HQ 109701: Conversion of U.S.-flag vessel in a foreign shipyard

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 109701

                                    August 22, 1988

            VES-13 CO:R:P:C 109701 DHR

            Category: Carriers

            James P. Walsh, Esq.
            Suite 800
            1752 N Street NW
            Washington, D.C. 20036

            RE:  Conversion of U.S.-flag vessel in a foreign shipyard

            Dear Mr. Walsh,

                 This is with reference to your letter of August 10,
            1988, concerning the conversion of a U.S.-flag vessel in a
            foreign shipyard.

            ISSUE:

                 Whether the U.S.-flag vessel ENDURANCE (592206), which
            was used as an oil rig supply vessel and has not been in
            the United States since 1980, is exempt from the assessment
            of duty on work done to it in a foreign shipyard.

            FACTS:

                 According to the vessel's log books, the vessel was
            built in the United States in 1978 and was documented under
            the laws of the United States.  The vessel left
            Brownsville, Texas, on April 9, 1980, and headed to
            Capetown, South Africa.  It departed Capetown on June 11,
            1980 for Singapore.  According to the log, the ENDURANCE
            worked as an oil supply vessel in the Java Sea and East
            China Seas until it was laid up in Johore Bahru, Malaysia,
            in January, 1986.  The vessel remained in Malaysia until it
            was sold.  The present owner sailed the vessel from
            Singapore to Pusan, Korea, from July 13 to 14, 1987.  The
            vessel has since remained at the Hyundai Shipyard in Pusan,
            where it is undergoing conversion.

                 Alaska Trawl Fisheries, Inc. intends to return the
            vessel to the United States sometime during the month of
            August or September.

            LAW AND ANALYSIS:

                 Section 1466, title 19, United States Code, provides
            for a duty of 50% to be assessed on equipment purchased for
            and repairs made to vessels documented under the laws of
            the United States to engage in the foreign or coasting
            trade or to a U.S. Vessel intended to be employed in such
            trade.  The duty is to be assessed upon the vessel's first
            arrival in the United States after such purchase of
            equipment or repairs.

                 Subsection (e) of section 1466 exempts from the duty
            provisions vessels designed and used primarily for purposes
            other than transporting passengers or merchandise in trade
            if the Vessel arrives back in the United States two years
            or more after its last departure from the United States.
            This exemption is not operative during the first six months
            after the last departure from the United States.

                 The ENDURANCE was not designed or used primarily to
            transport passengers or merchandise in the foreign or
            coasting trade.  There is nothing in the record to indicate
            the Vessel returned to the United States within two years
            of its last departure nor does the record indicate the
            Vessel purchased equipment or had repairs made in a foreign
            country within six months of its departure.

            HOLDING:

                 In view of the foregoing, the ENDURANCE will not be
            subject to the duty prescribed by 19 U.S.C. 1466 upon its
            arrival back in the United States for the first time since
            its departure in 1980.

                                     Sincerely,



                                          B. James Fritz
                                          Chief, Carrier Rulings Branch