CON-9-04/05/13-03-CO:R:C:E 223212 PH
Cathy Burgess, Esq.
Winston & Strawn
1400 L Street, NW.
Washington, D.C. 20005-3502
RE: T.I.B.; Subheading 9813.00.05, HTSUSA; Unpacking, Inflation,
and Inspection of Liferaft; Vessel Supplies and Equipment (19
U.S.C. 1309)
Dear Ms. Burgess:
In your letter of January 15, 1991, to the Carrier Rulings
Branch of the Customs Service you requested a ruling that certain
liferafts could be imported duty-free as instruments of
international traffic; articles exported and returned, not
advanced or imported in condition; or articles imported
temporarily free of duty under bond. In a ruling dated May 20,
1991 (File: 111468), the Carrier Rulings Branch held that the
liferafts under consideration would not qualify for designation
as instruments of international traffic. In that ruling, the
Carrier Rulings Branch advised you that it was referring your
ruling request to the Entry Rulings Branch and the Special
Classification Branch for action on the remaining issues about
which you asked. This ruling, prepared by the Entry Rulings
Branch, addresses the part of your request dealing with the
temporary importation under bond of the liferafts.
FACTS:
You state that your client in this matter performs the
periodic inspection and safety certification required for
vessels' fire and safety equipment, including liferafts.
Currently, your client brings liferafts ashore for unpacking,
inflation, inspection, and return to the vessel. Because of the
increasing cost of demurrage, your client has designed a
"Liferaft Exchange Program" which is designed "to eliminate the
commercial time pressures on liferaft service that may
potentially affect liferaft safety." In this program, your
client will keep approximately 15 to 20 ready, serviced liferafts
in stock at its station or an approved liferaft station. Your
client will exchange the serviced liferafts with outdated
liferafts from its customers' vessels. These outdated liferafts
will, in turn, be inspected, serviced, and prepared for the next
customer.
You state that your client's customers will be vessels with
flags of convenience. (By this statement, we assume you are
stating that the service provided by your client is only provided
to foreign-flag vessels. We so assume for purposes of this
ruling.) You further state that Customs, pursuant to Chapter 98,
Harmonized Tariff Schedule of the United States Annotated
(HTSUSA), permits your client to temporarily import free of duty
under bond gas cylinders which your client uses in a similarly
designed exchange program.
ISSUE:
May liferafts from one foreign-flag vessel which are brought
ashore to be unpacked, inflated, and inspected and then exchanged
for other liferafts (which are then to be serviced in like
manner) of another foreign-flag vessel be imported free of duty
under the transportation in bond (T.I.B.) provisions in Chapter
98, Subchapter XIII, HTSUSA?
LAW AND ANALYSIS:
Subheading 9813.00.05, HTSUSA, provides for the temporary
duty-free entry of:
Articles to be repaired, altered or processed
(including processes which result in articles
manufactured or produced in the United States).
This is the only T.I.B. provision which could be applicable to
the operation of your client. (I.e., subheading 9813.00.45,
HTSUSA, which is probably the T.I.B. provision under which the
gas cylinders to which you refer are imported, provides for the
duty-free entry under bond of "[c]ontainers for compressed gases,
filled or empty, and containers or other articles in use for
covering or holding merchandise (including personal or household
effects) during transportation and suitable for reuse for that
purpose." Clearly this provision is not applicable to the
liferafts under consideration.)
Pursuant to U.S. Note 1(a) of subchapter XIII, HTSUSA, which
contains subheading 9813.00.05:
The articles described in the provisions of this
subchapter, when not imported for sale or for sale
on approval, may be admitted into the United States
without the payment of duty, under bond for their
exportation within 1 year from the date of
importation, which period, in the discretion of the
Secretary of the Treasury, may be extended, upon
application, for one or more further periods which,
when added to the initial 1 year, shall not exceed
a total of 3 years ....
You state that the liferafts under consideration are brought
ashore to an authorized station where they are "unpacked,
inflated, inspected, and returned to the ship." You state that
this service "takes a minimum of four to five hours." Based on
your description, we conclude that the service provided by your
client consists of only of what you describe, i.e., unpacking,
inflation, and inspection. Only if the inspection uncovers a
defect in the liferafts are any repairs done to the liferafts.
Unpacking, inflation and inspection, by themselves, are not
considered to be repairs, alterations, or processing to or of
imported articles under subheading 9813.00.05, HTSUSA (see
Treasury Decision (T.D.) 78-77 and Customs Service Decision
(C.S.D.) 80-234; United States v. Border Brokerage Co., 48 CCPA
10 (1960, C.A.D. 754); and C.S.D. 80-81, interpreting the
predecessors of subheading 9813.00.05).
In order to enter articles under subheading 9813.00.05,
HTSUSA, there must be an intention at the time of entry that the
articles will actually be repaired, altered, or processed. If,
as appears to be true in this case, the lifeboats must be
inspected after entry before your client will know if they will
need to be repaired or otherwise altered or processed, the
requisite intent does not exist at the time of entry (see C.S.D.
80-81, referred to above). Therefore, the liferafts under
consideration may not be entered under any of the T.I.B.
provisions in subchapter XIII of chapter 98 of the HTSUSA.
As an alternative to the importation procedures you suggest,
your client may wish to consider establishing a Customs bonded
warehouse (see 19 U.S.C. 1555 et seq. and 19 CFR Parts 19 and
144) to service the liferafts. Under 19 U.S.C. 1309(a)(2),
"supplies (including equipment) ... of foreign vessels employed
in the fisheries or in the whaling business, or actually engaged
in foreign trade or [certain trade between the United States and
its possessions or between the contiguous States and the non-
contiguous States of the United States]" may be withdrawn, under
the Customs Regulations (see 19 CFR 10.59 et seq.), from a
Customs bonded warehouse free of duty and internal revenue tax.
Liferafts are considered to be equipment for purposes of 19
U.S.C. 1309(a)(2) (see H. E. Warner, Trustee, American Mail Line,
Ltd. v. United States, 28 CCPA 143 (1940, C.A.D. 136); T.D.
49815(4); and Legal Determination (L.D.) 3730-02). Please note
that this procedure is only available for foreign-flag vessels
engaged in the qualifying trade. We are enclosing a copy of
Customs pamphlet, U.S. Customs Bonded Warehouse, for your
information in this regard.
HOLDING:
Liferafts from one foreign-flag vessel which are brought
ashore to be unpacked, inflated, and inspected and then exchanged
for other liferafts (which are then to be serviced in like
manner) of another foreign-flag vessel may not be imported free
of duty under the transportation in bond (T.I.B.) provisions in
Chapter 98, Subchapter XIII, HTSUSA.
Sincerely,
John Durant, Director
Commercial Rulings Division