VES-13-18-RR:IT:EC 113991 GOB
Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 107
P.O. Box 2450
San Francisco, CA 94126
RE: Vessel Repair Entry No. 110-7994470-5; 19 U.S.C. 1466(a)
and (h)(3); PRESIDENT KENNEDY, V-88E; Petition
Dear Madam:
This is in response to your memorandum dated June 10, 1997,
which forwarded the petition submitted by American President
Lines, Inc. ("APL" or "petitioner") with respect to the above-referenced vessel repair entry.
FACTS:
The PRESIDENT KENNEDY ("vessel"), a U.S.-flag vessel,
arrived at the port of Seattle, Washington on January 30, 1997.
The subject vessel repair entry was timely filed. The vessel
underwent certain foreign shipyard work in Korea and the Republic
of China in January of 1997.
The petitioner asserts that part of the fifth item listed on
the vessel repair entry should be dutiable under 19 U.S.C.
1466(h)(3), rather than under 19 U.S.C. 1466(a). The petitioner
described the item on the vessel repair entry as "store crane
monorail track replacement."
By letter of May 9, 1997, your office determined that the
subject item did not come within the scope of 19 U.S.C.
1466(h)(3), but was dutiable under 19 U.S.C. 1466(a).
ISSUE:
Whether the subject item is dutiable pursuant to 19 U.S.C.
1466(a) or pursuant to 19 U.S.C. 1466(h)(3).
LAW AND ANALYSIS:
19 U.S.C. 1466(a) 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(h)(3) provides:
The duty imposed by section (a) of this section shall
not apply to -
...
(3) the cost of spare parts necessarily installed
before the first entry into the United states, but only
if duty is paid under appropriate commodity
classifications of the Harmonized Tariff Schedules
of the United States upon first entry into the United
States of each such spare part purchased in, or
imported from, a foreign country.
For the purpose of 19 U.S.C. 1466(h), we have defined a
"part" as follows:
A part is determined to be something which does not
lose its essential character or its identity as a
distinct entity but which, like materials, is
incorporated into a larger whole. It would be possible
to disassemble an apparatus and still be able to
identify a part. The term part does not mean part of a
vessel, which practically speaking would encompass all
elements necessary for a vessel to operate in its
designed trade. Examples of parts as defined are seen
in such items as piston rings and pre-formed gaskets,
as opposed to gaskets which are cut at the work site
from gasket material. (Emphasis in original.)
As stated above, the petitioner claims that the fifth item
listed on the vessel repair entry should be dutiable under 19
U.S.C. 1466(h)(3), rather than under 19 U.S.C. 1466(a). The
petitioner described the item on the vessel repair entry as
"store crane monorail track replacement." The foreign vendor's
invoice (invoice no. HYD9701745) describes the item as
"prefabrication of trolley track 11 meters @5,600.-"
We note that the same vendor's invoice describes certain
work which was performed, e.g., "provide service of qualified
fitter/welder ... to attend onboard to put up staging, crop out
bad section of track, and smoth [sic] surface then weld in new
track ..." The file indicates (correctly, in our view) that this
work (i.e., the work described in the previous sentence) is
dutiable under 19 U.S.C. 1466(a) and is not the subject of the
subject petition.
After a consideration of the issue, we find that the subject
item (described as "prefabrication of trolley track..." and
"store crane monorail track replacement") is a part and is
dutiable pursuant to 19 U.S.C. 1466(h)(3).
HOLDING:
The subject item (described as "prefabrication of trolley
track..." and "store crane monorail track replacement") is a part
and is dutiable pursuant to 19 U.S.C. 1466(h)(3).
Sincerely,
Jerry Laderberg
Acting Chief,
Entry and Carrier Rulings Branch