HQ 111729: Vessel Repair; United States Parts; Spares; Entry; 19 U.S.C. 1466; GREEN WAVE; Entry No. T64-0001101-5.

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 111729

                        February 19, 1992

VES-13-18   CO:R:IT:C  111729  JBW

CATEGORY:   Carriers

Chief, Technical Branch
Commercial Operations
Pacific Region
1 World Trade Center
Long Beach, CA 90831

RE:  Vessel Repair; United States Parts; Spares; Entry; 19
     U.S.C. 1466; GREEN WAVE; Entry No. T64-0001101-5.

Dear Sir:

     This letter is in response to your memorandum of May 14,
1991, which forwards for our review the application for relief
filed in conjunction with the above-referenced vessel repair
entry.

FACTS:

     The record reflects that the subject vessel, the GREEN WAVE,
arrived at the port San Francisco, California, on December 27,
1990.  Vessel repair entry, number T64-0001101-5, was filed on
December 28, 1990.  The entry lists various parts purchased for
the vessel during the course of its foreign voyage.  A bond was
filed to cover the cost of the estimated duties.  Notwithstanding
the possible eligibility of these parts for treatment under 19
U.S.C. 1466(h), no consumption entry was made and no duty was
paid under the Harmonized Tariff Schedule for these parts.  The
vessel operator states that the reason consumption entry was not
made was because of the uncertainty surrounding the entry and
duty treatment by the Customs Service of parts that are
purchased for a vessel and that are carried on that vessel at the
time of first entry of the parts.  In support of its claim, the
vessel operator submits correspondence between this office and
Mr. Edward L. Merrigan in which the treatment of these parts is
discussed.

ISSUE:

     Whether spare parts purchased in a foreign country for a
cargo vessel are subject to vessel repair duties if such parts at
the time of first were not entered under a consumption entry and
duty was not paid under the Harmonized Tariff Schedule of the
United States (HTSUS).

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides in
pertinent part for payment of duty in the amount of fifty percent
ad valorem on the cost of foreign repairs to vessels documented
under the laws of the United States to engage in foreign or
coastwise trade, or vessels intended to engage in such trade.

     The vessel repair statute exempts from duty spare repair
parts or materials that have entered the United States duty-paid
and are used aboard a cargo vessel engaged in foreign or coasting
trade.  19 U.S.C. 1466(h).  The Customs Service has held that
spare parts purchased for a United States-flag cargo vessel
during a foreign voyage are exempt from vessel repair duty under
19 U.S.C. 1466(h) if duty is paid on those parts under the
appropriate HTSUS commodity classification "at the time of their
first entry into the United States" on board that vessel,
provided that the parts are not installed on that vessel.
Headquarters Ruling Letter 111474, dated March 6, 1991.

     This office has stressed, however, that spare parts and
materials of foreign origin were not meant to benefit from nor
will they be permitted to benefit from the duty exemption under
section 1466(h)(2) unless they are landed and regularly entered
as merchandise at the HTSUS rates of duty prior to their foreign
installation.  See Headquarters Letter 111665, dated May 2, 1991.
From the facts presented, no consumption entry was made, nor was
duty paid under the HTSUS.  Rather, a vessel repair entry was
made.  Notwithstanding the alleged confusion, we find the parts
to be subject to duty as provided for under 19 U.S.C. 1466(a).

HOLDING:

     Spare parts purchased for a United States-flag cargo vessel
during a foreign voyage are exempt from vessel repair duty under
19 U.S.C. 1466(h) if duty is paid on those parts under the
appropriate HTSUS commodity classification "at the time of their
first entry into the United States" on board that vessel,
provided that the parts are not installed on that vessel.
Moreover, parts entered for consumption must be landed in the
United States, not merely carried aboard ship.  From the facts
presented, no consumption entry was made, nor was duty paid under
the HTSUS.  Rather, a vessel repair entry was made.  We find the
parts to be subject to duty as provided for under 19 U.S.C.
1466(a).  The application for relief is therefore denied.



                              Sincerely,



                              B. James Fritz
                              Chief
                              Carrier Rulings Branch