VES-12-02-RR:IT:EC 114301 GEV
Josann M. Reynolds
25 Hickory Hollow
Madison, Wisconsin 53705
RE: Yacht; Dutiability; Documentation; Importation; Exportation
Dear Ms. Reynolds:
This is in response to your letter dated March 18, 1998,
concerning potential duty to be paid on a personal purchase of a
motor cruiser. Our position on this matter is set forth below.
FACTS:
The vessel in question was originally built in Taiwan and
brought into the U.S. circa 1985 by Marine Traders International
of New Jersey. It was formally entered, duty-paid, and
documented by the U.S. Coast Guard with a recreation endorsement.
There were two prior private owners and the purchase presently
being contemplated is from the third and current owner, a
Canadian citizen. For insurance and business purposes the
current owner found it necessary to remove its U.S. documentation
and register it under the laws of Canada. Although such Canadian
registration occurred in 1995, the vessel itself has never
entered Canada and no Canadian duty was ever paid on it. Under
the current ownership the vessel has remained in U.S. waters on a
cruising license with the exception of annual holiday cruises by
the owners to the Bahamas. The speculative owners now propose to
purchase the vessel and redocument it under the laws of the
United States.
ISSUE:
Whether, under the facts of this case, the above-described
foreign-built vessel would again be subject to duty upon its sale
to U.S. citizens.
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LAW AND ANALYSIS:
The determination as to 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. In this regard we
note that 101.1(k), Customs Regulations (19 CFR 101.1(k))
defines "exportation" as "...a severance of goods from the mass
of things belonging to this country with the intention of uniting
them to the mass of things belonging to some foreign country."
Intent is to be determined from the facts and circumstances
surrounding a given case. It should be noted, however, that in
interpreting 101.1(k), it has been held that the intention of
the parties at the time of shipment abroad is the controlling
factor in the determination of whether or not the shipment is an
exportation. F.W. Meyers & Co., Inc., v. United States, 29 Cust.
Ct. 202, C.D. 1468 (1952)
With respect to an imported, duty-paid, U.S.-flagged yacht,
Customs has held that "[m]erely removing a yacht from U.S.
territorial waters on a temporary foreign pleasure cruise with
the intent to return the yacht to the United States would not
constitute an exportation." (see Customs ruling letter 103386,
dated September 27, 1978, published as C.S.D. 79-85) In
addition, it should be noted that any past or future transfers of
ownership 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
101.1(k). (Customs ruling letter 109248, dated December 9, 1987)
Our position as to whether an exportation has occurred with
respect to an imported, duty-paid yacht that, for whatever
reason, is foreign-flagged would be in concert with that
regarding a U.S.-flagged yacht as stated above. A yacht's
country of documentation is not in and of itself determinative as
to whether an importation has occurred, but rather, is one of any
number of factors to be considered in determining whether the
person bringing it into the United States did so with the intent
that it remain in this country permanently. (See American
Customs Brokerage Co., Inc., A/C Astral Corp. v. United States,
72 Cust. Ct. 245, 254, C.D. 4556, citing Estate of Lev H.
Prichard v. United States, 43 CCPA 85, 87-88; see also Customs
ruling letter 223889, dated July 8, 1998) The same rationale
applies when speaking in terms of whether an exportation has in
fact taken place (i.e., country of documentation is but one of
any number of factors to be considered and not per se the
controlling factor). (See Estate of Lev H. Prichard v. U.S., 43
CCPA 85, 89; see also David B. Roberts v. U.S., 17 CCPA 215, 217)
Upon reviewing this matter, we note that the vessel in
question was previously imported into the United States and
documented under the laws of this country. Although its current
owner is a Canadian citizen who had the vessel documented under
the laws of Canada, the vessel has never entered Canada and no
Canadian duty was ever paid on it. Furthermore, during this
ownership the vessel has remained in the United States with the
exception of annual holiday cruises to the Bahamas. Given the
totality of these circumstances, we have determined that the
subject vessel has not been exported from the United States
within the meaning of 101.1(k), Customs Regulations.
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HOLDING:
Under the facts of this case, the above-described foreign-built vessel would not be subject to duty upon its sale to U.S.
citizens.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch