H327273

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H327273 February 3, 2023 VES-3-18-OT-RR:BSTC:CCI H327273 TNA CATEGORY: Carriers Supervisory Liquidation Specialist C/o Vessel Repair Unit U.S. Customs and Border Protection 423 Canal Street, Suite 246 New Orleans, LA 70130 RE: 19 U.S.C. §1466(d)(2); Vessel Repair Entry C20-0081926-1; M/V STATES TIDE; Internal Advice on Protest No. 2002-22-100826; Duty Remission Dear Madame: This is in response to your memorandum dated September 14, 2022, forwarding for our further review the Protest filed by Richard Bertram of Jones Walker, on behalf of his clients, Tidewater Marine, LLC and Tidewater GOM, Inc. (collectively “Tidewater” or “Protestant”), with respect to Vessel Repair Entry C20-0081926-1. Our decision is set forth below. FACTS: The M/V STATES TIDE (the “vessel”) is a U.S.-flag platform supply vessel owned by Tidewater Marine, LLC and Tidewater GOM, Inc, which are subsidiaries of Tidewater, Inc. On April 16, 2021, the vessel arrived in Morgan City, Louisiana from Chaguaramas, Trinidad. The vessel’s agent subsequently filed a CBP Form 226 (Record of Vessel Foreign Repair or Equipment Purchase) with CBP’s Vessel Repair Unit - New Orleans (“VRU”) to document foreign shipyard costs. The entry form states that the vessel underwent dutiable repairs in Trinidad, performed by a number of different vendors. On July 13, 2021, Protestant filed an Application for Relief of duties. There, Protestant argued that much of the work completed aboard the vessel consisted of regulatory inspections for complying with maritime regulations such as those of the International Maritime Organization’s (“IMO”) regulations, such as an annual regulatory inspection and certification of the vessel’s sold boom pedestal hydraulic crane, among others. Protestant argued that such regulatory inspections are not subject to duty upon entry. Protestant also argued that the repairs at issue were performed using parts that were either made in America, or, if they had been manufactured abroad, they had been previously imported and duties had already been paid on them. In addition, Protestant notes that these parts were sent to the vessel’s regular crew for use and/or installation. As a result, Protestant argues that the subject repairs are not subject to further duties now. In support of these arguments, Protestant submitted an itemized listing of the parts it purchased for the repairs, as well as invoices from American vendors for the parts at issue. Protestant also submitted certifications from the vendors that the parts listed on the invoices were either of American manufacture or that if imported, duties had already been paid on these items. On April 15, 2022, the VRU issued a Determination of Duty letter granting the application for relief in part, which resulted in a duty consequence of USD $116,285.61. In support of its determination, the VRU provided Tidewater Marine with a listing of reasons why its application had been denied in part, as well as a spreadsheet noting every line item at issue and a reason why those items had been denied. In listing its reasons for denial, the VRU, citing HQ H035597, dated October 28, 2008, stated that Protestant had not established by satisfactory, documentary evidence, that the inspections and surveys at issue were nondutiable surveys- e.g., an annual or periodic survey performed by a regulatory body. In addition, the VRU noted that such evidence should include copies of the invoice and the report by the regulatory body. The VRU also denied a number of line items for being dutiable equipment rather than consumables. Lastly, the VRU denied a number of line items for failure to designate which section of 19 U.S.C 1466(d)(2), (h)(2) and (h)(3) was applicable, and because the submitted documentation does not support a claim under any of these sections. On July 15, 2022, Tidewater submitted a Protest regarding the VRU’s determination, along with supplemental arguments. Here, again, Protestant argues that the repairs at issue were performed by the vessel’s regular crew, using parts that were either made in America, or, if they had been manufactured abroad, they had been previously imported and duties had already been paid on them. In addition, Protestant cites HQ 111619, dated October 21, 1991, for the proposition that “where a part is purchased from a party unrelated to the vessel owner, a United States bill of sale constitutes sufficient evidence to demonstrate that the part was manufactured in the United States or entered in the United States, duty paid.” Protestant agues that its invoices and vender certifications as to the origin or duty status of the parts at issue therefore constitute sufficient proof that the items at issue are not dutiable now. Protestant also reiterates its argument that regulatory inspections are not subject