00-24098. Vessel Equipment Temporarily Landed for Repair

AGENCY:

Customs Service, Department of the Treasury.

ACTION:

Final rule.

SUMMARY:

This document amends the Customs Regulations to provide for the temporary landing in the United States of vessel equipment in need of repair, without requiring entry of that equipment under a Temporary Importation Bond (TIB). Instead, such equipment may be landed from a vessel for repair and then reladen aboard the same vessel, subject to Customs issuance of a special permit or license for the landed equipment, under an International Carrier Bond. Uncertainty had existed as to whether the relading of repaired equipment on vessels departing the United States would satisfy the TIB requirement that such merchandise be exported. The amendment eliminates this uncertainty while still allowing Customs adequate control over vessel equipment that is landed for repair and thereafter reladen aboard the same vessel.

EFFECTIVE DATE:

October 20, 2000.

FOR FURTHER INFORMATION CONTACT:

Larry L. Burton, Office of Regulations and Rulings, 202-927-1287.

SUPPLEMENTARY INFORMATION:

Background

Section 446, Tariff Act of 1930, as amended (19 U.S.C. 1446), provides that vessels arriving in the United States from foreign ports may retain vessel equipment and other named items aboard without the payment of duty. The statute also provides, however, that any of the named items which are landed and delivered from such a vessel are considered and treated as imported merchandise.

The cited statute is implemented by § 4.39 of the Customs Regulations (19 CFR 4.39), paragraph (b) of which provides that any articles other than cargo or baggage that are landed for delivery for consumption in this country are treated the same as any other imported article. Articles imported for consumption into the United States are subject to merchandise entry and the payment of applicable duty.

It is Customs view that when necessary equipment is unladed from a vessel only temporarily for the purpose of being repaired and then reladen aboard the vessel, it is not being delivered for consumption into the commerce of the United States. It is also clear, however, that when anything is landed in the United States, Customs has the duty and responsibility to exercise sufficient control and to protect the revenue from any unlawful introduction of merchandise into the commerce of the country.

There has been a lack of uniformity in the treatment that Customs has accorded vessel equipment temporarily landed for repair and relading. Some ports have employed Temporary Importation Bond (TIB) procedures in seeking to provide the necessary mechanisms for Customs control and the protection of the revenue, but a problem has existed with the use of a TIB for this purpose. While a TIB would adequately protect the revenue during the period when vessel equipment was in the United States, the bond provisions could only be satisfied and potential liability extinguished when the covered equipment was exported from the United States.

Exportation is defined in § 101.1 of the Customs Regulations (19 CFR 101.1), which provides that something is exported when it is separated from the goods of this country with the intent that it be made a part of the goods belonging to some foreign country. Customs does not believe that relading vessel equipment which is intended to remain aboard that vessel meets the definition of exportation. Accordingly, TIB bond liability may not be adequately terminated.

Section 4.30 of the Customs Regulations (19 CFR 4.30) provides that in all cases relevant to the present circumstances, no cargo, baggage, or other articles may be unladed from or laded upon any vessel arriving directly or indirectly from a foreign port or place, unless the Customs port director issues a permit allowing the activity (Customs Form (CF) 3171). This would provide adequate control by Customs over equipment unladings and ladings in terms of advance notice and actual knowledge.

Further, operators of vessels, or vessel agents acting in their stead, either have in place or can be required by local Customs officials to obtain International Carrier Bonds as reproduced in § 113.64, Customs Regulations (19 CFR 113.64). Paragraph (b) of that bond provision (§ 113.64(b)) obligates the bond for matters relating to the unlading, safekeeping, and disposition of merchandise, supplies, crew purchases, and other articles to be found on a vessel. This would provide adequate protection of the revenue in terms of any potential introduction of temporarily landed vessel equipment into the commerce of the United States.

Accordingly, by a document published in the Federal Register (64 FR 13370) on March 18, 1999, Customs proposed to add a new paragraph (g) to § 4.39 of the Customs Regulations (19 CFR 4.39(g)) to provide that equipment of a vessel arriving either directly or indirectly from a foreign port or place, if in need of repair, could be landed temporarily in order to be repaired. Unlading and relading would be in accord with the permit provisions of § 4.30, and the appropriate International Carrier Bond would be obligated as provided under § 113.64(b).

Discussion of Comment

Counsel on behalf of a vessel operating company submitted the only comment in response to the notice of proposed rulemaking. The commenter supported the proposal, stating that vessel operators would be relieved of needless and burdensome procedures by its implementation. However, the commenter suggested that the proposed rule be changed to allow repaired equipment to be reladen aboard any vessel operated by the same company that landed the equipment for repair.

Customs has determined that the suggested change should not be adopted. As previously noted, Customs Form (CF) 3171 is the document by which Customs would track and control the movement of equipment landed for repair. The CF 3171 is executed for a specific named vessel and does not extend to all vessels of the same line which may wish to lade or unlade equipment in a particular port of entry. As such, Customs believes that it can best exercise control over the relading of repaired equipment by requiring that it be placed on the same vessel which landed it for repair in the United States.

Adoption of Proposal

In view of the foregoing, and following careful consideration of the comment received and further review of the matter, Customs has concluded that the proposed amendment published in the Federal Register (64 FR 13370) on March 18, 1999, should be adopted as a final rule without change.

Regulatory Flexibility Act and Executive Order 12866

Because this final rule merely provides a different method to allow vessel equipment to be temporarily landed for repair without the payment of duty, it is certified pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) that the rule will not have a significant economic impact on a substantial number of small entities. Accordingly, it is not subject to the regulatory analysis or other requirements of 5 U.S.C. 603 and 604. Nor does the document meet the criteria for a “significant regulatory action” as specified in Executive Order 12866.

Paperwork Reduction Act

The collections of information contained in this final rule document have previously been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) and assigned OMB control numbers 1515-0013 (Application-Permit-Special License, Unlading-Lading, Overtime Services (Customs Form 3171)) and 1515-0144 (Customs Bond Structure (Customs Form 301 and Customs Form 5297)). The document restates the collections of information without substantive change. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

Part 178, Customs Regulations (19 CFR part 178), is amended to make provision for these existing information collection approvals.

Drafting Information

The principal author of this document was Larry L. Burton, Office of Regulations and Rulings, U.S. Customs Service. However, personnel from other offices participated in its development.

List of Subjects

19 CFR Part 4

• Customs duties and inspection
• Entry
• Inspection
• Merchandise
• Reporting and recordkeeping requirements
• Vessels

19 CFR Part 178

• Collections of information
• Reporting and recordkeeping requirements

Amendments to the Regulations

Parts 4 and 178, Customs Regulations (19 CFR parts 4 and 178), are amended as set forth below.

PART 4—VESSELS IN FOREIGN AND DOMESTIC TRADES

1. The general authority citation for part 4 as well as the specific authority citation for § 4.39 continue to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624; 46 U.S.C. App. 3, 91;

* * * * *

Section 4.39 also issued under 19 U.S.C. 1446;

* * * * *

2. Section 4.39 is amended by adding a new paragraph (g) to read as follows:

§ 4.39

Stores and equipment of vessels and crews' effects; unlading or lading and retention on board.

* * * * *

(g) Equipment of a vessel arriving either directly or indirectly from a foreign port or place, if in need of repairs in the United States, may be unladen from and reladen upon the same vessel under the procedures set forth in § 4.30 relating to the granting of permits and special licenses on Customs Form 3171 (CF 3171). Adequate protection of the revenue is insured under the appropriate International Carrier Bond during the period that equipment is temporarily landed for repairs (see § 113.64(b) of this chapter), and so resort to the procedures established for the temporary importation of merchandise under bond is unnecessary. Once equipment which has been unladen under the terms of a CF 3171 has been reladen on the same vessel, potential liability for that transaction existing under the bond will be extinguished.

PART 178—APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

1. The authority citation for part 178 continues to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.

2. Section 178.2 is amended by adding new listings in the table in appropriate numerical order to read as follows:

§ 178.2

Listing of OMB control numbers.

19 CFR section	Description	OMB control No.
*         *         *         *         *         *         *
§§ 4.10, 4.16, 4.30, 4.37, 4.39, 4.91, 10.60, 24.16, 122.29, 122.38, 123.8, 146.32, 146.34	Application-Permit-Special License, Unlading-Lading, Overtime Services (Customs Form 3171)	1515-0013
*         *         *         *         *         *         *
Part 113	Customs Bond Structure (Customs Form 301 and Customs Form 5297)	1515-0144
*         *         *         *         *         *         *

Approved: June 18, 2000.

Raymond W. Kelly,

Commissioner of Customs.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.