HQ 109313: Determination of build of an Zodiac inflatable craft of less than 5 net tons when a part of the craft is built abroad.

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 109313

                                     June 2, 1988




            VES 3-23/VES 3-02 CO:R:P:C  109313 BEW

            CATEGORY:  CARRIERS

            Mr. Robert Johnson
            Captain Napali Boat Cruises
            P.O. Box 567
            Hanalei, Hi 96714

            RE:  Determination of build of an Zodiac inflatable craft of
                 less than 5 net tons when a part of the craft is built
                 abroad.

            Dear Mr. Johnson:

                 This in response to your letter of December 20, 1987,
            requesting a ruling that a 23' Zodiac Mark VI HD, HA 598 CP
            inflatable craft will be considered built in the United States
            for purposes of the coastwise laws, after the modifications and
            improvements to the vessel described in the correspondence.

            FACTS:

                 You state that the 23' Zodiac was purchased in 1986 for
            $10,200 from Zodiac of North America.  You state that the 23'
            Zodiac was transformed by you and a Frederick Hanlon by
            completing the following reconstructive work:

                 All above and below water seams were double-taped; the
                 keel was wrapped to provided extra strength; a wide strip
                 of Hypalon material was applied to the area beneath the
                 keel which extends from the bow to the stern to ward off
                 chafing on the bottom of the craft by the keel; a
                 triangular patch was applied to the bottom to strength the
                 area along the transom; the area where the pontoons meet
                 the floor was reinforced by applying two overlapping
                 strips of flange tape the full length of the craft; all
                 areas where the transom meets the pontoons were reinforced
                 with several layers of Hypalon; and the contact areas of
                 the bow board and the pontoons were reinforced with a
                 double flange type of Hypalon.

                 In addition, you state that the console, gas box and
                 battery box, or "T-box" were constructed of marine ply;













                 and then "shot" with fiberglass by Lightnin' Fiberglass of




























































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                 Kauai; that these boxes were mounted onto the deck of the
                 craft using stainless through bolts; the transom was
                 stripped of its finish, the factory made bolt holes were
                 filled with wooden dowels, and a marine epoxy resin was
                 applied; the transom was reshaped in order to accommodate
                 the motors that were to be bolted to the transom.  An
                 aluminum mounting plate for the throttle controls and
                 stainless motor-mounting bracket plates were fabricated by
                 Ashby's Metal Service of Kauai.

                 You enclosed documents and invoices showing that the total
            cost for the modifications and additions on the hull and
            superstructure is $15,249.43.  In addition, you state the cost
            of safety equipment and batteries -  $1,425.54; the U.S. built
            motors - $7,000;  and freight - $1,187.49, for a total re-
            construction cost of $24,862.46.

            ISSUE:

                 Is an inflatable foreign-built craft, which has
            substantial modifications and additions performed on the hull
            and superstructure in the United States sufficiently
            substantially modified to be considered a United States-built
            vessel for purposes of the coastwise laws.

            LAW AND ANALYSIS:

                 Generally, the  coastwise laws prohibit the transportation
            of merchandise or passengers between points in the United
            States embraced within the coastwise laws in any vessel other
            than a vessel built in, documented under the laws of, and owned
            by citizens of the United States.  The passenger coastwise law,
            46 U.S.C. App. 289, provides that:

                      No foreign vessel shall transport passengers
                      between ports or places in the United States,
                      either directly or by way of a foreign port,
                      under a penalty of $200 for each passenger so
                      transported and landed.

                 Pursuant to 46 U.S.C. 12106 and 12110 and their
            predecessors (46 U.S.C. 65i and 65m and, before them, 46 U.S.C.
            11) and consistent with 46 U.S.C. App. 883, the coastwise
            merchandise law, the Customs Service has consistently held that
            the prohibition in 46 U.S.C. App. 289 applies to all non-
            coastwise-qualified vessels.  Non-coastwise-qualified vessels
            include any vessel other than a vessel built in, properly
            documented under the laws of, and owned by citizens of the
            United States, with certain exceptions (see 46 U.S.C.
            12106(a)(2)(B) and 19 CFR 4.80(a)(2) and (3)).











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                 Usually, the United States Coast Guard determines whether
            a vessel is built in the United States, for purposes of
            documentation of the vessel, and this determination is followed
            by Customs for purposes of the requirement that vessels
            engaging in the coastwise trade must be built in the United
            States.  Vessels which are of less than 5 net tons, as we
            understand to be true of the Zodiac inflatable craft under
            consideration, cannot be documented under the United States
            flag by the Coast Guard.

                 Qualified vessels of less than 5 net tons are not
            precluded from engaging in the coastwise trade simply because
            they cannot be documented under the laws of the United States,
            however.  Section 4.80(a), Customs Regulations (19 CFR
            4.80(a)), enumerates the vessels which may engage in the
            coastwise trade.  Subparagraph (a)(2) of this section (i.e., 19
            CFR 4.80(a)(2)) provides that no vessel exempt from
            documentation (e.g., of less than 5 net tons) shall transport
            any passengers or merchandise between United States coastwise
            points unless the vessel is owned by a citizen of the United
            States and is entitled to or, except for its tonnage, would be
            entitled to be documented with a coastwise license.  As stated
            above, to be entitled to be documented with a coastwise license
            a vessel must, among other things, be built in the United
            States (46 U.S.C. 12106(a)(2)), with an exception inapplicable
            in this case.

                 Thus, foreign-built inflatable crafts may not be used in
            the coastwise trade.  Customs has ruled, however, that
            inflatable boats which, although originally built abroad, have
            been sufficiently modified or rebuilt in the United States may
            be considered built in the United States, for purposes of the
            coastwise laws (Customs ruling No. 107435/106756, dated
            March 1, 1985).   In making it determination as to whether an
            imported vessel is rebuilt in the United States, Customs
            considers the alterations and modifications done to the hull
            and fittings and superstructure the criticial element.
            Accordingly, we find that the imported Zodiac inflatable craft,
            after completion of the modifications and alterations to the
            hull and fittings of the craft described above, will be
            sufficiently substantially modified to be considered built in
            the United States, for purposes of the coastwise laws.



















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            HOLDING:

                 An inflatable foreign-built craft, which has substantial
            modifications and additions performed on the hull and
            superstructure in the United States is sufficiently
            substantially modified to be considered a United States-built
            vessel for purposes of the coastwise laws.

                                              Sincerely,




                                              Kathryn C. Peterson
                                              Chief
                                              Carrier Rulings Branch