VES-13-18-R:IT:C 113445 GOB
Port Director of Customs
Attn: Vessel Repair Liquidation Unit
423 Canal Street, Room 303
New Orleans, Louisiana 70130-2341
RE: Vessel Repair Entry No. C15-0019322-7; 19 U.S.C. 1466; 19 U.S.C. 1466(d)(2);
M/V GREEN RIDGE, V-24; Protest
Dear Sir:
This is in response to your memorandum dated May 12, 1995, which forwarded
the protest submitted by Central Gulf Lines, Inc. ("protestant") with respect to the
above-referenced vessel repair entry.
FACTS:
The record reflects that the M/V GREEN RIDGE ("the vessel") arrived at the port
of Sunny Point, North Carolina on February 11, 1993 and subsequently filed the subject
vessel repair entry.
In Ruling 112934 dated December 9, 1993, we denied the petition for relief with
respect to the subject entry. In that ruling we stated:
...the petitioner's request for relief must be denied absent evidence indicating the origin of the parts referenced to in the LAMARCO and the General Engineering invoices.
ISSUE:
Whether the subject costs are dutiable pursuant to 19 U.S.C. 1466. If so,
whether the duty is subject to remission pursuant to 19 U.S.C. 1466(d)(2).
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LAW AND ANALYSIS:
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.
19 U.S.C. 1466(d)(2) provides for the remission or refund of duties:
If the owner or master of such vessel furnishes good and sufficient evidence
that-
...
(2) such equipments or parts thereof or repair parts or materials, were manufactured or produced in the United States, and the labor necessary to install such equipments or to make such repairs was performed by residents of the United States, or by members of the regular crew of such vessel.
T.D. 75-257 states in part:
...the cost of materials of United States origin which are purchased by the vessel
owner in the United States is not subject to duty under 19 U.S.C. 1466, when installed on the vessel in a foreign country.
In order to receive remission under 19 U.S.C. 1466(d)(2), U.S. manufacture or
production must be established, in addition to the establishment that the labor was
performed by U.S. residents or members of the regular crew of the vessel.
In order to receive duty-free treatment pursuant to T.D. 75-257, U.S. origin must
be established. T.D. 75-257 applies only to materials; it does not apply to labor. T.D.
75-257 pertains to nondutiability under 19 U.S.C. 1466(a); it does not pertain to
remission under 19 U.S.C. 1466(d)(2).
To establish U.S. manufacture, production, or origin, an applicant must submit a
statement from the vendor or manufacturer of the merchandise that such merchandise
was manufactured or produced in the United States.
In Ruling 112728 dated October 8, 1993, we stated:
...it is Customs position that the cost of U.S.-resident labor is not subject to duty under 19 U.S.C. 1466 when no equipments, parts, or materials are used in conjunction with the expertise of U.S. labor. (Emphasis supplied.)
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In Ruling 112728, the two-pronged test of 19 U.S.C. 1466(d)(2) was deemed to
be satisfied because U.S. labor was used and there were no equipment, parts, or
materials used.
The facts in the case at issue differ from the facts in Ruling 112728 in that the
record indicates that equipment, parts, or materials were used in conjunction with the
expertise of U.S. labor in the case at issue.
Our ruling on the petition in this case, Ruling 112934 dated December 9, 1993,
stated this distinction. It stated:
...Headquarters Ruling 112728 (Oct. 8, 1993) holds that the cost of U.S.-resident
labor is not subject to duty under 19 U.S.C. 1466 if no foreign parts, equipment,
or materials are used in conjunction with the expertise of U.S. labor. However, the use of U.S.-labor in conjunction with foreign parts, equipment, or materials is
dutiable pursuant to 19 U.S.C. 1466(d)(2).
With its protest, the protestant has submitted a statement from Louisiana
Maintenance & Repair Co., Inc. ("LAMARCO") that "...all parts/materials furnished by
LAMARCO in the above repairs were of U.S. origin, manufactured in the U.S." Such
statement, in conjunction with LAMARCO's statement with respect to the use of U.S.
residents, is sufficient for remission pursuant to 19 U.S.C. 1466(d)(2). Accordingly, the
protest is granted with respect to the LAMARCO repairs.
The protestant has not submitted a statement from the vendor or manufacturer
with respect to the U.S. manufacture or production of the equipment, parts, or materials
supplied by Diesel Injection & Governor Service ("DIGS") and/or General Engineering
& Machine Works. Accordingly, the protest is denied with respect to these repairs.
HOLDING:
As detailed supra, the protest is granted with respect to the LAMARCO repairs.
The protest is denied with respect to the costs incurred with respect to DIGS and
General Engineering & Machine Works.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated
August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by
your office 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 take steps to make the decision available to Customs
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personnel via the Customs Rulings Module in ACS and the public via the Diskette
Subscription Service, the Freedom of Information Act and other public access
channels.
Sincerely,
Harvey B. Fox
Director
Office of Regulations and Rulings