CON-9-03 CO:R:C:E 223946 SR
Robert Slomovitz, Chief
National Import Specialist Division
Branch 1
New York Seaport
New York, NY 10048-0945
RE: Subheading 9813.00.50, HTSUS; professional equipment tools
of trade; temporary importation under bond; Jones Act; 41 Stat.
999; 46 U.S.C. App. Section 883.
Dear Sir:
This request for internal advice was initiated by a letter
dated April 3, 1992, from Border Brokerage Company, Customs
Brokers, on behalf of Fraser River Pile & Dredge Ltd. (FRPD), New
Westminster, British Columbia, Canada.
FACTS:
FRPD is involved in the reconstruction project of Port of
Everett Pier No. 1 in Lynwood, Washington. They will be
installing concrete piles and a subsequent deck system. The FRPD
currently believes that two barges will be required which will be
outfitted in New Westminister, B.C., each with cranes and
supplementary deck equipment. They will be towed to the project
site in Washington by a Canadian tug. At the site, one barge
will be prepared for installation of the concrete piles and the
other used for craning and miscellaneous support as required for
cutting off the concrete piles, installation of the formwork,
setting reinforcing steel, pouring the concrete and upon
completion of the concrete work, removal of the formwork.
The piledriving barge will be anchored by 5 anchors. The
pilings will be delivered to the jobsite, possibly from Canada on
a Canadian scow, and will be tied alongside the crane vessel.
The crane will lift a concrete pile from the pile scow and load
it in to the piledriving frame at the forward end of the vessel.
The crane barge's anchor cables will be continually adjusted to
aim the piling into the desired location, at which point the pile
is lowered to the sea bottom and the piledriving hammer is used
to install the concrete pile. When this is done another anchor
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cable adjustment will be made to move the pile driver to set the
next piling, and the process is repeated.
A second Canadian crane barge and an attached work barge
will effect the construction of the docks. This crane barge will
be used in cutting the pilings to the proper height, installing
the formwork, for placing the reinforced steel, pouring concrete,
and for the removal of the concrete framework once it has been
cured. This vessel is continuously dropping off and removing
ancillary equipment and materials to service the project site.
Once the cast-in-place concrete beams have been cured the
proper length of time, a precast concrete deck system consisting
of precast concrete deck panels is placed over the dock area.
The precast deck panels may be from a Canadian supplier. They
are usually delivered via waterborne equipment. They are put
into place by using a waterborne crane.
A fender system may be installed to protect the dock from
damage such as from loads caused by moorage of the vessels. This
fender system may be installed from the water side of the dock.
This may require installation of timber piling and ancillary
bolting, etc. to be installed by one of the vessels already on
the project site. In some cases, the fender system may be
installed utilizing a land crane working off the completed dock
area. The design and completion schedule usually dictate which
method is employed.
ISSUES:
ISSUE 1
Whether the coastwise laws are violated when a non-
coastwise-qualified vessel, in conjunction with a coastwise-
qualified vessel, engages in pile driving and deck construction
operations within coastwise waters.
ISSUE 2
Whether the equipment can be entered free of duty
temporarily under bond according to subheading 9813.00.50,
Harmonized Tariff Schedule of the United States (HTSUS).
LAW AND ANALYSIS:
ISSUE 1
Generally, the coastwise laws (e.g., 46 U.S.C. App. sections
289 and 883, and 46 U.S.C. App. sections 12106 and 12110)
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prohibit the transportation of merchandise or passengers between
points in the United States embraced within the coastwise laws in
any vessel other than a vessel built in and documented under the
laws of the United States, and owned by persons who are citizens
of the United States.
The coastwise law pertaining to the transportation of
merchandise, section 27 of the Act of June 5, 1920, as amended
(41 Stat. 999; 46 U.S.C. App. section 883, often called the Jones
Act), provides that:
No merchandise shall be transported by water, or by land and
water, on penalty of forfeiture of the merchandise (or a
monetary amount up to the value thereof as determined by the
Secretary of the Treasury, or the actual cost of the
transportation, whichever is greater, to be recovered from
any consignor, seller, owner, importer, consignee, agent, or
other person or persons so transporting or causing said
merchandise to be transported), between points in the United
States . . . embraced within the coastwise laws, either
directly or via a foreign port, or for any part of the
transportation, in any other vessel than a vessel built in
and documented under the laws of the United States and owned
by persons who are citizens of the United States . . .
The coastwise laws generally apply to points in the
territorial sea, defined as the belt, three nautical miles wide,
seaward of the territorial sea baseline, and to points located in
the internal waters, landward of the territorial sea baseline, in
cases where the baseline and the coastline differ. These laws
have also been interpreted to apply to transportation between
points within a single harbor.
The meaning of the term "transportation" was recently
established in the case of International Raw Materials, Ltd. v.
Baker, Memorandum Opinion of May 20, 1988 (E.D. Pa, Civil Action
No. 87-2005), which held that "'transportation' of merchandise
occurs when the merchandise is laden at one point and unladen at
another point." See 19 CFR 4.80b (1979). The Customs Service
has consistently held that a non-coastwise-qualified vessel used
as a moored facility within territorial and internal waters does
not engage in the coastwise trade and consequently does not
violate the coastwise laws, or any other law administered by the
Customs Service, provided that the vessel remains stationary.
E.g., C.S.D. 89-107, 23 Cust. B. & Dec., No. 44, 8, 9 (1989).
If, however, the vessel is not stationary while in use, then such
operations would be prohibited by the coastwise laws.
Vessels moving merchandise or passengers between such a
stationary platform and another coastwise point must be
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documented for the coastwise trade. 46 U.S.C. App. sections 289
and 883 (1982 & Supp. III 1985). Furthermore, such barges may
not have any passengers or merchandise aboard during movement
following the completion of the project, provided these sites are
points subject to the application of the coastwise laws. C.S.D.
89-107. Finally, United States law requires that a coastwise-
qualified vessel tow the vessels under consideration between
coastwise points. 46 U.S.C. App. section 316(a)(West Supp.
1990).
Concerning the proposed operations involving the non-
coastwise-qualified pile driving barge, it is stated that said
barge will carry: (1) a crane that will be both laden and
unladen foreign, (2) pilings taken aboard the barge immediately
prior to being driven, without barge movement, at the same site,
(3) concrete, concrete forms, and other tools, and (4) anchors
and steel spuds to hold the vessel in position. Of necessity,
the barge must move the crane from one coastwise point to
another, but as the crane is to remain on board at all times,
transportation of it will not constitute a prohibited coastwise
movement. As the crane will not be repositioned while
transporting any pilings, the individual loading onto and from
the crane barge is also permitted by Section 883. As to the
concrete forms, anchors, steel spuds and other tools, to the
extent that they are laden on the barge and the barge is
subsequently moved to another point where the materials leave the
barge, such activity would be violative of Section 883.
However, the proposed operations in which a coastwise-
qualified "supply barge" which, after being secured to the crane
barge, will act as a replenishing barge to deposit and replace
various supplies consumed aboard the crane barge, present no
violation of Section 883.
The operations in which a non-coastwise-qualified "crane
barge" will, inter alia, cut pilings to size, install steel and
concrete, and attach dock components to the piers under
construction will constitute a violation if the crane barge
transports tools or materials from one point to a second point at
which they are removed from the barge. It is further anticipated
that this vessel will transport parts of pilings to shoreside
from the worksite for discharge. This movement of materials from
one point to another using a non-coastwise-qualified vessel
violates Section 883.
Regarding the transfer of concrete by the shore-based crane
to the work barge for eventual off-loading at the work site, such
an operation will only be allowed if the materials are laden at
one coastwise point and unladen at the same point without
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movement by the vessel. Any unlading at a different coastwise
point constitutes a violation of the 883.
ISSUE 2
The equipment can be brought in free of duty temporarily
under bond according to subheading 9813.00.50, HTSUS, which
provides for professional equipment, tools of trade, repair
components for equipment or tools admitted under this heading,
all the foregoing imported by or for nonresidents sojourning
temporarily in the United States and for the use of such
nonresidents. U.S. Note 1(b) of Subchapter XIII states that
"[f]or articles admitted into the United States under heading
9813.00.50, entry shall be made by the nonresident importing the
articles or by an organization represented by the nonresident
which is established under the laws of a foreign country or has
its principal place of business in a foreign country".
Articles that are admitted temporarily free of duty under
subheading 9813.00.50, HTSUS, must meet the requirements of U.S.
Note 1(a), Section XIII, HTSUS, which provides as follows:
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 . . .
If the equipment brought in under subheading 9813.00.50, HTSUS,
consists of goods originating in Canada, then the bond
requirement is waived under the Canadian Free Trade Agreement as
shown in the Special Duty Rate Column for subheading 9813.00.50,
HTSUS.
HOLDING:
ISSUE 1
The proposed operations discussed above are approved in part
and prohibited in part under the Jones Act.
ISSUE 2
The equipment may be admitted into the United States
temporarily free of duty temporarily under bond according to the
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terms of subheading 9813.00.50, HTSUS, which provides for
professional equipment, tools of trade, repair components for
equipment or tools, imported by or for nonresidents sojourning
temporarily in the United States for the use of such
nonresidents. In order to gain the benefit of duty-free
treatment, the importer must meet all of the accountability
requirements under the U.S. Notes of Subchapter XIII to the
satisfaction of the District Director; however, if the
merchandise is of Canadian origin then the bond requirement is
waived in accordance with the Canadian Free Trade Agreement.
Sincerely,
John Durant
Director