VES 3-13-CO:R:IT:C 112035 BEW
Mr. D. Amesbury
3 Church Circle
Annapolis, Maryland 21401
RE: Importation of a British-registered pleasure boat, owned by
a U.S. citizen, for sale in the United States
Dear Mr. Lawrence:
This is in reference to your letter of September 5, 1991, in
which you request information concerning the importation of a
British registered sailing yacht which is presently in the United
States under a cruising license.
You state that you are giving some thought to registering
the vessel in the United States. You state that you wish to pay
the duty so that you will be able to offer the vessel for sale.
You have raised the issue of whether you would be entitled to
reclaim all or part of the duties paid if the yacht is exported
and if so, is there any time limit.
On the basis of your letter, we are only able to provide you
with a general information letter, not a ruling letter. The
procedures and requirements for obtaining a ruling letter are set
forth in Part 177 of the Customs Regulations (19 CFR Part 177),
copy enclosed.
Under the Harmonized Tariff Schedules of the United States
(HTSUS), Heading 8903.00.00, Yachts and other vessels for
pleasure or sport, rowboats and canoes, Subheading 8903.91.00,
Sailboats with or without auxiliary motor are dutiable at the
rate of 1.5 percent ad valorem. A sailboat owned by a resident
of the United States or brought into the United States for sale
or charter to a resident thereof, would be subject to this duty
provision of the HTSUS.
Duty on the vessel is collectable when it is first imported.
The determination of whether or not a yacht is dutiable when it
has previously been subject to Customs entry and payment of duty
is dependent on whether it has been exported from the United
States after its first importation. If it has been exported, it
is again dutiable as an importation under items 8903.91.00 or
8903.92.00, HTSUS. Exportation, in this context, is defined as
occurring when the yacht is severed from the mass of things
belonging to this country with the intention of being united with
the mass of things belonging to some foreign country (see section
101.1(k), Customs Regulations (19 CFR 101.1(k)). Merely removing
a yacht from U.S. territorial waters on a temporary foreign
pleasure cruise with the intent to return it to the United States
thereafter would not constitute an exportation. In addition, it
should be noted that any past or future transfers of ownership of
a vessel that take place while it remains within the United
States do not affect its duty-paid status provided the
circumstances surrounding the transfers of ownership do not
indicate that an exportation has occurred within the meaning of
section 101.1(k).
Section 313(j), Tariff Act of 1930, as amended (19 U.S.C.
1313(j)), provides for a refund of duty of duty if a duty-paid
article is exported, within three years from the date of
importation, in the same condition as when imported and was not
used in the United States. The statute provides that the
performing of incidental operations does not constitute a use for
drawback purposes. Incidental operations include, but are not
limited to, testing, cleaning, repacking, and inspecting.
The prevailing interpretation of "use" of an article under
both 19 U.S.C. 1313(j) and Part 191.141, Customs Regulations, is
that an article is used when it is employed for the purpose for
which it was manufactured and intended. Articles that have been
changed in condition due to deterioration, accidental destruction
or damage are also usually ineligible for same-condition
drawback. The Customs Service has previously held that offering
merchandise for sale does not negate the provisions of 1313(j),
nor does demonstration connected with such offers render the
merchandise ineligible for drawback unless the merchandise
becomes significantly deteriorated.
Therefore, in the fact situation you described, same
condition drawback would be available if the yacht is in the same
condition as when imported (not entered), "use" of the yacht is
limited to showing it to potential buyers, and exportation occurs
within three years from the date of importation assuming there
is compliance with all applicable regulations, particularly those
in section 191.141, Customs Regulations."
Since your vessel has already entered the United States and
is currently docked in the waters in Chesapeake Bay area, selling
or chartering the vessel to a U.S. resident would subject the
vessel to Customs consumption entry procedures and the duty
provisions of subheading 8903.91.00 of the HTSUS.
You should be aware that foreign-flag or foreign-built
vessels are prohibited from engaging in the coastwise trade.
Generally, the coastwise laws (e.g., 46 U.S.C. App. 289 and 883,
46 U.S.C. 12106 and 12110) prohibit the transportation of
merchandise or passengers between points in the United States
embraced within the coastwise laws in any vessel other than a
vessel built in and documented under the laws of the United
States and owned by persons who are citizens of the United
States.
A "passenger" is defined in section 4.50(b) of the Customs
Regulations (19 CFR 4.50(b)), as "any person carried on a vessel
who is not connected with the operation of such vessel, her
navigation, ownership, or business". The family and legitimate
guests of the owner or bareboat charterer of a vessel used for
pleasure purposes are not considered passengers.
Title 19, United States Code, section 1433, provides that
immediately upon the arrival at any port or place in the United
States or Virgin Islands of: (1) any vessel from a foreign port
or place; (2) any foreign vessel from a domestic port; or (3) any
vessel of the United States carrying bonded merchandise, or
foreign merchandise for which entry has not been made, the master
of the vessel shall report the arrival at the nearest Customs
facility. The report of arrival shall be in accordance with the
procedures in section 4.2, Customs Regulations, as amended by
T.D.87-150.
The master of any foreign vessel arriving in a United States
port, whether from a foreign port or another United States port,
is required to make vessel entry under title 19, United States
Code, section 1435 (19 U.S.C. 1453), and section 4.3 of the
Customs Regulations (19 CFR 4.3). Such vessels are also required
to clear when bound for a foreign port, and must have a permit to
proceed from one United States port to another.
Title 46, United States Code, Appendix, section 104 (46
U.S.C. App. 104), authorizes the issuance of cruising licenses to
pleasure vessels of countries which extend reciprocal privileges
to United States pleasure vessels. United Kingdom is such a
country. Section 4.94 of the Customs Regulations, concerns the
issuance of cruising licenses which exempt foreign yachts from
formal entry and clearance procedures. Subsequent to the receipt
of the cruising license, yachts may arrive and depart from the
United States and cruise in specified waters of the United States
without entering and clearing, without filing manifests and
obtaining or delivering permits to proceed, and without the
payment of entrance and clearance fees, or fees for receiving
manifests and granting permits to proceed, duty on tonnage,
tonnage tax, or light money. The license is granted subject to
the condition that the vessel will not engage in trade or violate
the laws of the United States in any respect.
The master, however, of a foreign pleasure vessel with a
cruising license is required to report the vessel's arrival at
each United States port as provided in 19 U.S.C. 1433.
Cruising licenses, as their name implies, are intended for
the use of foreign vessels on relatively brief cruises in the
United States and are not to be used as a form of permanent
license to permit a foreign vessel to remain indefinitely in our
waters.
This letter addresses only those federal requirements which
are administered by the Customs Service. Questions relating to
the vessel's registration and documentation, and vessel safety
requirements should be directed to the United States Coast Guard
at the following address:
Mr. Thomas Willis
Chief, Vessel Documentation
U.S. Coast Guard (GMVI-6/13)
2100 Second Street., SW (Room 1312)
Washington, D.C. 20593-0001
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch