under section 1466(e).
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch