VES-3-02-OT:RR:BSTC:CCR H329892 DMK
Robert M. Kennard
Waterman Logistics, Inc., c/o
Seabulk Fleet Management LLC
RE: 19 U.S.C. § 1466; Vessel Repair; U.S. Origin Goods; M/V GREEN COVE; Seabulk Fleet Management LLC; Protest Number 2022-22-100831; Vessel Repair Entry Number C20-0083507-7
Dear Mr. Kennard;
This letter is in response to your Application for Further Review with regard to the above referenced vessel repair entry.
FACTS
The following facts are from your August 8, 2022, protest and supporting information. During a voyage, the M/V GREEN COVE (“Vessel”) incurred costs subject to declaration as required by 19 U.S.C. § 1466 in various countries. On July 27, 2021, the Vessel arrived at Jacksonville, Florida, and submitted a Foreign Repair Declaration. A complete Vessel Repair Entry and Application for Relief from Vessel Repair Duties was filed. On February 25, 2022, the CBP Vessel Repair Unit issued its determination, assessing vessel repair duties to certain costs.
On August 8, 2022, you submitted a protest regarding whether certain items were exempt from the assessment of vessel repair duties under 19 U.S.C. § 1466. In particular, you contended that Item Nos. 14, 15, and 63 are exempt from vessel repair duties because they were installed on the Vessel by members of the regular crew while the Vessel was on the high seas, in a foreign water, or in a foreign port and did not involve foreign shipyard repairs by foreign labor. Additionally, you contended that Item Nos. 32, 33, 47, and 50 are exempt from vessel repair duties because they are of U.S. origin.
On August 15, 2022, your protest was granted in part and denied in part. In particular, the protest was approved with exception of Item Nos. 47 and 50, because those items are not a class of goods typically installed, under 19 U.S.C. § 1466(h)(4). On August 22, 2022, CBP processed an Application for Further Review of your protest.
ISSUE
Whether Item Nos. 47 and 50 are exempt from vessel repair duties under 19 U.S.C. § 1466?
LAW AND ANALYSIS
Title 19, United States Code, section 1466(a) provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to and equipment for vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to be employed in such trade.
This provision is implemented by 19 C.F.R. § 4.14, which also outlines the bond requirements, entry requirements, and deadlines for submitting evidence of the cost of foreign repairs. Pursuant to 19 C.F.R. § 4.14(e), each vessel repair entry “must show all foreign voyage expenditures for equipment, parts of equipment, repair parts, materials and labor.” In addition, 19 C.F.R. § 4.14(h) states the following:
(h) Justifications for relief from duty. Claims for relief from the assessment of vessel repair duties may be submitted to CBP…
(2) Relief from duty under 19 U.S.C. 1466(d). Requests for relief from duty under 19 U.S.C. 1466(d) consist of claims that a foreign shipyard operation or expenditure involves any of the following: …
(ii) U.S. parts installed by regular crew or residents. Relief will be granted if equipment, parts of equipment, repair parts, or materials used on a vessel were manufactured or produced in the United States and were purchased in the United States by the owner of the vessel. It is required under the statute that residents of the United States or members of the regular crew of the vessel perform any necessary labor in connection with such installations.
Furthermore, 19 C.F.R. § 4.14(i)(1)(i) requires that applications for relief from the assessment of a vessel repair duty must include “[i]temized bills, receipts, and invoices.” Lastly, CBP has held that the burden rests on the protestant to establish, by adequate, clear, and satisfactory documentary evidence, that an item is non-dutiable under 19 U.S.C. § 1466. See HQ H035597 (Oct. 28, 2008).
Pursuant to 19 U.S.C. § 1466(d)(2), a duty may be remitted if good and sufficient evidence is provided establishing “such equipments…were manufactured or produced in the United States, and the labor necessary to install such equipments or to make such repairs was performed by residents of the United States, or by members of the regular crew of such vessel.” Therefore, a two-prong test must be met with respect to granting duty-free treatment to the installation of equipment: (1) U.S. manufacture or production must be established, and (2) the labor must have been performed by U.S. residents or members of the regular crew of the vessel. See HQ H035597 (Oct. 28, 2008).
Similarly, 19 U.S.C. § 1466(h)(4) clarifies that a duty shall not apply to “the cost of equipment, repair parts, and materials that are installed on a vessel documented under the laws of the United States and engaged in the foreign or coasting trade, if the installation is done by members of the regular crew of such vessel while the vessel is on the high seas, in foreign waters, or in a foreign port, and does not involve foreign shipyard repairs by foreign labor.” (emphasis added). This reflects the two-prong test requirement of 19 U.S.C. § 1466(d)(2). CBP has also previously ruled that similar items are not eligible for treatment under 19 U.S.C. § 1466(h)(4), as they are not within the class of goods which are typically “installed” on a vessel. HQ H057060 (Jun. 17, 2009).
Regardless of whether the items in Lines 47 and 50 are within the class of goods which are typically “installed” on a vessel, you have provided no evidence that such installation was performed by residents of the United States or members of the regular crew. Accordingly, the supporting documentation does not meet the criteria for duty to not apply under 19 U.S.C. § 1466(d)(2) or 19 U.S.C. § 1466(h)(4).
HOLDING
Because you have failed to provide evidence fulfilling the requirements of 19 U.S.C. § 466(d)(2) or 19 U.S.C. § 1466(h)(4), your Application for Further Review is DENIED. The items in lines 47 and 50 are dutiable at a rate of fifty percent ad valorem.
Sincerely,
W. Richmond Beevers
Chief, Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade; Regulations and Rulings
U.S. Customs and Border Protection