HQ 110767: U.S. shipping practices

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 110767

                        February 21, 1990

VES-3-06/07-CO:R:P:C 110767 GV

CATEGORY: Carriers

Mr. Ralph Edwards
U.S. Department of Transportation
Maritime Administration
400 Seventh Street, S.W.
Washington, D.C. 20590

RE:  U.S. shipping practices

Dear Mr. Edwards:

     This is in response to your facsimile transmission dated
January 8, 1990, regarding an inquiry you received from the U.S.
Embassy in Tokyo pertaining to certain U.S. shipping practices.

FACTS:

     A U.S. shipping firm has informed the U.S. Embassy in Tokyo
that it is fairly common practice for a foreign vessel to carry
foreign-bound cargo from one U.S. location to another (e.g., New
York to Long Beach) and then transfer the cargo to a different
foreign vessel of the same line which would actually transport
the cargo to its final foreign destination.  It is stated that
none of the cargo would actually be left at Long Beach but would
continue to its foreign destination.

     In addition, a U.S. shipping firm plans to load foreign-
bound cargo at Yokohama, Japan, transport it to Kobe, Japan, and
then transfer the cargo to another vessel of the same company
that would take the cargo to its final non-Japanese destination.
It is stated that none of the cargo would actually be left at
Kobe.  Furthermore, the U.S. firm in question noted that after
the transfer of the cargo to the second vessel, the vessel upon
which the subject cargo was originally laden would then go into
drydock in Kobe.  This operation purportedly takes place in
Japan approximately once a year.

ISSUES:

     1.  Whether the carriage of foreign-bound cargo by a non-
coastwise-qualified vessel from its U.S. point of lading to a
second U.S. point where it is transshipped to a different vessel
of the same line for transport to its foreign destination
constitutes a violation of 46 U.S.C. App. 883.

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     2.  Whether the carriage of cargo by a U.S.-owned vessel
from one Japanese point to a second Japanese point where it is
transshipped to a different vessel of the same line for transport
to its final non-Japanese destination constitutes a violation of
46 U.S.C. App. 883.

LAW AND ANALYSIS:

     The Customs Service enforces various navigation laws, some
of which deal with the coastwise trade.  Title 46, United States
Code Appendix, section 883 (46 U.S.C. App. 883), the merchandise
coastwise law, often called the Jones Act, provides, in part,
that no merchandise shall be transported between points in the
United States embraced within the coastwise laws, either directly
or via a foreign port, or for any part of the transportation, in
any vessel other than a vessel built in and documented under the
laws of the United States and owned by persons who are citizens
of the United States (i.e., a coastwise-qualified vessel).  See
also sections 4.80 and 4.80b, Customs Regulations (19 CFR 4.80,
4.80b).

     For purposes of section 883, a point in the United States
territorial waters is considered a point embraced within the
coastwise laws.  The territorial waters of the United States
consist of the territorial sea, defined as the belt, 3 nautical
miles wide, adjacent to the coast of the United States and
seaward of the territorial sea baseline.

     In regard to the first scenario described above, the
carriage of cargo by a non-coastwise-qualified vessel from its
U.S. point of lading to another U.S. point for transshipment
constitutes a violation of 46 U.S.C. App. section 883
notwithstanding the fact that the cargo is destined foreign.

     In regard to the second scenario, 46 U.S.C. App. 883 is
inapplicable in view of the fact that the proposed transportation
of cargo does not involve two U.S. points.  Such a transportation
is outside the jurisdiction of the Customs Service for purposes
of cabotage.  We note, however, that title 19, United States
Code, section 1466 (19 U.S.C. 1466), provides in pertinent part
for payment of duty in the amount of 50 percent ad valorem on the
cost of foreign repairs to vessels documented under the laws of
the United States to engage in the foreign or coastwise trade, or
vessels intended to engage in such trade.  Section 4.14(b)(1),
Customs Regulations (19 CFR 4.14(b)(1)), promulgated pursuant to
19 U.S.C. 1466, provides in part that upon first arrival of a
U.S.-flagged vessel in the U.S. the owner or master shall declare
on Customs Form (CF) 226 all equipment, parts, or materials
purchased, and all repairs made, outside the U.S. regardless of
the dutiable value of such items or expenses.  In addition,
pursuant section 4.14(b)(2), Customs Regulations (19 CFR
4.14(b)(2)) such items or expenses shall be entered on CF 226 by
                              - 3 -

the master or owner.  The entry shall be filed with the
appropriate Customs officer at the port of first arrival within
five working days after arrival.  Accordingly, the U.S.-flagged
vessel undergoing drydocking operations in Kobe must declare such
expenses upon its first arrival in the U.S. subsequent to
undergoing such operations and file an entry covering such
expenses within five working days after arrival.  The entry will
then be forwarded to the appropriate vessel repair liquidation
unit for determining the amount of duties due.

HOLDINGS:

     1.  The carriage of foreign-bound cargo by a non-coastwise-
qualified vessel from its U.S. point of lading to a second U.S.
point where it is transshipped to a different vessel of the same
line for transport to its foreign destination constitutes a
violation of 46 U.S.C. App. 883.

     2.  Title 46, United States Code Appendix, section 883 is
inapplicable to the carriage of cargo by a U.S.-owned vessel from
one Japanese point to a second Japanese point where it is
transshipped to a different vessel of the same line for transport
to its final non-Japanese destination.

                                   Sincerely,




                                   B. James Fritz
                                   Chief
                                   Carrier Rulings Branch