HQ 112999: Vessel Repair; Petition for Review; Spare Parts; 19 U.S.C. 1466(h); Vessel Repair Entry No. C53-0020954-7; Date of Arrival: December 21, 1992; Port of Arrival: Corpus Christi, Texas; Vessel: S/S MONTRACHET

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 112999

                            May 23, 1994

VES-13-18-CO:R:IT:C  112999 DEC

CATEGORY:  Carriers

Regional Director
Commercial Operations Division
ATTN:  Vessel Repair Liquidation Unit
New Orleans, Louisiana  70130

RE:  Vessel Repair; Petition for Review; Spare Parts; 19 U.S.C.
      1466(h); Vessel Repair Entry No. C53-0020954-7; Date of
     Arrival:  December 21, 1992; Port of Arrival:  Corpus
     Christi, Texas; Vessel:  S/S MONTRACHET

Dear Sir:

     This ruling is in response to your memorandum dated January 10,
1994, which forwards the petition for review filed in connection
with the assessment of vessel repair duties on the above-referenced
vessel for our review.


FACTS:

     The S/S MONTRACHET is an American-flag vessel owned by Crest
Tankers, Inc.  The subject vessel arrived in the United States after
having extensive foreign repair work performed at a shipyard in
Croatia, during the period of November 4 through December 1, 1992.  
On December 8, 1993, the vessel operator received the ruling letter
on the application for relief (Headquarters Decision 112756 (Nov. 1,
1993)).  The vessel operator has timely filed this petition for
review.


ISSUE:

     Whether the work performed upon the subject vessel involving
the use of spare parts is subject to duty pursuant to 19 U.S.C.
 1466.


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 

                                 -2-


the laws of the United States to engage in foreign or coastwise
trade, or vessels intended to engage in such trade.

     Title 19 United States Code, section 1466(d) states that:

           If the owner or master of such vessel furnishes good and
           sufficient evidence that-
           . . . 
                (2)  such equipments or parts thereof or repair
                     parts or materials, were manufactured or
                     produced in the United States, and the labor
                     necessary to install such equipments or to
                     make such repairs was performed by residents
                     of the United States, or by members of the
                     regular crew of such vessel . . .

           then the Secretary of the Treasury is authorized to
           remit or refund such duties . . . (emphasis added).

19 U.S.C.  1466(d)(1993).

     The provisions set forth in 19 U.S.C.  1466(h) expired on
December 31, 1992.  In the subject case, the vessel entered the
United States prior to the expiration of this statutory provision. 
Accordingly, this ruling letter on the issue of the dutiability of
spare parts will be treated pursuant to the rules of law in effect
at the time the vessel formally made entry.  Section 1466(h)
provided, in pertinent part that:

           (h)  The duty imposed by subsection (a) of this section
                shall not apply to--

                (2) the cost of spare repair parts or materials
                (other than nets or nettings) which the owner or
                master of the vessel certifies are intended for use
                aboard a cargo vessel, documented under the laws of
                the United States and engaged in the foreign or
                coasting trade, for installation or use on such
                vessel, as needed, in the United States, at sea, or
                in a foreign country, but only if duty is paid under
                appropriate commodity classifications of the
                Harmonized Tariff Schedule of the United States upon
                first entry into the United States of each such
                spare part purchased in, or imported from, a foreign
                country.

     While section 1466(h) applies by its terms only to foreign-
made imported parts, there is 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 (d)(2) with the assessment provisions of subsection (a) 

                                 -3-


of section 1466 would obligate operators to pay duty on such
materials unless they were installed by crew or resident labor.  

     If an article is claimed to be of U.S. manufacture, there must
be proof of its origin in the form of a bill of sale or domestic
invoice.  If a foreign manufactured article is claimed to have been 
previously entered for consumption, duty paid by the vessel
operator, there must be proof of this fact in the form of a
reference to the consumption entry number for that previous
importation, as well as to the U.S. port of importation.  If
imported articles are purchased in the United States from a party
unrelated to the vessel operator, a domestic bill of sale to the
vessel operator must be presented.  

     Further, with regard to imported articles, a certification on
the CF 226 or an accompanying document prepared by a person with
direct knowledge of the fact that an article was imported or
purchased for the purpose of either then-existing or intended future
installation on a company vessel must be presented.  Ordinarily, the
vessel's master would not have direct knowledge of this fact, and an
agent may also be without such knowledge.  The second certification
required by 19 U.S.C. 1466(h)(2) as to the vessel's documentation
(foreign or coasting trades) and service (cargo vessel), will be
made by the master on the vessel repair entry (CF 226) at the time
of arrival.

     If the elements stated above are proven to the satisfaction of
Customs, the cost of foreign labor utilized for installation of
U.S.-made or previously imported articles will be subject to duty
under section 1466 in matters concerning repairs, and only the cost
of qualifying materials used in repairs will be free of duty.

     The application for relief was denied and the decision is now
petitioned for review with respect to the invoices from Kansas
Packing, Inc., the Mariners-Astubeco, Inc., Texas Marine Supply, and
World Wide Metric (Order No. 890346).  Upon a review of the invoices
and supporting evidence, the Customs Service finds that evidence
submitted with respect to the Kansas Packing Company, Inc.,
Mariners-Astubeco, Inc. and Texas Marine Supply supports a finding
that the invoiced parts were of U.S.-origin or manufactured in the
U.S.  While the record contains statements from two of these
companies that the origin of the parts is uncertain, it is the
position of the Customs Service that since a domestic invoice for
the parts was produced, the parts are not subject to duty.  The
petitioner's request for relief is granted.

     The petitioner requests relief from vessel repair duty with
respect to certain items which were deemed dutiable because no
domestic invoice was submitted to Customs.  The vessel operator's
purchase order alone is not sufficient evidence upon which the
Customs Service will grant relief.  Accordingly, relief with respect
to the spare parts accounted for on the vessel operator's purchase 

                                 -4-


order number 1090 (Oct. 23, 1990) is denied.  Since the vessel
repair statute (19 U.S.C. 1466) applies duty to a vessel's equipment
and parts thereof, these unused parts are, presumptively, subject to
duty since they were aboard when the vessel entered the U.S. and
were a part of the vessel's supply of spares.


HOLDING:

     After a thorough review of the record, the petition for relief
is granted in part and denied in part based on insufficient
documentation as to the origin of the spare parts referenced to in
the submitted invoices.  The petitioner should be informed of the
right to file a protest following liquidation of this entry, as
evidenced by the posting of the bulletin notice of liquidation.

                                Sincerely,




                                Stuart P. Seidel
                                Director, International Trade
                                Compliance Division