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HQ 115608

May 16, 2002

VES-12-01-RR:IT:EC 115608 LLO


Jerry J. Ciccone
Canadian American Transportation Systems, LLC P.O. Box 12664
Charlotte Stations
Rochester, New York 14612

RE: Dutiability; Foreign Built Vessel; Foreign Trade

Dear Mr. Ciccone:

We received your letter inquiring as to whether any import duty will be charged on a foreign-built, foreign-flag vessel carrying passengers from one coastwise point to a foreign point.


Canadian American Transportation Systems, LLC has the exclusive Rights to running a fast ferry trip from Rochester, New York to Toronto Canada. The vessel conducting the fast ferry trip is an Australian-built vessel that flies the Bahamian flag.


Whether import duty would be charged on a foreign-built, foreign-flag vessel carrying passengers from one coastwise point to a foreign port not embraced within coastwise laws.


Title 46, United States Code 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 penalty of $200 for each passenger so transported and landed.”

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, and never sold foreign with certain exceptions (46 U.S.C. §12106(a)(2)(B) and 19 C.F.R. §4.80 (a)(2) and (3)).

Additionally, the Customs Service has ruled that transportation of passengers from a point in the United States to the high seas or foreign waters and back to the point of original embarkation, often called a “voyage to nowhere,” is not considered coastwise trade. A vessel passenger is defined as “any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business.”

The carriage of passengers from the U.S. to Canada is not coastwise trade. If your itinerary calls for the carriage of the same passengers taken to Canada, back to the U.S., you must return them to the same point in Rochester at which they originally boarded for the trip to Canada. Passengers disembarking at a point in the U.S. other than the point of embarkation would have been transported in violation of 46 U.S.C. §289. Commercial vessels are specifically exempted from duty under chapter 89 of the Harmonized Tariff Schedule of the United States. If the vessel conducting the fast ferry trip is a commercial vessel (i.e. passenger vessel, cargo vessel, fishing vessel, tug boat, etc.), it will be exempt from duty. If the vessel were a yacht or pleasure boat, bought into the U.S. for sale or charter to a U.S. resident, it would be assessed duty.


The subject vessel may be used to transport passengers round-trip between the U.S. and Canada, so long as passengers embark and disembark at the same point in the U.S., without violating 46 U.S.C. §289. The duty consequences concerning the vessel depend upon whether the vessel is determined to be a commercial vessel under the Harmonized Tariff Schedule of the United States.


Larry L. Burton

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