HQ 113749: Vessel Repair Entry No. C14-0026892-1; GREEN ISLAND; V-11;Parts; T.D. 75-257; 19 U.S.C. 1466(h)(2)

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 113749

                          July 17, 1996

VES-13-18-RR:IT:EC 113749 GEV

CATEGORY: Carriers

Chief, Vessel Repair Liquidation Unit
U.S. Customs Service
423 Canal Street
New Orleans, Louisiana 70130

RE: Vessel Repair Entry No. C14-0026892-1; GREEN ISLAND; V-11;
Parts; 
       T.D. 75-257; 19 U.S.C.  1466(h)(2)

Dear Sir:

     This is in response to your memorandum dated October 28,
1996, forwarding a petition for review of your decision denying
an application for relief from duties assessed pursuant to 19
U.S.C.  1466.  Our findings are set forth below.

FACTS:

     The GREEN ISLAND is a U.S.-flag vessel owned and operated by
Waterman Steamship Corporation of New Orleans, Louisiana.  During
the voyage in question, the petitioner states that various spare
parts (Item nos. 6 and 7) were purchased in the United States
from domestic vendors and then shipped foreign to be placed on
board.  The vessel subsequently returned to the United States
arriving at Newport News, Virginia, on July 29, 1994.  A vessel
repair entry was timely filed.

     An application for relief, dated October 27, 1994, was also
timely filed.  The application provided that the "...basis for
claiming relief...is that U.S. parts are remissable under section
4.14(c)(3)(ii) of the Customs Regulations."  By letter dated
April 11, 1995, from the Chief, New Orleans Vessel Repair
Liquidation Unit (VRLU), to Waterman Steamship Corporation, the
application for relief was denied with respect to Item nos. 6 and
7 in view of the fact that the evidence submitted was
insufficient to establish that the parts in question were
manufactured in the United States.  A petition for review of the
decision of the VRLU was timely filed by letter dated May 11,
1995.  The petitioner "...maintains that a vendor invoice is
sufficient proof of 
                              - 2 -


origin when the purchase involves spare parts supplied by
domestic vendors."  Consequently, the petitioner has submitted
what is contended to be the requisite documentation to support
his claim for relief.

ISSUE:

     Whether evidence has been presented sufficient to prove that
the parts for which the petitioner seeks relief are non-dutiable
under 19 U.S.C.  1466.

LAW AND ANALYSIS:

     Title 19, United States Code,  1466(a) (19 U.S.C. 
1466(a)), provides in pertinent part for the payment of an ad
valorem duty of 50 percent of the cost of  "...equipments, or any
part thereof, including boats, purchased for, or the repair parts
or materials to be used, or the expenses of repairs made in a
foreign country upon a vessel documented under the laws of the
United States..." 

     The Customs Regulations promulgated pursuant to 19 U.S.C. 
1466 are found at 19 CFR  4.14.  Section 4.14(c)(3)(ii), cited
as the original basis for relief, provides, in pertinent part,
that U.S.-manufactured parts purchased by the vessel owner in the
United States and installed with U.S. labor or by members of the
vessel's regular crew are subject to remission.  (See also 19
U.S.C.  1466(d)(2)).  

      Further in regard to Customs administration of duty
assessment issues (prior to August 20, 1990) under 19 U.S.C. 
1466 regarding alleged U.S.-manufactured parts, the provisions of
Treasury Decision (T.D.) 75-257 are controlling.  That decision
provides that when materials of U.S.-manufacture are purchased by
the vessel owner in the United States for installation abroad by
foreign labor, the labor cost alone is subject to duty under 19
U.S.C.  1466.  When those same materials are purchased by the
owner overseas or purchased in the United States by parties other
than the owner, the cost of the materials themselves (even though
of U.S.-manufacture) was also subject to vessel repair duty. 
With respect to claims for relief under T.D. 75-257, it is
Customs policy to require direct evidence of U.S. manufacture
(e.g., an affidavit by the manufacturer) as well as U.S. purchase
(e.g., bill of sale or domestic invoice) for relief to be
granted.  (Customs ruling letter 111272, dated November 2, 1990)

     The climate with regard to parts shipped abroad from the
United States for foreign installation was transformed on August
20, 1990, when the President signed Public Law 101-382 which
added a new subsection (h) to 19 U.S.C.  1466.  While this
provision applied by its terms only to foreign-made imported
parts, there was ample reason to extend its effect to U.S.-made
materials as well.  To fail to do so would act to discourage the
use of U.S.-made materials in effecting foreign repairs since
continued linkage of remission provisions of subsection
1466(d)(2) with the assessment provisions of subsection (a) of 
1466 would obligate operators to pay duty on such materials
unless they were installed by crew or resident labor.  

                              -3-


Consequently, Customs so extended the duty-free treatment of
subsection (h) to U.S.-manufactured parts.  (See, e.g., Customs
ruling letter 110980, dated April 16, 1991)  

     We note, however, that the entry in this case was made
subsequent to the expiration date of subsection (h) (i.e.,
December 31, 1992).  Although subsection (h) was subsequently
reenacted (see Public Law 103-465), the implementing legislation
contained no provision regarding retroactive treatment for the
subject entry.  Consequently, the provisions of T.D. 75-257
control with respect to the petitioner's claims.    

     In regard to the two items in question, we note the
following.  The evidence submitted with respect to Item 6
consists solely of a signed statement by Waterman's Fleet
Manager.  This documentation is insufficient to warrant relief
under T.D. 75-257.  Accordingly, Item 6 is dutiable.

     The evidence submitted with respect to Item 7 includes both
a U.S. vendor invoice and certification.  This documentation is
sufficient to warrant relief under T.D. 75-257.  Accordingly,
Item 7 is non-dutiable.

HOLDING:

     With respect to Item 6, evidence has been presented
insufficient to prove that the parts for which the petitioner
seeks relief are non-dutiable under 19 U.S.C.  1466.  In regard
to Item 7, evidence has been presented sufficient to prove that
the parts for which the petitioner seeks relief are non-dutiable
under 19 U.S.C.  1466.

      Accordingly, the petition is granted in part and denied in
part.

                              Sincerely,




                              Jerry Laderberg
                              Acting Chief
                              Entry and Carrier Rulings Branch