VES-13-18 CO:R:IT:C 111304 JBW
Chief, Technical Branch
Commercial Operations
Pacific Region
1 World Trade Center
Long Beach, CA 90831
RE: Vessel Repair; Taxes; 19 U.S.C. 1466; GREEN WAVE;
Protest No. 27040 002990.
Dear Sir:
This letter is in response to your memorandum of September
11, 1990, which forwards for our review and ruling the above-
referenced protest against the assessment of vessel repair
duties.
FACTS:
The record reflects that the subject vessel, the GREEN
WAVE, arrived at Port Hueneme, California, on March 10, 1989.
Vessel repair entry, number C27-0012577-9, was filed on the
same day as arrival and indicates that shipyard work was
performed in New Zealand. The protestant filed an
application for relief, which addressed the issues of
casualty and of taxes assessed by the Government of New
Zealand. This office denied relief on both issues.
Headquarters Ruling Letter 110425, dated November 30, 1989.
The entry was liquidated on April 20, 1990, and the
protestant timely filed its protest on July 16, 1990.
The vessel owner protests only that portion of our ruling
that found the cost of the New Zealand goods and services tax
(GST) dutiable. The protestant claims that the vessel,
being exempt from the GST by law, was never charged these
taxes. The record reflects that Ascot Shipping, Ltd.,
collated and paid the various shipyard charges on the account
of the protestant. The GST, which appear on the Sinclair
Melbourne & Co., Ltd, invoices, were paid by Ascot Shipping,
which in turn received a refund of the taxes. The Ascot
Shipping invoice paid by the protestant reflects the
Sinclair Melbourne invoiced amounts minus the GST.
ISSUE:
Whether foreign government taxes that were included on a
shipyard invoice, but were never paid by the protestant are
dutiable under 19 U.S.C. 1466 (1988).
LAW AND ANALYSIS:
Title 19, United States Code, section 1466, provides in
pertinent part for payment of duty in the amount 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 engage in
such trade. The Customs Service has held that foreign
government taxes constitute dutiable expenses as that term is
used in the vessel repair statute. Headquarters Ruling
Letter 110425. The statute limits the assessment of duties
to those costs incurred in a foreign country. If the vessel
owner demonstrates that costs were never in fact incurred,
then no duty on the amount of those costs is owed.
The protestant claims that it never paid the GST that
appear on the Sinclair Melbourne invoices. Rather, the GST
was paid by Ascot Shipping, the agent for the protestant in
New Zealand, which ultimately received a refund of the GST.
The claim of the protestant is supported by a list of charges
owing to Ascot Shipping by the protestant; this list shows
the cost of the work performed by Sinclair Melbourne deducted
by the amount of the GST. We thus conclude that the GST
were never paid by the protestant and are thus not dutiable
under 19 U.S.C. 1466.
As part of your memorandum, you state that the protestant
is claiming a duty refund of $1,532.03 (U.S.), but that the
protestant includes as part of its protest GST that were
listed on invoices that your office determined were not
dutiable. This office does not have a complete account of
the liquidation of this entry. However, it is axiomatic that
only duties that were paid are subject to refund. In
reliquidating this entry, your office should refund only
those duties that the protestant can demonstrate were
actually paid. If GST was included on invoices that were
determined to be non-dutiable, then no duty was paid on the
GST and no duty refund is available.
HOLDING:
Foreign government taxes that were included on a shipyard
invoice, but were never paid by the protestant are not
dutiable under 19 U.S.C. 1466. The protest is granted,
subject to the requirement that only duties that the
protestant can demonstrate were actually paid are eligible
for refund.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch