HQ 109666: Determination of build of an Zodiac inflatable craft of less than 5 net tons when a part of the craft is built abroad.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                       HQ 109666

                                    October 4, 1988

            VES 3-23/VES 3-02 CO:R:P:C  109666 BEW

            CATEGORY:  CARRIERS

            Mr. Mark O'Dell
            Garden Island Inflatables
            2970 C Waapa Road
            Lihue, Kauai, Hawaii 96766

            RE:  Determination of build of an Zodiac inflatable craft of
                 less than 5 net tons when a part of the craft is built
                 abroad.

            Dear Mr. O'Dell:

                 This in response to your letter of July 15, 1988,
            requesting a ruling that a 23' Zodiac Mark VI HD, HA 828 CP
            inflatable craft will be considered built in the United States
            for purposes of the coastwise laws, after the modifications and
            improvements to the vessel described in the correspondence.

            FACTS:

                 You state that the 23' Zodiac was purchased for $14,280
            from Zodiac of North America.  You state that the 23' Zodiac
            was extensively redesigned by completing the following
            reconstructive work:

                 All seams have been reinforced, the transom was removed,
                 fiberglassed, reinstalled with heavier duty mounts and
                 watersealed off.

                 The thrust board was removed, the underlying seams
                 reinforced, and heavy duty mounting pads were added to the
                 boat;

                 The thrust board was fiberglassed and heavy duty mounts
                 were built for it, the thrust board was reinstalled and
                 watersealed off;

                 Both bow boards were removed, fiberglassed and surfaced
                 with an anti-skid surface;













                                         - 2 -


                 The bottom of the transom was triple reinforced to prevent
                 sand abrasion; and

                 The speed tubes were dismantled and all structural
                 attachment points for the speed tubes were reinforced.

                 In addition, you state that a fiberglass console was built
                 in Hawaii and installed in the craft, along with twin 70
                 HP Johnson engines and American steering products

                 You enclosed documents and invoices showing that the total
            cost for the modifications and additions on the hull and
            superstructure is $13,674,52.  In addition, you state the cost
            the U.S. built motors - $6,954;  and trailer - 2,380, for a
            total reconstruction cost of $22,928.52.

            ISSUE:

                 Is an inflatable foreign-built craft, which has
            substantial modifications and additions performed on the hull
            and superstructure in the United States sufficiently
            substantially modified to be considered a United States-built
            vessel for purposes of the coastwise laws.

            LAW AND ANALYSIS:

                 Generally, the  coastwise laws 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, documented under the laws of, and owned
            by citizens of the United States.  The passenger coastwise law,
            46 U.S.C. App. 289, 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. 12106 and 12110 and their
            predecessors (46 U.S.C. 65i and 65m and, before them, 46 U.S.C.
            11) and consistent with 46 U.S.C. App. 883, 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 any vessel other than a vessel built in, properly















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            documented under the laws of, and owned by citizens of the
            United States, with certain exceptions (see 46 U.S.C.
            12106(a)(2)(B) and 19 CFR 4.80(a)(2) and (3)).

                 Usually, the United States Coast Guard determines whether
            a vessel is built in the United States, for purposes of
            documentation of the vessel, and this determination is followed
            by Customs for purposes of the requirement that vessels
            engaging in the coastwise trade must be built in the United
            States.  Vessels which are of less than 5 net tons, as we
            understand to be true of the Zodiac inflatable craft under
            consideration, cannot be documented under the United States
            flag by the Coast Guard.

                 Qualified vessels of less than 5 net tons are not
            precluded from engaging in the coastwise trade simply because
            they cannot be documented under the laws of the United States,
            however.  Section 4.80(a), Customs Regulations (19 CFR
            4.80(a)), enumerates the vessels which may engage in the
            coastwise trade.  Subparagraph (a)(2) of this section (i.e., 19
            CFR 4.80(a)(2)) provides that no vessel exempt from
            documentation (e.g., of less than 5 net tons) shall transport
            any passengers or merchandise between United States coastwise
            points unless the vessel is owned by a citizen of the United
            States and is entitled to or, except for its tonnage, would be
            entitled to be documented with a coastwise license.  As stated
            above, to be entitled to be documented with a coastwise license
            a vessel must, among other things, be built in the United
            States (46 U.S.C. 12106(a)(2)), with an exception inapplicable
            in this case.

                 Thus, foreign-built inflatable crafts may not be used in
            the coastwise trade.  Customs has ruled, however, that
            inflatable boats which, although originally built abroad, have
            been sufficiently modified or rebuilt in the United States may
            be considered built in the United States, for purposes of the
            coastwise laws (Customs ruling No. 107435/106756, dated
            March 1, 1985, copy enclosed).   In making it determination as
            to whether an imported vessel is rebuilt in the United States,
            Customs considers the alterations and modifications done to the
            hull and fittings and superstructure the critical element.
            Accordingly, we find that the imported Zodiac inflatable craft,
            after completion of the modifications and alterations to the
            hull and fittings of the craft described above, will be
            sufficiently substantially modified to be considered built in
            the United States, for purposes of the coastwise laws.















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            HOLDING:

                 An inflatable foreign-built craft, which has substantial
            modifications and additions performed on the hull and
            superstructure in the United States is sufficiently
            substantially modified to be considered a United States-built
            vessel for purposes of the coastwise laws.

                                              Sincerely,




                                              B. James Fritz
                                              Chief
                                              Carrier Rulings Branch

            Enclosure

























            CO:R:P:C:BEWhiting:9/30/88