HQ 111547: Vessel Importation; Pleasure; United States Citizen; Intent; Repairs; 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 111547

                          April 1, 1991

VES-12-02   CO:R:IT:C  111547  JBW

CATEGORY:   Carriers

Mr. John W. McConnell, Jr.
Haight, Gardner, Poor & Havens
1300 I Street, N.W.
Washington, D.C. 20005

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

Dear Mr. McConnell:

     This letter is in response to your inquiry, dated February
21, 1991, in which you request our ruling on the dutiable status
of the yacht VIRGINIAN.

FACTS:

     The VIRGINIAN is a pleasure yacht that was built in The
Netherlands and is registered and documented under the laws and
flag of Bermuda.  The yacht was constructed under an agreement
between the shipbuilder and the Virginian Company Limited ("the
Company"), a corporation organized under the laws of the Island
of Guernsey, Channel Islands.  Under a nominee trust, shares of
the Company are held by nominee Guernsey companies as nominees
and trustees for a United States citizen and a United States
trustee, jointly, for the benefit of a United States citizen
("the Beneficiary"). The Beneficiary also resides in the United
States.

     The VIRGINIAN was delivered in Europe to the Company in
December, 1990, after which the yacht sailed to the Caribbean. 
During this "shakedown" cruise, items requiring repair or
alteration were identified.  Under the construction agreement,
the shipbuilder provided a warranty for the repair of any item
that did not meet specifications within six months of delivery. 
The warranty and service yard for the shipbuilder is the Merrill-
Stevens Dry Dock Company, Miami, Florida.

     The Company intends to bring the vessel to the United States
to undergo the required warranty work at the end of March, 1991. 
After the completion of the work, the vessel will cruise in the
waters of the United States for a period not to exceed three
months.  You state in your letter that the yacht will normally be
used in the Caribbean Islands and off the coasts of Central
America and northern South America during the winter.  During the
summer, the yacht will be used in Europe and in the
Mediterranean.  Incident to its worldwide voyages, the vessel may
cruise the waters of the United States, but in no case is it
anticipated that the yacht will remain in the United States for
periods greater than three months or cruise more than once a
year.  During the period of ownership, the yacht will be used in
United States waters less than twenty percent of the time.  The
owner and the beneficiary will not charter or sell the yacht
while it is in the United States.  While in the United States,
the master of the yacht will obtain and operate the yacht under a
cruising license issued by the Customs Service.

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 warranty repairs and temporary pleasure
cruising of United States waters 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").

     At the outset, we note that you do not dispute that the
vessel will be brought into this country by a United States
resident, despite the fact title to the vessel is in the name of
a foreign corporation.  We do not therefore consider questions of
importations by a foreign citizen or nonresident of the United
States.

     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.

     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 court in The Astral noted the difficulty of divining
intent:

          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.

     Applying these principles, we determine that the VIRGINIAN
may be brought temporarily into the United States for warranty
repairs without subjecting the vessel to duty.  The Company has
demonstrated that the warranty repairs are required and are to be
made in the most competent yard available.

     The use of the yacht for pleasure purposes in United States
waters following repairs and in the future for cruising
incidental to the voyages of the yacht for periods not to exceed
three months presents greater difficulty.  The court in The
Astral stressed that the principal use of the vessel in the
United States following the repairs was for assessing whether
repairs were properly made and whether further repairs were
required.  As stated above, the court noted that limited pleasure
use of the vessel did not change the fundamental character of the
post-repair shakedown cruise.  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 peregrinations of the VIRGINIAN lead us to
conclude that the present intention of the owner is not to bring
the vessel permanently into the United States; consequently, the
yacht would not be considered imported for tariff purposes at
this time.  You state that in no case is it anticipated that, in
any one year, the yacht will remain in the United States for
periods greater than three months or cruise more than once.  The
time spent in the United States will usually be in transit
between the Caribbean and the Mediterranean, the two principal
waters in which the yacht will be used.  We caution that if the
vessel engages in conduct that suggests the vessel is here for
any purpose other than a temporary or transit cruise, then the
vessel will then become liable for duty.  The present intent of
the owners cannot form a reasonable basis for a ruling at this
time as to the possible future dutiability of the yacht when it
enters United States waters.

     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)
(1990).  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 residence will also
result in duty liability.

HOLDING:

     The yacht VIRGINIAN may be brought into the United States
for repairs and pleasure cruising for periods not to exceed three
months.



                              Sincerely,



                              B. James Fritz
                              Chief