HQ 110565: Protest No. 30019-000913; Vessel Repair Entry No. 110- 0103681-0; Date of Arrival: May 30, 1988, Tacoma, Washington; MV SEALAND MARINER

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 110565
                          July 25, 1990

VES-13-18-CO:R:P:C 110565 LLB

CATEGORY:  Carriers

Chief, Technical Branch
Pacific Region
300 North Los Angeles Street
Post Office Box 2071
Los Angeles, California 90053-3379

RE:  Protest No. 30019-000913; Vessel Repair Entry No. 110-
     0103681-0; Date of Arrival:  May 30, 1988, Tacoma,
     Washington; MV SEALAND MARINER


Dear Sir:

     Reference is made to your memorandum of September 11, 1989,
which forwards the above-captioned protest from the assessment of
vessel repair duties for our determination.

FACTS:

     In May of 1988, the vessel incurred shipyard charges while
in Japan.  Upon consideration of an Application for Relief from
the assessment of duties (decided in Headquarters on February 8,
1989) it was held that certain of the costs associated with a
survey were not dutiable, but other costs associated with the
survey, including those for the purchase of parts and for certain
labor charges, were dutiable.

     The protest presently under consideration concerns the
decision to consider the cost of parts used during the survey to
be dutiable.  It is stated that the parts used were "ship's
spares" which had previously been imported and entered as
merchandise into the United States with duty paid under
applicable tariff item numbers.  The parts were then sent to the
vessel (and, indeed, to other Sea-Land vessels as well), to be
maintained as spares until such time as needed.  Sea-Land
believes it unfair to be charged vessel repair duties on the cost
of materials for which duties have once been paid under
merchandise consumption entries.

ISSUE:

     Whether parts used in the course of conducting a non-
dutiable survey are themselves dutiable, and whether their
dutiability under the vessel repair statute is affected by the
fact that they may have previously been the subject of a duty-
paid merchandise entry.

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides in
pertinent part for payment of an ad valorem duty of 50 percent of
the cost of foreign repairs to a vessel documented under the laws
of the United States to engage in the foreign or coastwise trade.

     Between October 8, 1975, and May 10, 1989, the Customs
position on the foreign installation of United States
manufactured materials was guided by Treasury Decision 75-257
(T.D. 75-257).  This decision holds as follows with regard to
such materials:

     1.   The cost of U.S.-made materials purchased
          abroad by a vessel owner is dutiable under
          section 1466.

     2.   The cost of U.S.-made materials purchased in
          this country by a foreign shipyard (read,
          other than by owner) is dutiable under
          section 1466, even if purchased for a
          specific vessel.

     3.   The cost of U.S.-made materials purchased in
          this country by the vessel owner for foreign
          installation is not subject to duty under
          section 1466.

     4.   The cost of foreign labor used to install any
          material mentioned in the previously-listed
          items is dutiable.  Labor is not dutiable
          when performed by the crew for the
          installation of any materials, foreign or
          U.S.-made, purchased anywhere (1466(a)), or
          by U.S. residents for the installation of
          U.S.-made materials only (1466(d)).

     In a ruling published in the Customs Bulletin of May 10,
1989, Customs departed from T.D. 75-257 by applying the duty
provisions of section 1466 to the cost of U.S.-made and purchased
materials which are not installed by regular crew or U.S.
resident labor.  We are currently evaluating whether that matter
should have been published for comment before full adoption.
Nonetheless, reconsideration of that issue would not necessarily
affect the duty status of foreign-made materials which were
entered for consumption into the United States prior to
exportation for eventual installation.  The fact of entry for
consumption does not convert the materials to products of the
United States.


HOLDING:

     Following thorough consideration of the evidence before us
as well as the applicable precedents, it is our determination
that the protest should be denied in full.

                                Sincerely,




                                Stuart P. Seidel
                                Director, Regulatory Procedures
                                and Penalties Division


CO:R:P:C/LLB/bb/6/21/90