VES-13-18-CO:R:P:C 111140 GV
Chief, Technical Branch
Commercial Region
Pacific Region
1 World Trade Center
Long Beach, California 90831
RE: Vessel Repair; Entry No. 808-0502976-8; LAWRENCE H. GIANELLA
V-74; U.S. parts; Installation by Crew
Dear Sir:
This is in response to your memorandum dated June 20, 1990,
transmitting an application for relief from duties assessed
pursuant to 19 U.S.C. 1466. You request that we review six (6)
items contained in the above entry. Our findings are set forth
below.
FACTS:
The LAWRENCE H. GIANELLA is a U.S.-flag vessel owned by
Wilmington Trust Company of Wilmington, Delaware, and operated by
Ocean Ships, Inc. of Houston, Texas. The subject vessel had
foreign shipyard work performed on her from September, 1989
through February, 1990. Subsequent to the completion of this
work the vessel arrived in the United States at San Francisco,
California on March 21, 1990. A vessel repair entry was filed on
the date of arrival.
An application for relief, dated May 11, 1990, was timely
filed. The applicant claims, inter alia, that the costs of
various U.S.-made materials shipped foreign and installed by the
vessel's crew are nondutiable (see Exhibits 1, 8, 14, 15, 17, and
18). In support of this claim the applicant submitted an
affidavit from the Engineering Manager for Ocean Ships, Inc.
(Exhibit B), and shipyard invoices of the materials in question.
ISSUE:
Whether the expenses for which the applicant seeks relief
are dutiable under 19 U.S.C. 1466.
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LAW AND ANALYSIS:
Title 19, United States Code, section 1466, provides in
pertinent part, for payment of duty in the amount of 50 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 engage in such trade.
In regard to the items specified for our review (Exhibits 1,
8, 14, 15, 17, and 18) the basis for which relief is sought is
that these items were manufactured and purchased in the United
States, shipped directly to the ship at the foreign shipyard, and
installed by the vessel's crew.
In response to requests for advice regarding the dutiability
under section of 1466 of equipments, parts, repair material,
etc., which have been manufactured and purchased in the United
States for installation abroad on U.S.-documented vessels,
Customs, by memorandum dated April 19, 1989, and published in the
Customs Bulletin of May 10, 1989, held that the use of foreign
labor to install U.S. parts subjects both the parts and labor to
duty. The memorandum further held that the installation of such
parts by U.S. residents or regular crew labor warrants remission
pursuant to section 1466(d)(2).
Upon further review of this matter, however, it appears that
the implementation of Customs policy as set forth in the May 10,
1989, Customs Bulletin should have been preceded by the
publication of a notice in the Federal Register soliciting
comments from interested parties. Accordingly, until such time
as said notice is published, Customs will uphold its position as
delineated in T.D. 75-257, which held that where equipment,
parts, repair materials, etc., which have been manufactured and
purchased in the United States are installed abroad on U.S.-
documented vessels by other than U.S. residents or regular crew,
only the labor alone is dutiable. If the installation of such
articles is performed by U.S. residents or the regular crew,
remission is warranted pursuant to section 1466(d)(2).
In our adherence to the policy set forth in T.D. 75-257,
however, it has come to our attention that affidavits have been
submitted which misrepresent the place of manufacture of the
articles in question. Inasmuch as we have come to learn of this
misrepresentation, it is our policy to require evidence beyond an
affidavit from an interested party to establish U.S. manufacture
and U.S. purchase. Therefore, we require direct evidence of U.S.
manufacture as well as U.S. purchase for remission to be granted.
In the application currently under consideration, the
applicant has submitted invoices for the contested articles which
indicate purchase in the United States. However, the record is
devoid of evidence as to the articles' place of manufacture and
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source of labor with the exception of the affidavit of the
Engineering Manager for Ocean Ships, Inc. (Exhibit B). While
this affidavit is sufficient proof of installation of the subject
parts by members of the crew, it provides no direct evidence of
U.S. manufacture of the parts.
Accordingly, the application is denied with respect to
Exhibits 1, 8, 14, 15, 17 and 18 with the exception of freight
and handling costs listed thereunder.
HOLDING:
The expenses for which the applicant seeks relief are
dutiable under 19 U.S.C. 1466 with the exception of those costs
noted above.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch