ENT-1-03-CO:R:C:E 223889 PH
Mr. Robert K. Gardiner
1579 East Cumberland Boulevard
Milwaukee, Wisconsin 53211
RE: Dutiability of Sailboat Documented in the United States but
not Brought into the United States; Importation, What Is;
General Note 1, HTSUSA; 19 CFR 101.1(h), 141.1(a)
Dear Mr. Gardiner:
In your letter of April 9, 1992, to the Carrier Rulings
Branch, you requested written confirmation that documenting a
foreign-built yacht with the United States Coast Guard does not
constitute an importation of the yacht if the yacht remains in
Europe and is not brought to the United States. Your letter has
been forwarded to this Branch for direct response. Our ruling
follows.
FACTS:
You state that you are contemplating the purchase of a
sailboat in Sweden for your personal use. You do not plan to
bring the vessel to the United States at any time. You plan to
document the vessel with the United States Coast Guard, even
though the vessel remains abroad. You ask whether, under these
circumstances, the vessel will be considered to have been
imported and will be subject to duty and luxury tax.
(Note: We assume that the luxury tax you refer to is that
provided for by section 11221(a) of the Omnibus Budget
Reconciliation Act of 1990 (Public Law 101-508; 26 U.S.C. 4002).
We defer to the Internal Revenue Service as to the applicability
of this tax. This ruling is limited to the applicability of
Customs duties and does not address the applicability of this
tax.)
ISSUE:
Does the documentation under the flag of the United States
of a yacht which is not brought into the United States constitute
an "importation" of the yacht so that it is subject to Customs
duties?
LAW AND ANALYSIS:
General Note 1 of the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA) (19 U.S.C. 1202) provides that
"[a]ll goods provided for in this schedule and imported into the
customs territory of the United States from outside thereof are
subject to duty or exempt therefrom as prescribed in general
notes 3 and 4." The customs territory of the United States is
defined in General Note 2, HTSUSA, as including "... only the
States, the District of Columbia and Puerto Rico." Section
141.1(a), Customs Regulations (19 CFR 141.1(a)) provides that:
Duties and the liability for their payment accrue
upon imported merchandise on arrival of the
importing vessel within a Customs port with the
intent then and there to unlade, or at the time
of arrival within the customs territory of the
United States if the merchandise arrives
otherwise than by vessel, unless otherwise
specially provided for.
This is consistent with the decisions of the Courts which
have addressed the meaning of importation (see Cunard S. S. Co.
v. Mellon, 262 U.S. 100, 122 (1923), "Importation ... consists in
bringing an article into a country from outside"; see also The
Sherwin-Williams Co. v. United States, 38 CCPA 13, C.A.D. 432
(1950), and United States v. Estate of Boshell, T.D. 41884 (Ct.
of Cust. App. 1922), and cases cited therein).
In the case under consideration, a vessel would be purchased
abroad and it would be documented under the flag of the United
States while abroad. If the vessel is not brought into the
customs territory of the United States, as defined in General
Note 2, HTSUSA (see above), it would not be considered to be
imported. Therefore, under the foregoing authorities, the
documentation of the vessel under the flag of the United States
under these circumstances (i.e., if the vessel is not brought
into the customs territory of the United States) would not be
considered an importation of the vessel and it would not be
subject to duty. This is consistent with the Customs ruling you
cited in your letter, Ruling 103386, which was published in the
Customs Bulletin as Customs Service Decision (C.S.D.) 79-85.
As you apparently have been advised, if the vessel is
brought to the customs territory of the United States, it may be
subject to duties under the HTSUSA as provided in General Note 1,
HTSUSA, and 19 CFR 141.1(a) (quoted above). In this regard, your
attention is invited to subheading 8903.91.00, HTSUSA (providing
a duty of 1.5% for "[s]ailboats, with or without auxiliary
motor"); U.S. Note 1 to Chapter 89, HTSUSA (containing subheading
8903.91.00), providing that "[v]essels if in use in international
trade or commerce or if brought into the customs territory of the
United States by nonresidents thereof for their own use in
pleasure cruising shall be admitted without formal customs
consumption entry or the payment of duty"; and Astral Corp. v.
United States, 72 Cust. Ct. 245, C.D. 4546 (1974), concerning the
applicability of Customs duties to a yacht brought temporarily
into the United States. (Note: In addition to Customs duties,
merchandise which is formally entered or released in the United
States is subject to a merchandise processing fee of 0.17 percent
of the value of the merchandise (19 U.S.C. 58c; 19 CFR 24.23) and
commercial cargo loaded on or unloaded from a commercial vessel
in certain United States ports is subject to a harbor maintenance
user fee of 0.125 percent of the value of the cargo (26 U.S.C.
4461, 4462; 19 CFR 24.24).)
HOLDING:
The documentation under the flag of the United States of a
yacht which is not brought into the United States does not
constitute an "importation" into the United States of the yacht
and it is not subject to Customs duties as a result of such
documentation.
Sincerely,
William G. Rosoff
Chief
Entry Rulings Branch