2011-7815. Interest on Untimely Paid Vessel Repair Duties

AGENCY:

Customs and Border Protection, Department of Homeland Security; Department of the Treasury.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

This document proposes to amend title 19 of the Code of Federal Regulations (19 CFR) to provide that where an owner or master of a vessel documented under the laws of the United States fails to timely pay the duties determined to be due to Customs and Border Protection (CBP) that are associated with the purchase of equipment for, or repair to, the vessel while it is outside the United States, interest will accrue on the amounts owed to CBP and that person will be liable for interest. The purpose of this document is to ensure that title 19 of the CFR reflects that CBP collects interest as part of its inherent revenue collection functions in situations where an owner or master of a vessel fails to pay the vessel repair duties determined to be due within 30 days of CBP issuing the bill.

DATES:

Comments must be received on or before May 31, 2011.

ADDRESSES:

You may submit comments, identified by docket number, by one of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments via docket number USCBP 2008-0085.
• Mail: Trade and Commercial Regulations Branch, Regulations and Rulings, Office of International Trade, Customs and Border Protection, 799 9th Street, NW. (Mint Annex), Washington, DC 20229-1179.

Instructions: All submissions received must include the agency name and docket number for this proposed rulemaking. All comments received will be posted without change to http://www.regulations.gov,, including any personal information provided. For detailed instructions on submitting comments and additional information on the proposed rulemaking process, see the “Public Participation” heading of the SUPPLEMENTARY INFORMATION section of this document.

Docket: For access to the docket to read background documents or comments received, go to http://www.regulations.gov. Submitted comments may also be inspected during regular business days between the hours of 9 a.m. and 4:30 p.m. at the Trade and Commercial Regulations Branch, Regulations and Rulings, Office of International Trade, Customs and Border Protection, 799 9th Street, NW., 5th Floor, Washington, DC. Arrangements to inspect submitted comments should be made in advance by calling Joseph Clark at [phone].

FOR FURTHER INFORMATION CONTACT:

Carrie Owens, Chief, Entry Process and Duty Refunds, Regulations and Rulings, Office of International Trade, [phone].

SUPPLEMENTARY INFORMATION:

Public Participation

Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of the proposed rule. Customs and Border Protection (CBP) also invites comments that relate to the economic, environmental, or federalism effects that might result from this proposed rule. If appropriate to a specific comment, the commenter should reference the specific portion of the proposed rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change.

Background

Section 466 of the Tariff Act of 1930, as amended (19 U.S.C. 1466), and Subchapter XVIII, Chapter 98, Harmonized Tariff Schedule of the United States (19 U.S.C. 1202), provide, in pertinent part, that equipment purchased for, or repairs made to, an American vessel in a foreign country are subject to entry and the payment of ad valorem duty on the first arrival of the affected vessel in any port of the United States.

Section 498 of the Tariff Act of 1930 (19 U.S.C. 1498) provides that the Secretary of the Treasury is authorized to prescribe rules and regulations for the declaration and entry of merchandise. Within that statute, paragraph (a)(10) provides, in pertinent part, that the Secretary may prescribe rules and regulations pertaining to the entry of merchandise within the provisions of section 1466 of this title (relating to vessel repairs and equipment purchases).

The Federal Claims Collection Act of 1966, codified at 31 U.S.C. 3701-3720A, as amended, establishes general federal claim and interest collection authority. Section 3717(a) directs the head of an executive, judicial, or legislative agency to charge interest on any outstanding debt to the United States Government. Sections 3737(b) and (d) provide that interest accrues from the date notice is mailed, however no interest will be charged if the amount on the claim is paid within 30 days from the mailing date.

Based on the authority conferred by these statutory provisions, this document proposes to amend title 19 of the Code of Federal Regulations (19 CFR) to provide that where an owner or master of a vessel documented under the laws of the United States fails to timely pay the duties determined to be due to Customs and Border Protection (CBP) that are associated with the purchase of equipment for, or repair to, the vessel while it is outside the United States, interest will accrue on the amounts owed to CBP and that person will be liable for interest. The purpose of this document is to ensure that title 19 of the CFR reflects that CBP collects interest as part of its inherent revenue collection functions in situations where an owner or master of the vessel fails to pay the vessel repair duties determined to be due within 30 days of CBP issuing the bill.

These proposed changes, other than those involving non-substantive editorial changes, are discussed below in more detail.

Explanation of Amendments

Section 4.14

Section 4.14 of title 19 of the Code of Federal Regulations (19 CFR 4.14) sets forth the regulatory provisions applicable to equipment purchases for, and repairs to, American vessels and provides that the costs associated with such expenditures are subject to declaration, entry and payment of ad valorem duty.

Section 4.14(i) sets forth the general procedures for seeking relief from the assessment of vessel repair duties and prescribes the manner by which an Application for Relief from such duties must be submitted to CBP. Within § 4.14(i), this document proposes to redesignate existing paragraph (i)(3) as paragraph (i)(4) and to add a new paragraph (i)(3). Newly proposed § 4.14(i)(3), entitled “Application for Relief; failure to file or denial in whole or in part,” will provide that if no Application for Relief is filed, or if a timely filed Application for Relief is denied in whole or in part, the VRU (vessel repair unit) will determine the amount of duty due and issue a bill to the party who filed the vessel repair entry. If the bill is not timely paid, interest will accrue as provided in § 24.3a(b)(1) of this chapter.

