VES-3-02 CO:R:P:C 111212 JBW
Mr. N. Dale Dunham
Emergency Planning Coordinator
San Francisco International Airport
San Francisco, California 94128
RE: Coastwise; Passenger; Hovercraft; Rescue; Classification; 46
U.S.C. App. 289; 46 U.S.C. App. 883; subheading
8901.10.00, HTSUS.
Dear Mr. Dunham:
This letter is in response to your letter of July 25, 1990,
regarding the use of foreign-built hovercraft to perform air
crash rescue in San Francisco Bay.
FACTS:
San Francisco International Airport is examining the use of
hovercraft for air crash rescue, recovery and associated
operations and training on the waters of San Francisco Bay. You
state that hovercraft are almost exclusively manufactured abroad.
We assume for purposes of this analysis that the hovercraft at
issue is designed for use principally over water.
ISSUES:
(1) Whether the coastwise laws prohibit the use of a
foreign-built hovercraft for air crash rescue operations and
training.
(2) What is the classification under United States law of
a hovercraft designed principally for use over water.
(3) Whether a foreign-built hovercraft imported into the
United States is subject to entry and assessment of duty under
United States law.
LAW AND ANALYSIS:
I. Eligibility for Use of a Hovercraft as a Rescue Vessel
under the Coastwise Laws of the United States.
The passenger coastwise law, 46 U.S.C. App. 289 (Supp. III
1985), provides that:
No foreign vessel shall transport passengers
between ports or places in the United States,
either directly or by way of a foreign port,
under a penalty of $200 for each passenger so
transported and landed.
Pursuant to 46 U.S.C.A. 12106 and 12110 (West Supp. 1990)
and consistent with 46 U.S.C.A. App. 883 (1975 & West Supp.
1990) (the coastwise merchandise law), the Customs Service has
consistently held that the prohibition in 46 U.S.C. App. 289
applies to all non-coastwise-qualified vessels. Non-coastwise-
qualified vessels include, with certain exceptions, any vessel
other than a vessel built in, properly documented under the laws
of, and owned by citizens of the United States. 46 U.S.C.
12106(a)(2)(B); 19 C.F.R. 4.80(a)(2)-(3) (1990).
The Customs Service has held that hovercraft, when used as
in this case on or in proximity to water, are considered
"vessels" for purposes of the navigation laws, of which the
coastwise passenger statute is one. See T.D. 56390(1), 100
Treas. Dec. 168 (1965).
The Customs Regulations define "passenger" for purposes of
section 289 as "any person carried on a vessel who is not
connected with the operation of such vessel, her navigation,
ownership, or business." 19 C.F.R. 4.50(b) (1990). Whereas the
use of hovercraft is otherwise within the ambit of the coastwise
laws, the Customs Service has held that the use of a vessel for
rescue work is not considered to be transportation of passengers
or merchandise as defined in the regulations. Consequently, the
utilization of the vessel for rescue work is not considered to be
an engagement in the coastwise trade. T.D. 78-438, 12 Cust. B. &
Dec. 953 (1978); Headquarters Letter Ruling 109373, dated March
28, 1988.
Furthermore, the Customs Service has held that a person
being trained or receiving instruction in the handling or
navigation of a vessel, and whose presence on board the vessel is
required in order to receive such training or instruction, is not
a "passenger" within the coastwise laws. Accordingly, while the
vessel is used for such training, it need not be documented to
engage in the coastwise trade. See Headquarters Ruling Letter
104973, dated January 12, 1981; see also Headquarters Ruling
Letter 109850, dated December 27, 1988, and Headquarters Ruling
Letter 109287, dated February 24, 1988. We conclude that the
coastwise laws do not prohibit the use of a foreign-built
hovercraft for air crash rescue and training operations.
II. Classification and Entry of Hovercraft
under United States Law.
United States law requires that all goods imported into the
customs territory of the United States be subject to or exempt
from duty as provided for in the Harmonized Tariff Schedules of
the United States (HTSUS). The General Rules of Interpretation
(GRI's) set forth the legal framework in which merchandise is to
be classified under the HTSUS. GRI 1 requires that
classification be determined first according to the terms of the
headings of the tariff and any relative section or chapter notes
and, unless otherwise required, according to the remaining
GRI's.
Classified under Heading 8901, HTSUS, are cruise ships,
excursion boats, ferry boats, cargo ships, barges and similar
vessels for the transportation of persons or goods. The
Explanatory Notes, which provide the official interpretation of
the tariff at the international level, include within Heading
8901 "[v]essels of the hydroglider type, hydrofoils and
hovercraft." Hovercraft, being principally designed and used to
transport people over water, are classified in subheading
8901.10.00, HTSUS, under the provision for "cruise ships,
excursion boats and similar vessels principally designed for the
transportation of persons...." The hovercraft under
consideration, assuming it is designed for use principally over
water, would be classified under this provision.
United States Note 1 to Chapter 89, HTSUS, exempts from
formal customs consumption entry and the payment of duty vessels
if in use in international trade or commerce. You state that the
hovercraft will be used exclusively in the San Francisco Bay
area. From this description, we assume that it is unlikely that
the hovercraft will be used beyond the internal or territorial
waters of the United States; consequently, the vessel will not be
used in international trade or commerce. The vessel therefore
does not benefit from this exemption. However, vessels not
classified in Headings 8903 and 8907, subheadings 8905.90.10 and
8906.00.10, or Chapter 98, HTSUS, are excepted from entry. 55
Fed. Reg. 40162, 40166 (October 2, 1990)(to be codified at 19
C.F.R. 141.4(b)).
HOLDINGS:
The coastwise laws of the United States do not prohibit the
use of a foreign-built hovercraft for air crash rescue and
training operations.
Hovercraft, being principally designed and used to
transport people over water, are classified under subheading
8901.10.00, HTSUS. Vessels not classified in Headings 8903 and
8907, subheadings 8905.90.10 and 8906.00.10, or Chapter 98,
HTSUS, are excepted from entry.
We note, however, your statement with respect to the
prospective use of the hovercraft in "associated operations." As
we do not know what such activity entails, we cannot comment as
to the coastwise, entry, duty, or any other implication of this
additional activity.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch