HQ 112787: Vessel Importation; Pleasure; United States Citizen; Intent; Cruising.

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 112787

                          July 16, 1993

VES-12-02   CO:R:IT:C  112787  JBW

CATEGORY:   Carriers

Mr. James P. Walsh
Davis Wright Tremaine
701 Pennsylvania Avenue, N.W.
Suite 600
Washington, D.C. 20004-2608

RE:  Vessel Importation; Pleasure; United States Citizen; Intent;
     Cruising.

Dear Mr. Walsh:

     This letter is in response to your inquiry, dated June 30,
1993, in which you request our ruling on the dutiable status of
the yacht CALIXE.

FACTS:

     The yacht CALIXE is a vessel owned by Confresi Bay Limited
(CBL), a corporation organized under the laws of the Island of
Guernsey.  The stock of CBL is owned by two other Guernsey
corporations, Anka Limited and Topaz Investments Limited.  The
stock of those two corporations is held in trust for Craig McCaw,
a resident of the State of Washington.  The  vessel is documented
under the laws of the Commonwealth of the Bahamas.

     The home port of the yacht is Antibes, France.  However, the
beneficial owner of the yacht intends to bring the yacht to
California for approximately one week in July, 1993.  The yacht
will then sail to Vancouver, British Columbia, for part of July
and August and to the State of Washington for part of August.  
The yacht will then be sailed to Antibes.  While in United States
waters, the yacht will be used exclusively for the pleasure of the
beneficial owner; it will not be used for commercial purposes nor
will it engage in trade.

ISSUE:

     Whether a vessel owned by a foreign corporation for the
benefit of a United States citizen that is brought into the United
States for temporary pleasure cruising is an importation, thus
requiring the payment of duty.

LAW AND ANALYSIS:

     United States law requires that all goods imported into the
customs territory of the United States be subject to duty or exempt
from duty as provided for in the Harmonized Tariff Schedule of the
United States (HTSUS).  General Note 1, HTSUS. From this language,
an item must be deemed "imported" for tariff purposes before duty
liability arises.  American Customs Brokerage Co., Inc. A/C Astral
Corp v. United States, 72 Cust. Ct. 245, 253, C.D. 4546, 375 F.
Supp. 1360, 1365-66 (1974)("The Astral").

     The Customs Service has determined that a pleasure vessel
owned by a foreign corporation the primary asset of which is the
vessel or the primary business of which relates to the use of the
vessel is considered owned by a resident of the United States if
a substantial portion of the capital stock is owned by one or more
residents of the United States.  Headquarters Ruling Letter 110970,
dated July 17, 1990.  In the present case, the yacht is owned by
a foreign corporation for a United States resident in whom the
stock of the corporation is owned in trust.  The Customs Service
will therefore impute the ownership of the yacht to the United
States resident for purposes of establishing liability for duty.

     A yacht purchased abroad and brought into the United States
by a United States resident is presumed, in the absence of evidence
to the contrary, to be brought into the United States for use here
"permanently" so that it would be classifiable as imported
merchandise and thus subject to duty.  The Astral, 72 Cust. Ct. at
253-54, 375 F. Supp. at 1366; Estate of Lev H. Pritchard v. United
States, 43 C.C.P.A. 85, 88 , C.A.D. 612 (1956).  This presumption
can be overcome by satisfactory evidence establishing that the
yacht owner did not intend to bring the yacht into this country
permanently.  The Astral, 72 Cust. Ct. at 254, 375 F. Supp. at
1366.  

     The Customs Court in The Astral examined the factors under
which a vessel, which is brought into the United States by a United
States resident, is considered imported.  In that case, a United
States resident had brought into United States waters a foreign-
built and documented pleasure yacht for warranty repairs and an
extended shakedown cruise.  Although the vessel was kept in the
United States principally to ascertain whether the repairs were
properly performed, the court noted that the vessel was used by the
owner for pleasure purposes.  Nevertheless, the court concluded
that the vessel was not imported for tariff purposes.

     The court in The Astral noted the difficulty of divining the
intent of an owner bringing a yacht into the United States:

          Intent is a state of mind which is difficult
          of precise proof and can only be inferred from
          acts and circumstances.  A person's intent is
          usually evidenced by his conduct or
          statements.  Expressions of intent, however,
          may be used for self-serving purposes.  Hence,
          the court must scrutinize them carefully,
          together with the conduct of the person making
          them, and the external circumstances which
          might tend to confirm or refute them.

The Astral, 72 Cust. Ct. at 254, 375 F. Supp. at 1366-67 (citations
omitted).  In determining that the owner did not intend to bring
his yacht permanently into the United States, the court stated that
the owner brought the vessel into the United States for repairs in
the only qualified repair yard available, that design features
demonstrated that the vessel would cruise in the Mediterranean,
that the owner intended to change his residence to Europe, and that
the voyage of the vessel finally terminated in the Mediterranean. 
72 Cust. Ct. at 256, 375 F. Supp. at 1368.  The court stated that
pleasure use by the owner did not change the essential nature of
the shakedown cruise following the repairs.  Id.  While determining
that such use did not constitute an intent to permanently bring the
vessel into the United States, the issue of pleasure cruising by
a United States resident that is unrelated to repairs was not
before the court.

     For duty liability to arise, we must find that the owner
intended to bring the yacht permanently into the United States. 
The term permanent is defined to mean "continuing or enduring in
the same state, status, place, or the like, without fundamental or
marked change...not temporary or transient."  Websters New
International Dictionary 1824 (2d ed. 1953).  The term temporary
is defined to mean "lasting for a time only; existing for a limited
time...."  Id. at 2598.  From these definitions, the time that a
vessel is kept in the United States is a significant factor in
evaluating the owner's intent to permanently bring the vessel into
the United States.  Other factors that may be relevant are: (1) the
regularity that the vessel is used in the United States, (2) the
frequency that the vessel calls at particular ports in the United
States, and (3) the registry and regular berth of the vessel.

     The proposed use of the CALIXE leads us to conclude that the
present intention of the owner is not to bring the vessel
permanently into the United States.  The yacht will remain in the
United States for two to three weeks.  The registry is Bahamian,
and the regular berth of the vessel is France.  There is no
indication that the owner will use the yacht in the United States
for any purpose other than a temporary cruise.  Consequently, the
yacht would not be considered imported for tariff purposes at this
time.  

     As to the contemplated immediate arrival, we note that this
ruling is based on representations as to the use of the vessel. 
An application for a cruising license requires a statement of the
waters in which the yacht will cruise and the length of time that
the vessel will remain in the United States.  19 C.F.R.  4.94(c)
(1993).  Requests not conforming to the guidelines established
above will result in the vessel being assessed duty.  Sale or
chartering of the yacht to United States residents will also result
in duty liability.  

HOLDING:

     The yacht CALIXE, brought into the United States for temporary
pleasure cruising by a United States resident, would not be
considered imported for tariff purposes. 



                              Sincerely,



                              Acting Chief
                              Carrier Rulings Branch