HQ 110462: Petition for Review for Vessel Repair Entry #C27-0034983-3 Vessel: PRESIDENT POLK V-2 Date of Arrival: October 3, 1988 Port of Arrival: San Pedro, California

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 110462
                            January 21, 1990

VES-13-18-CO:R:P:C  110462 LLB

CATEGORY:  Carriers

Chief, Technical Branch
Pacific Region
300 North Los Angeles Street
Post Office Box 2071
Los Angeles, California 90053-3379

Re:  Petition for Review for Vessel Repair Entry #C27-0034983-3
     Vessel:  PRESIDENT POLK V-2
     Date of Arrival:  October 3, 1988
     Port of Arrival:  San Pedro, California

Dear Sir:

     Reference is made to your memorandum of September 8, l989,
which forwards for our consideration a petition for review
regarding our decision in Customs Letter Ruling 110059 (dated
June 21, 1989).

FACTS:

     The vessel in question was delivered new to the owner on
July 17, l988.  According to Coast Guard records, the vessel was
documented as a U.S.-flag vessel on July 18, 1988, in San
Francisco, California.  On September 3, 1988, while on a voyage
from Oakland, California, to Yokohama, Japan, the vessel
sustained damage to the port anchor.  On September 7, 1988, the
owner contacted the builder regarding a replacement for the
damaged anchor.

     One anchor was airlifted from Kiel, West Germany to Hong
Kong for installation, which was completed on September 18, 1988.

     On September 7, 1988, a second anchor was ordered from the
foreign builder for delivery in Oakland, California.  The invoice
price listed for the anchor is 33,730 DM.

     The owner filed an application for relief on the grounds
that the installed anchor was covered under the vessel's warranty
clause.  This application for relief was denied in Customs Letter
Ruling 110059 (June 21, 1989) for lack of sufficient information.
The owner now files a petition for review on the grounds that the
anchor installed was a "spare part" and therefore entitled to
duty-free status.
ISSUE:

     Whether an anchor airlifted from a foreign builder to a
foreign port and immediately installed can be considered a
"spare part" and entitled to duty-free status.

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides, in
pertinent part, that the equipment purchased for and the repairs
made in a foreign country upon a vessel documented under the laws
of the United States to engage in the foreign or coasting trade
or intended to be employed in those trades shall be subject to
the payment of an ad valorem duty of 50 percent on the cost of
that equipment and those repairs.

     It is Customs position that, in certain cases, foreign
shipyard costs for work performed on a vessel prior to its U.S.
documentation are dutiable under section 1466.  The particular
circumstances involved in a case may result in the assessment of
duty.  Such is the case, for instance, when a vessel, although
not documented under U.S. law at the time work is performed, is
intended to be used in foreign or coastwise trade once
documented.  In this case the vessel was intended to be and in
fact was documented for the foreign trade.

     The vessel owner asserts that a listing of the anchor in a
specification booklet which covers the class of vessel under
consideration under "Spare Parts", is sufficient to classify the
anchor as a duty-free spare part.  The Customs Service has held
that a part which is not of such immediate necessity as to be
carried aboard ship is not a spare (see Customs Letter 109463).
Furthermore, Customs Letter Ruling 109424 LLB, upon which the
owner relies, specifically states that only "materials loaded on
the vessels prior to documentation, including spare parts", may
be excused from duty consideration.

     In the instant case the anchor was not loaded onto and
carried with the vessel prior to the date of the vessel's
documentation.  Here, the vessel in question was documented on
July 18, 1988.  The replacement anchor had not been placed aboard
the vessel at that time, but remained with the foreign builder
until being airlifted to Hong Kong in September, l988.
Therefore, the so-called "fleet spare" replacement anchor cannot
be classified as a duty-free spare part within the ambit of 19
U.S.C. 1466.

HOLDING:

     An anchor which is not carried aboard a vessel as a spare,
but rather is airlifted from a foreign builder to a foreign port
and installed cannot be classified as a duty-free spare part.
Accordingly, the petition for review is denied.

                                Sincerely,




                                B. James Fritz
                                Chief
                                Carrier Rulings Branch


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