VES-13-18-CO:R:IT:C 111622 BEW
Chief, Technical Branch
Pacific Region
1 World Trade Center
Long Beach, California 90831
RE: Honolulu Repair Entry No. C32-0006757-8 dated
November 20, 1990, M/V ROVER. Application; vessel repairs,
six-month rule; 19 U.S.C. 1466(e).
Dear Sir:
Reference is made to your memorandum of March 26, 1991,
which forwards for our consideration an Application for Relief
from vessel repair duties filed by OMI Rover Transportation,
Inc., New York, New York, concerning the above-captioned vessel
repair entry.
FACTS:
The vessel M/V ROVER previously owned by Ocean Shipholdings,
Inc., departed the United States on August 11, 1986, and remained
continuously outside the United States until the time it arrived
in the port of Honolulu, Hawaii, on November 16, 1990. The
vessel was delivered to OMI from Ocean Carriers, Inc. in February
1990.
The entire vessel repair entry involves a potential duty of
$430,500.
The applicant has submitted invoices and bank transmittal
forms as evidence of the repairs that were made during the first
six-months after the vessel departed the United States.
You have requested our advice concerning the following
repairs:
Item No. Description
DD Memorandum of Agreement
DD Bank of the Southwest Transmittal
Form
Item No. Description
EE International Paint (Invoice Dated
After 6 months)
EE International Paint (Invoice Dated
After 6 months)
GG Bank of the Southwest Transmittal
Form (Dated After 6 months).
ISSUE:
Whether materials purchased and installed prior the
expiration of the six-month period commencing on August 11, 1986,
1983, may qualify for remission of vessel repair duties assessed
in the present case.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466(a), 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 the foreign or
coastwise trade, or vessels intended to be employed in such
trade.
The vessel repair statute provides in subsection (e) (19
U.S.C. 1466(e)), that when a vessel covered by the vessel repair
statute:
...arrives in a port of the United States two
years or more after its last departure from a
port in the United States, the duties imposed
by [section 1466] shall apply only with
respect to... [purchases and repairs] made
during the first six months after the last
departure of such vessel from a port of the
United States.
The intent of the provision is that duty be collected on
repairs to vessels which may have been taken abroad for the
purpose of obtaining foreign repairs, thus the six-month
limitation on dutiability during periods of extended absence from
the United States.
In this case, relief is sought concerning the above stated
six items of repairs which occurred during the first six months
following the vessel departure from the United States.
Subsection (e) of the statute applies vessel repair duty to
repair parts purchased or repairs made during the first six
months of an extended absence. The statutory language is read
disjunctively to apply, as the situation dictates, to either
purchases or installations. (Customs Ruling Letter 109300,
July 1, 1988). Our findings are set forth below:
Items DD - Memorandum of Agreement and Bank of the
Southwest Bank Transmittal Form - these two documents do
not segregate dutiable items from non-dutiable items,
therefore, the entire amount of $2,264,866 (Singapore
dollars), the total amount stated in the Memorandum of
Agreement, is dutiable. It appears that the Bank
Transmittal, dated April 29, 1987, is payment of only one-
half of the amount ($533,220.55 in U.S dollars) that was
agreed upon.
Item GG - Bank of the Southwest Bank Transmittal Form -
this document does not segregate dutiable items from non-
dutiable items, therefore, the entire amount of $173,954.98,
is dutiable.
Items EE - International Paint Invoice Nos. 642570 and
642572 are both dated August 20, 1987, with a disposition
date of May 22, 1987. It appears from the documents that
these invoices are for paint and paint products of U.S.
origin which were purchased subsequent to the expiration
dated of the six-month period, therefore, the entire amount
listed on both documents are non-dutiable.
HOLDING:
Following a thorough review of the facts in this matter, and
after an analysis of the law and relevant precedents, we have
determined that Items DD and Item GG are dutiable for reason that
the purchases under consideration in these items are not
segregated and were made within the first six months of the
relevant time period under section 1466(e). Items GG are non-
dutiable for reason that these items were purchased subsequent
to the first six months of the relevant time period.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch