[Code of Federal Regulations]

[Title 19, Volume 1]

[Revised as of April 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 19CFR4.14]



[Page 24-28]

 

                        TITLE 19--CUSTOMS DUTIES

 

   CHAPTER I--BUREAU OF CUSTOMS AND BORDER PROTECTION, DEPARTMENT OF 

              HOMELAND SECURITY; DEPARTMENT OF THE TREASURY

 

PART 4_VESSELS IN FOREIGN AND DOMESTIC TRADES--Table of Contents

 

Sec.  4.14  Equipment purchases by, and repairs to, American vessels.



    (a) General provisions and applicability. Under section 466, Tariff 

Act of 1930, as amended (19 U.S.C. 1466), purchases for or repairs made 

to certain vessels while they are outside the United States, including 

repairs made while those vessels are on the high seas, are subject to 

declaration, entry and payment of ad valorem duty. This does not apply 

to reimbursement paid to members of the regular crew of a vessel for 

labor expended in making repairs to the vessel. These requirements are 

effective upon the first arrival of affected vessels in the United 

States or Puerto Rico. The vessels subject to these requirements include 

those documented under U.S. law for the foreign or coastwise trades, as 

well as those which were previously documented under the laws of some 

foreign nation or are undocumented at the time that foreign shipyard 

repairs are performed, but which exhibit an intent to engage in those 

trades under Customs interpretations. Duty is based on actual foreign 

cost. This includes the original foreign purchase price of articles 

which have been imported into the United States and are later sent 

abroad for use. For the purposes of this section, expenditures made in 

American Samoa, the Guantanamo Bay Naval Station, Guam, Puerto Rico, or 

the U.S. Virgin Islands are considered to have been made in the United 

States, and are not subject to declaration, entry or duty. Under 

separate provisions of law, the cost of labor performed, and of parts 

and materials produced and purchased in Israel are not subject to duty 

under the vessel repair statute. Additionally, expenditures made in 

Canada or in Mexico are not subject to any vessel repair duties. Even in 

the absence of any liability for duty, it is still required that all 

repairs and purchases, including those made in Canada, Mexico, and 

Israel, be declared and entered.

    (b) Applicability to specific types of vessels--(1) Fishing vessels. 

As provided in Sec.  4.15, vessels documented under U.S. law with a 

fishery endorsement are subject to vessel repair duties for covered 

foreign expenditures. Undocumented American fishing vessels which are 

repaired, or for which parts, nets or equipment are purchased outside 

the U.S. are also liable for duty.

    (2) Government-owned or chartered vessels. Vessels normally subject 

to the vessel repair statute because of documentation or intended use 

are not excused from duty liability merely because they are either owned 

or chartered by the U.S. Government.

    (3) Vessels continuously away for two years or longer. (i) Liability 

for expenditures throughout entire absence from U.S. Vessels that 

continuously remain outside the United States for two years or longer 

are liable for duty on any fish nets and netting purchased at any time



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during the entire absence. Vessels designed and used primarily for 

transporting passengers or merchandise, which depart the United States 

for the sole purpose of obtaining equipment, parts, materials or repairs 

remain fully liable for duty regardless of the duration of their absence 

from the United States.

    (ii) Liability for expenditures made during first six months of 

absence. Except as provided in paragraph (b)(3)(i) of this section, 

vessels that continuously remain outside the United States for two years 

or longer are liable for duty only on those expenditures which are made 

during the first six months of their absence. See paragraph (h)(3) of 

this section. However, even though some costs might not be dutiable 

because of the six-month rule, all repairs, materials, parts and 

equipment-related expenditures must be declared and entered.

    (c) Estimated duty deposit and bond requirements. Generally, the 

person authorized to submit a vessel repair declaration and entry must 

either deposit or transmit estimated duties or produce evidence of a 

bond on Customs Form 301 at the first United States port of arrival 

before the vessel will be permitted to depart from that port. A 

continuous or single entry bond of sufficient value to cover all 

potential duty on the foreign repairs and purchases must be identified 

by surety, number and amount on the vessel repair declaration which is 

submitted at the port of first arrival. At the time the vessel repair 

entry is submitted by the vessel operator to the appropriate VRU port of 

entry as defined in paragraph (g) of this section, that same identifying 

information must be identified on the entry form. Sufficiency of the 

amount of the bond is within the discretion of Customs at the arrival 

port with claims for reduction in duty liability necessarily being 

subject to full consideration of evidence by Customs. Customs officials 

at the port of arrival may consult the appropriate Vessel Repair Unit 

(VRU) port of entry as identified in paragraph (g) of this section or 

the staff of the Entry Procedures and Carriers Branch in Customs 

Headquarters in setting sufficient bond amounts. These duty, deposit, 

and bond requirements do not apply to vessels which are owned or 

chartered by the United States Government and are actually being 

operated by employees of an agency of the Government. If operated by a 

private party for a Federal agency under terms whereby that private 

party is liable under the contract for payment of the duty, there must 

be a deposit or a bond filed in an amount adequate to cover the 

estimated duty.

    (d) Declaration required. When a vessel subject to this section 

first arrives in the United States following a foreign voyage, the 

owner, master, or authorized agent must submit a vessel repair 

declaration on Customs Form 226, a dual-use form used both for 

declaration and entry purposes, or must transmit its electronic 

equivalent. The declaration must be ready for presentation in the event 

that a Customs officer boards the vessel. If no foreign repair-related 

expenses were incurred, that fact must be reported either on the 

declaration form or by approved electronic means. The Customs port of 

arrival receiving either a positive or negative vessel repair 

declaration or electronic equivalent will immediately forward it to the 

appropriate VRU port of entry as identified in paragraph (g) of this 

section.

    (e) Entry required. The owner, master, or authorized representative 

of the owner of any vessel subject to this section for which a positive 

declaration has been filed must submit a vessel repair entry on Customs 

Form 226 or transmit its electronic equivalent. The entry must show all 

foreign voyage expenditures for equipment, parts of equipment, repair 

parts, materials and labor. The entry submission must indicate whether 

it provides a complete or incomplete account of covered expenditures. 

The entry must be presented or electronically transmitted by the vessel 

operator to the appropriate VRU port of entry as identified in paragraph 

(g) of this section, so that it is received within ten calendar days 

after arrival of the vessel. Claims for relief from duty should be made 

generally as part of the initial submission, and evidence must later be 

provided to support those claims. Failure to submit full supporting 

evidence of cost within stated time limits, including any extensions 

granted under this section, is considered to be a failure to enter.



[[Page 26]]



    (f) Time limit for submitting evidence of cost. A complete vessel 

repair entry must be supported by evidence showing the cost of each item 

entered. If the entry is incomplete when submitted, evidence to make it 

complete must be received by the appropriate VRU port of entry as 

identified in paragraph (g) of this section within 90 calendar days from 

the date of vessel arrival. That evidence must include either the final 

cost of repairs or, if the operator submits acceptable evidence that 

final cost information is not yet available, initial or interim cost 

estimates given prior to or after the work was authorized by the 

operator. The proper VRU port of entry may grant one 30-day extension of 

time to submit final cost evidence if a satisfactory written explanation 

of the need for an extension is received before the expiration of the 

original 90-day submission period. All extensions will be issued in 

writing. Inadequate, vague, or open-ended requests will not be granted. 

Questions as to whether an extension should be granted may be referred 

to the Entry Procedures and Carriers Branch in Customs Headquarters by 

the VRU ports of entry. Any request for an extension beyond a 30-day 

grant issued by a VRU must be submitted through that unit to the Entry 

Procedures and Carriers Branch, Customs Headquarters. In the event that 

all cost evidence is not furnished within the specified time limit, or 

is of doubtful authenticity, the VRU may refer the matter to the Customs 

Office of Investigations to begin procedures to obtain the needed 

evidence. That office may also investigate the reason for a failure to 

file or for an untimely submission. Unexplained or unjustified delays in 

providing Customs with sufficient information to properly determine duty 

may result in penalty action as specified in paragraph (j) of this 

section. Extensions granted for the filing of necessary evidence may 

also extend the time for filing Applications for Relief (see paragraph 

(i)(1) of this section).

    (g) Location and jurisdiction of vessel repair unit ports of entry. 

Vessel Repair Units (VRUs) are responsible for processing vessel repair 

entries. VRUs are located in New York, New York; New Orleans, Louisiana; 

and San Francisco, California. The New York unit processes vessel repair 

entries received from ports of arrival on the Great Lakes and the 

Atlantic Coast of the United States north of, but not including, those 

located in the State of Virginia. The New Orleans unit processes vessel 

repair entries received from ports of arrival on the Atlantic Coast from 

and including those in the State of Virginia, southward, and from all 

United States ports of arrival on the Gulf of Mexico including ports in 

Puerto Rico. The San Francisco unit processes vessel repair entries 

received from all ports of entry on the Pacific Coast including those in 

Alaska and Hawaii.

    (h) Justifications for relief from duty. Claims for relief from the 

assessment of vessel repair duties may be submitted to Customs. Relief 

may be sought under paragraphs (a), (d), (e), or (h) of the vessel 

repair statute (19 U.S.C. 1466(a), (d), (e), or (h)), each paragraph of 

which relates to a different type of claim as further specified in 

paragraphs (h)(1)-(h)(4) of this section.

    (1) Relief under 19 U.S.C. 1466(a). Requests for relief from duty 

under 19 U.S.C. 1466(a) consist of claims that a foreign shipyard 

operation or expenditure is not considered to be a repair or purchase 

within the terms of the vessel repair statute or as determined under 

judicial or administrative interpretations. Example: a claim that the 

shipyard operation is a vessel modification.

    (2) Relief from duty under 19 U.S.C. 1466(d). Requests for relief 

from duty under 19 U.S.C. 1466(d) consist of claims that a foreign 

shipyard operation or expenditure involves any of the following:

    (i) Stress of weather or other casualty. Relief will be granted if 

good and sufficient evidence supports a finding that the vessel, while 

in the regular course of its voyage, was forced by stress of weather or 

other casualty, while outside the United States, to purchase such 

equipment or make those repairs as are necessary to secure the safety 

and seaworthiness of the vessel in order to enable it to reach its port 

of destination in the United States. For the purposes of this paragraph, 

a ``casualty'' does not include any purchase



[[Page 27]]



or repair made necessary by ordinary wear and tear, but does include the 

failure of a part to function if it is proven that the specific part was 

repaired, serviced, or replaced in the United States immediately before 

the start of the voyage in question, and then failed within six months 

of that date.

    (ii) U.S. parts installed by regular crew or residents. Relief will 

be granted if equipment, parts of equipment, repair parts, or materials 

used on a vessel were manufactured or produced in the United States and 

were purchased in the United States by the owner of the vessel. It is 

required under the statute that residents of the United States or 

members of the regular crew of the vessel perform any necessary labor in 

connection with such installations.

    (iii) Dunnage. Relief will be granted if any equipment, equipment 

parts, materials, or labor were used for the purpose of providing 

dunnage for the packing or shoring of cargo, for erecting temporary 

bulkheads or other similar devices for the control of bulk cargo, or for 

temporarily preparing tanks for carrying liquid cargoes.

    (3) Relief under 19 U.S.C. 1466(e). Requests for relief from duty 

under 19 U.S.C. 1466(e) relate in pertinent part to matters involving 

vessels normally subject to the vessel repair statute, but that 

continuously remain outside the United States for two years or longer. 

Vessels that continuously remain outside the United States for two years 

or longer may qualify for relief from duty on expenditures made later 

than the first six months of their absence. See paragraph (b)(3)(ii) of 

this section.

    (4) Relief under 19 U.S.C. 1466(h). Requests for relief from duty 

under 19 U.S.C. 1466(h) consist of claims that a foreign shipyard 

operation or expenditure involves any of the following:

    (i) Expenditures on LASH barges. Relief will be granted with respect 

to the cost of equipment, parts, materials, or repair labor for Lighter 

Aboard Ship (LASH) operations accomplished abroad.

    (ii) Certain spare repair parts or materials. Relief will be granted 

with respect to the cost of spare repair parts or materials which are 

certified by the vessel owner or master to be for use on a cargo vessel, 

but only if duty was previously paid under the appropriate commodity 

classification(s) as found in the Harmonized Tariff Schedule of the 

United States when the article first entered the United States.

    (iii) Certain spare parts necessarily installed on a vessel prior to 

their first entry into the United States. Relief will be granted with 

respect to the cost of spare parts only, which have been necessarily 

installed prior to their first entry into the United States with duty 

payment under the appropriate commodity classification(s) as found in 

the Harmonized Tariff Schedule of the United States.

    (i) General procedures for seeking relief--(1) Applications for 

Relief. Relief from the assessment of vessel repair duty will not be 

granted unless an Application for Relief is filed with Customs. Relief 

will not be granted based merely upon a claim for relief made at the 

time of entry under paragraph (e) of this section. The filing of an 

Application for Relief is not required, nor is one required to be 

presented in any particular format, but if filed it must clearly present 

the legal basis for granting relief, as specified in paragraph (h) of 

this section. An Application must also state that all repair operations 

performed aboard a vessel during the one-year period prior to the 

current submission have been declared and entered. A valid Application 

is required to be supported by complete evidence as detailed in 

paragraphs (i)(1)(i)-(vi) and (i)(2) of this section. Except as further 

provided in this paragraph, the deadline for receipt of an Application 

and supporting evidence is 90 calendar days from the date that the 

vessel first arrived in the United States following foreign operations. 

The provisions for extension of the period for filing required evidence 

in support of an entry, as set forth in paragraph (f) of this section, 

are applicable to extension of the time period for filing Applications 

for Relief as well. Applications must be addressed and submitted by the 

vessel operator to the appropriate VRU port of entry and will be decided 

in that unit. The VRUs may seek the advice of the Entry Procedures and 

Carriers Branch in Customs Headquarters with regard to any specific



[[Page 28]]



item or issue which has not been addressed by clear precedent. If no 

Application is filed or if a submission which does not meet the minimal 

standards of an Application for Relief is received, the duty amount will 

be determined without regard to any potential claims for relief from 

duty (see paragraph (h) of this section). Each Application for Relief 

must include copies of:

    (i) Itemized bills, receipts, and invoices for items shown in 

paragraph (e) of this section. The cost of items for which a request for 

relief is made must be segregated from the cost of the other items 

listed in the vessel repair entry;

    (ii) Photocopies of relevant parts of vessel logs, as well as of any 

classification society reports which detail damage and remedies;

    (iii) A certification by the senior officer with personal knowledge 

of all relevant circumstances relating to casualty damage (time, place, 

cause, and nature of damage);

    (iv) A certification by the senior officer with personal knowledge 

of all relevant circumstances relating to foreign repair expenditures 

(time, place, and nature of purchases and work performed);

    (v) A certification by the master that casualty-related expenditures 

were necessary to ensure the safety and seaworthiness of the vessel in 

reaching its United States port of destination; and

    (vi) Any permits or other documents filed with or issued by any 

United States Government agency other than Customs regarding the 

operation of the vessel that are relevant to the request for relief.

    (2) Additional evidence. In addition, copies of any other evidence 

and documents the applicant may wish to provide as evidentiary support 

may be submitted. Elements of applications which are not supported by 

required evidentiary elements will be considered fully dutiable. All 

documents submitted must be certified by the master, owner, or 

authorized corporate officer to be originals or copies of originals, and 

if in a foreign language, they must be accompanied by an English 

translation, certified by the translator to be accurate. Upon receipt of 

an Application for Relief by the VRU within the prescribed time limits, 

a determination of duties owed will be made. After a decision is made on 

an Application for Relief by a VRU, the applicant will be notified of 

the right to protest any adverse decision.

    (3) Administrative protest. Following the determination of duty 

owing on a vessel repair entry, a protest may be filed under 19 U.S.C. 

1514(a)(2) as the only and final administrative appeal. The procedures 

and time limits applicable to protests filed in connection with vessel 

repair entries are the same as those provided in part 174 of this 

chapter. In particular, the applicable protest period will begin on the 

date of the issuance of the decision giving rise to the protest as 

reflected on the relevant correspondence from the appropriate VRU.

    (j) Penalties--(1) Failure to report, enter, or pay duty. It is a 

violation of the vessel repair statute if the owner or master of a 

vessel subject to this section willfully or knowingly neglects or fails 

to report, make entry, and pay duties as required; makes any false 

statements regarding purchases or repairs described in this section 

without reasonable cause to believe the truth of the statements; or aids 

or procures any false statements regarding any material matter without 

reasonable cause to believe the truth of the statement. If a violation 

occurs, the vessel, its tackle, apparel, and furniture, or a monetary 

amount up to their value as determined by Customs, is subject to seizure 

and forfeiture and is recoverable from the owner (see Sec.  162.72 of 

this chapter).

    (2) False declaration. If any person required to file a vessel 

repair declaration or entry under this section, knowingly and willfully 

falsifies, conceals or covers up by any trick, scheme, or device a 

material fact, or makes any materially false, fictitious or fraudulent 

statement or representation, or makes or uses any false writing or 

document knowing the same to contain any materially false, fictitious or 

fraudulent statement, that person will be subject to the criminal 

penalties provided for in 18 U.S.C. 1001.



[66 FR 16397, Mar. 26, 2001]



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