to duty upon entry. In support of this argument, Protestant cites 19 U.S.C. §1466(a), 19 C.F.R. §4.14(h)(1), and C.S.D. 79-2, 13 Cust. B. & Dec. 993 (1979). Protestant’s submission did not include an application for further review (“AFR”), as the pages on CBP Form 19 that relate directly to AFR are completely blank, and Protestant’s submission, which only mentions a protest, does not make any arguments as to why Protestant qualifies for AFR. On September 14, 2022, the VRU forwarded the protest to Regulations and Rulings’ Carriers, Cargo Security and Restricted Merchandise Branch for a decision, requesting guidance as to the resolution of the legal issues that Protestant raises. ISSUE: Whether the costs for which the protestant seeks relief are dutiable, non-dutiable, or remissible under 19 U.S.C. § 1466? LAW AND ANALYSIS: As an initial matter, we note the protest was timely filed, having been filed within 180 days of the date of duty determination. 19 U.S.C. § 1514(c)(3) and 19 C.F.R. § 174.12(e). The entry was liquidated on April 22, 2022, and the instant protest was filed on July 15, 2022. However, we note that the Protestant did not make a request for further review as required by 19 C.F.R. § 174.24 because it did not provide a statement advising the basis of further review or describing the facts and law justifying its request further review. In fact, the entire second page of CBP Form 19 is blank. Furthermore, Protestant’s arguments on the protest, submitted in a separate document from Form 19, do not make any arguments to justify an Application for Further Review (“AFR”), as required by 19 C.F.R. § 174.25. As a result, Protestant does not qualify for AFR. However, the Vessel Repair Unit (“VRU”) is requesting guidance as to the resolution of the legal issues at hand. In forwarding the subject protest, the VRU explained that it had denied relief from duty on the U.S. invoices at issue, it was looking for our final determination. Accordingly, this response constitutes internal advice per 19 C.F.R. § 177.11. This conversion to internal advice in the absence of AFR is consistent with prior CBP rulings. See, e.g., HQ H239257, dated July 25, 2013. 19 U.S.C. § 1466(a) requires the payment of a 50% ad valorem duty on the “[t]he equipments, or any part thereof . . . 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 to engage in the foreign or coasting trade, or a vessel intended to be employed in such trade...” This provision is implemented by 19 C.F.R. § 4.14, which also outlines the bond requirements, entry requirements, and deadlines for submitting evidence of the cost of foreign repairs. Pursuant to 19 C.F.R. § 4.14(e), each vessel repair entry “must show all foreign voyage expenditures for equipment, parts of equipment, repair parts, materials and labor.” In addition, 19 C.F.R. § 4.14(h) states the following: (h) Justifications for relief from duty. Claims for relief from the assessment of vessel repair duties may be submi

As an initial matter, we note the protest was timely filed, having been filed within 180 days of the date of duty determination. 19 U.S.C. § 1514(c)(3) and 19 C.F.R. § 174.12(e). The entry was liquidated on April 22, 2022, and the instant protest was filed on July 15, 2022. However, we note that the Protestant did not make a request for further review as required by 19 C.F.R. § 174.24 because it did not provide a statement advising the basis of further review or describing the facts and law justifying its request further review. In fact, the entire second page of CBP Form 19 is blank. Furthermore, Protestant’s arguments on the protest, submitted in a separate document from Form 19, do not make any arguments to justify an Application for Further Review (“AFR”), as required by 19 C.F.R. § 174.25. As a result, Protestant does not qualify for AFR.However, the Vessel Repair Unit (“VRU”) is requesting guidance as to the resolution of the legal issues at hand. In forwarding the subject protest, the VRU explained that it had denied relief from duty on the U.S. invoices at issue, it was looking for our final determination. Accordingly, this response constitutes internal advice per 19 C.F.R. § 177.11. This conversion to internal advice in the absence of AFR is consistent with prior CBP rulings. See, e.g., HQ H239257, dated July 25, 2013.19 U.S.C. § 1466(a) requires the payment of a 50% ad valorem duty on the “[t]he equipments, or any part thereof . . . 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 to engage in the foreign or coasting trade, or a vessel intended to be employed in such trade...” This provision is implemented by 19 C.F.R. § 4.14, which also outlines the bond requirements, entry requirements, and deadlines for submitting evidence of the cost of foreign repairs. Pursuant to 19 C.F.R. § 4.14(e), each vessel repair entry “must show all foreign voyage expe