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HQ 116456

June 24, 2005

VES-3-18-RR:IT:EC 116456 IDL


Chief, Vessel Repair Unit
U.S. Customs and Border Protection
423 Canal Street
New Orleans, LA 70130

RE: 19 U.S.C. § 1466; Vessel Repair Entry C20-0059022-7; Protest No. 2002-03-100050

Dear Sir:

This is in response to your memorandum of April 26, 2005, forwarding for our review the protest filed by Matson Navigation Company, Inc. (“protestant”) with respect to Vessel Repair Entry C20-0059022-7. Our ruling on this matter is set forth below.


The M/V MANOA, a U.S.-flagged vessel owned by the protestant,

The CF 226 reflects that Matson Navigation Company, Inc. is the owner of the vessel. The supplemental submission states that Matson Navigation Company, Inc. is the operator of the vessel. incurred foreign shipyard costs. The vessel arrived in the port of Los Angeles on May 27, 2002. A vessel repair entry was timely filed. The determination of duty occurred on October 25, 2002.

The ensuing protest, received on January 23, 2003, pertained to duty charged on all repair items used by the regular crew of the vessel during the voyage. The VRU did not finalize the protest, as well as other similar Matson protests and vessel repair entries involving spare parts used by the vessel’s crew, pending the passage of the “Miscellaneous Trade and Technical Corrections Act of 2004” (Public Law No. 108-429).


Whether the costs for which the protestant seeks relief are dutiable under 19 U.S.C. § 1466.


Initially, we note that the information in the file indicates that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests. 19 U.S.C. 1514(c)(3) and 19 CFR 174.12(e).

Title 19, United States Code, § 1466(a) provides in pertinent part for the payment of an ad valorem duty of 50 percent of the cost of “. . . equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States . . . “

We further note that counsel for the protestant filed a supplemental submission dated April 8, 2005 with the VRU, pursuant to section 1554 of the “Miscellaneous Trade and Technical Corrections Act of 2004.” Section 1554 of the Miscellaneous Trade and Technical Corrections Act of 2004, signed by the President on December 3, 2004, amended the vessel repair statute by adding the following exemption to § 1466(a) found in 19 U.S.C. § 1466(h):

(4) the cost of equipment, repair parts, and materials that are installed on a vessel documented under the laws of the United States and engaged in the foreign or coasting trade, if the installation is done by members of the regular crew of such vessel while the vessel is on the high seas.

Declaration and entry shall not be required with respect to the installation, equipment, parts, and materials described in paragraph (4).

This newly-enacted legislation further provides for a retroactive effective date for that equipment, repair parts, and materials installed on or after April 25, 2001.

As noted above, the subject protest was received by the VRU on January 23, 2003 and counsel for the protestant filed a supplemental submission dated April 8, 2005 with respect to the following items:

(i) TR Nos. 314, 315 (Exhibit 2);
(ii) TR No. 317 (Exhibit 3); and
(iii) TR Nos. 111, 316, 318, and 319 (no exhibit number assigned).

The protestant seeks relief pursuant to 19 U.S.C. § 1466(h)(2), which exempts from duty spare repair parts or materials that have been manufactured in the United States or entered the United States duty-paid and are used aboard a cargo vessel engaged in foreign or coasting trade.

At the outset, however, we note that the invoice for items appearing under Exhibit 2 is dated after the date of arrival of the vessel. An invoice dated after the date of arrival of a vessel is not probative evidence with respect to a claim that an item listed thereon is eligible for an exemption from any provision of 19 U.S.C. § 1466 with regard to the subject voyage. In addition, the protestant failed to submit an invoice or other documentation with regard to item nos. 111, 316, 318, and 319. Accordingly, the protestant’s claim for relief under 19 U.S.C. § 1466(h)(2) with respect to the items under Exhibit 2 and the four undocumented items is unsubstantiated, and all such items are dutiable.

With regard to TR No. 317, appearing under Exhibit 3, the protestant submitted an “inventory adjustment” log for the vessel, dated April 26, 2002 to May 27, 2002, indicating that twenty-six pieces of Part Number Y328-119 were consumed from inventory during that period. However, the U.S. manufacturer of such part, McLemore Pump, Inc., indicates on its invoice (C52808, May 11, 2001) that it provided the protestant with only four pieces of this item. As such, the protestant has failed to demonstrate that twenty-two of the pieces consumed were manufactured by a U.S. entity, as required by § 1466(h)(2), and duty is payable on twenty-two pieces. The remaining four pieces are non-dutiable.


Accordingly, the costs for which the protestant seeks relief are dutiable or non-dutiable under 19 U.S.C. § 1466 consistent with the analysis above. The protest should be DENIED-IN-PART and GRANTED-IN-PART.

In accordance with the Protest/Petition Processing Handbook (CIS HB, January [2002, pp. 18 and 21), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.


Glen E. Vereb

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