LIQ-15: RR:CR:DR
229506 LLB
Category: Liquidation
U.S. Customs Service
Attn: Joseph J. Wilson
111 West Huron Street, Room 603
Buffalo, NY 14202
Re: Internal Advice; Entry 112-xxxx88-9; Harbor Maintenance Fees; 26 U.S.C. § 4462; 19 C.F.R. § 24.24; Inland Waterway Fuel Tax; 26 U.S.C. § 4042; 33 U.S.C. § 1804
Dear Mr. Wilson:
We have reviewed your internal advice request of March 29, 2002, initiated pursuant to 19 C.F.R. § 177.11, by Tower Group International on behalf of their client, Babcock and Wilcox Canada. Our decision follows.
FACTS
The entry in question involves a shipment of steam generators. The following facts were provided by Babcock and Wilcox (Babcock). On September 7, 2001, the merchandise in question was shipped by barge from the Port of Toronto. The barge was towed across Lake Ontario to the Oswego Canal, at which time it proceeded through the Oswego Canal and the Erie Canal to the Hudson River to Sandy Hook, New Jersey. The tow continued down the Atlantic coast of New Jersey, through the Delaware Bay, through the Delaware-Chesapeake Canal and down the Chesapeake Bay. The merchandise was unloaded at a customer’s private jetty at Calvert Cliffs, Maryland. At entry, the harbor maintenance fee was assessed, which according to the Automated Commercial System (ACS), Babcock paid. ACS further reflects that this entry has not been liquidated.
ISSUE
Whether Calvert Cliffs, Maryland is considered a port subject to the HMF
a.)If so, whether Babcock is exempt from the paying the HMF
LAW and ANALYSIS
The statutory authority for the harbor maintenance fee is found in the Water Resources Development Act of 1986. Pub. Law 99-662; 100 Stat. 4082, 4266; 26 U.S.C. § 4461, et seq. Under this statute, a fee is imposed for the use of a port, defined as any channel or harbor or component thereof in the United States which is not an inland waterway, is open to public navigation, and at which Federal funds have been used since 1977 for construction, maintenance, or operation. The Customs Regulations promulgated under the authority of the statute, 19 C.F.R. § 24.24, list the ports subject to the HMF.
Babcock argues that like the facts in HQ 223593 (May 11, 1992), the dock where the subject merchandise was unloaded, was not subject to the HMF. In HQ 223593, the protestant unloaded merchandise on a company-owned dock at Cherry Point, Washington and entry was made at Bellingham, Washington. When initially promulgated, the ports in the Puget Sound listed as being subject to the harbor maintenance fee included Bellingham, with a note "Includes only the ports listed." See T.D. 87-44. In T.D. 92-7, section 24.24 was amended and the following was added to the notes regarding Puget Sound ports: "Bellingham includes all of Bellingham Bay and tributary waters north of Chuchanut Bay on the east, and Portage Island on the west." Insofar as the dock at Cherry Point was not within the foregoing geographical boundary, Customs held that the merchandise that was unloaded at that location was not subject to the HMF.
The facts in HQ 223593 are distinguishable from the current case. Here, the ports in the Chesapeake Bay listed in § 24.24(b)(1), as being subject to the HMF, “[i]ncludes all Maryland points on the Chesapeake Bay and its tributary waters except the Potomac River.” According to the port area map, Calvert Cliffs is located on the Chesapeake Bay and therefore, is within the geographical boundary outlined in § 24.24(b)(1). Insofar as Calvert Cliffs falls within the geographical boundary of the Chesapeake Bay, the merchandise unloaded there is subject to the HMF.
* * *
Pursuant to 19 C.F.R. § 24.24(a), “[c]ommercial cargo loaded or unloaded from a commercial vessel is subject to a port use fee of 0.125 percent . . . of its value . . . unless exempt under paragraph (c) of this section or one of the special rules in paragraph (d) of this section is applicable.” Subsection (c)(5) exempts from payment of the HMF, “[c]ommercial vessels, if any fuel used to move the cargo is subject to the Inland Waterway Fuel Tax . . .” Without citation to the regulations, Babcock argues that it was exempt from paying the HMF for a 1995 shipment that was identical to the subject shipment insofar as the 1995 shipment also involved towing merchandise to a customer’s private jetty in Florida. In support of its argument, Babcock refers to an April 4, 1995, letter sent to it from Customs’ Budget Division, Office of Finance. The letter generally states that HMF was not due on the journey described therein because the Inland Waterway Fuel Tax was paid. As discussed above, payment of the Inland Waterway Fuel Tax exempts payment of the HMF. 19 C.F.R. § 24.24(c)(5).
The circumstances described in the April 4, 1995, letter are distinguishable from the current transaction. Pursuant to 26 U.S.C. § 4042, a fuel tax is imposed on fuel used in the commercial transportation on inland waterways. Subsection (d)(2) of the statute defines inland or intracoastal waterway of the United States by the description provided in section 206 of the Inland Waterways Revenue Act of 1978 which is codified at 33 U.S.C. § 1804. The route described by Babcock for the September 7, 2001, shipment, does not fall within any of the inland and intracoastal waterways described in § 1804; therefore, the movement of the shipment was not subject to the fuel tax. Insofar, as the movement of the shipment was not subject to the fuel tax, the shipment does not qualify for an exemption from payment of the HMF under 19 C.F.R. § 24.24(c)(5).
Based on our review of the facts presented, the shipment in question does not fall within any of the exemptions in § 24.24(c) or the special rules in subsection (d); therefore, HMF was properly assessed at .125% of the entered value pursuant to § 24.24(a).
HOLDING
The subject merchandise unloaded at Calvert Cliffs, Maryland is subject to the HMF insofar as it is within the geographical boundary described in 19 C.F.R. § 24.24(b)(1), for Chesapeake Bay Ports in Maryland. Inasmuch as the merchandise or the movement thereof, does not qualify under any exemptions or special rules under 19 C.F.R. § 24.24(c) and (d), HMF was properly assessed at .125% of the entered value pursuant to § 24.24(a).
Sixty days from the date of the decision, the Office of Regulations and Rulings
will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division