It is also proposed to amend § 4.14(j)(1), which prescribes the penalties for failure to report, enter, or pay vessel repair duties, to state that the owner or master of the vessel who fails to timely pay the duty determined to be due will be liable for interest as provided in section 24.3a(b)(1) of this chapter.

Section 24.3a

It is proposed to make conforming changes to §§ 24.3a(a) and (b) (19 CFR 24.3a(a) and (b)) which, respectively, prescribe the payment due date for CBP bills and provide for the assessment of interest charges if payment is not received by CBP on or before the late payment date appearing on the bill. The proposed changes to paragraph (a) specifically would include “vessel repair duties” as among the types of bills CBP issues. In paragraph (b), it is proposed to include “vessel repair duties” as among the types of bills for which CBP may assess interest charges from the date the bill is issued.

The Regulatory Flexibility Act and Executive Order 12866

Because these proposed amendments merely reflect the agency's revenue collection functions and rights, and impose no additional regulatory burden on the importing public, pursuant to the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., it is certified that, if adopted, the proposed amendments will not have a significant economic impact on a substantial number of small entities. Further, these proposed amendments do not meet the criteria for a “significant regulatory action” as specified in Executive Order 12866.

Paperwork Reduction Act

As there are no new collections of information proposed in this document, the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) are inapplicable.

Signing Authority

This proposed rulemaking is being issued in accordance with 19 CFR 0.1(a)(1), pertaining to the authority of the Secretary of the Treasury (or his/her delegate) to approve regulations related to certain CBP revenue functions.

List of Subjects

19 CFR Part 4

• Administrative practice and procedure
• Cargo vessels
• Customs duties and inspection
• Entry
• Passenger vessels
• Penalties
• Repairs
• Reporting and recordkeeping requirements
• Shipping
• Vessels

19 CFR Part 24

• Accounting
• Claims
• Customs duties and inspection
• Exports
• Imports
• Interest
• Reporting and recordkeeping requirements
• Taxes
• User fees
• Wages

Proposed Amendments to the Regulations

For the reasons set forth in the preamble, parts 4 and 24 of title 19 of the CFR (19 CFR Parts 4 and 24) are proposed to be amended as set forth below.

PART 4—VESSELS IN FOREIGN AND DOMESTIC TRADE

1. The general authority citation for part 4 continues, and the specific authority citation for § 4.14 is revised, to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624, 2071 note; 46 U.S.C. 501, 60105.

* * * * *

Section 4.14 also issued under 19 U.S.C. 1466, 1498; 31 U.S.C. 9701.

* * * * *

2. In § 4.14:

a. The heading text is revised;

b. Existing paragraph (i)(3) is redesignated as paragraph (i)(4) and a new paragraph (i)(3) is added; and

c. Paragraph (j)(1) is amended by adding a new third sentence.

The additions to § 4.14 read as follows:

§ 4.14

Equipment purchases for, and repairs to, American vessels.

* * * * *

(i) * * *

(3) Application for Relief; failure to file or denial in whole or in part. If no Application for Relief is filed, or if a timely filed Application for Relief is denied in whole or in part, the VRU will determine the amount of duty due and issue a bill to the party who filed the vessel repair entry. If the bill is not timely paid, interest will accrue as provided in § 24.3a(b)(1) of this chapter.

(j) * * *

(1) * * * The owner or master of the vessel who fails to timely pay the duty determined to be due is liable for interest as provided in § 24.3a(b)(1) of this chapter.

* * * * *

PART 24—CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE

3. The general authority citation for part 24 is revised to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States, 1505, 1520, 1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 3717, 9701; Public Law 107-296, 116 Stat. 2135 (6 U.S.C. 1 et seq.).

* * * * *

4. Section 24.3a is amended:

a. In the heading text, by adding after the word “assessment” the words “on bills”;

b. In paragraph (a): by adding after the word “reliquidation)” the language “, or vessel repair duties,”; and by removing the words “shall be” and adding in their place the word “are”;

c. In the heading text to paragraph (b)(1), by adding after the word “for” the words “vessel repair duties,”;

d. In paragraph (b)(2)(i) introductory text, by removing the word “shall” and adding in its place the word “will”;

e. In paragraph (b)(2)(i)(A), by removing the word “shall” and adding in its place the word “will”;

f. In paragraph (b)(2)(i)(B) introductory text, by removing the word “shall”;

g. In paragraph (b)(2)(i)(B)(1), by removing the word “shall” and adding in its place the word “will”;

h. In paragraph (b)(2)(i)(B)(2), by removing the word “shall” and adding in its place the word “will”;

i. In paragraph (b)(2)(i)(B)(3), by removing the word “shall” wherever it appears and adding in each place the word “will”;

j. In paragraph (b)(2)(i)(B)(4), by removing the word “shall” and adding in its place the word “will”;

k. In paragraph (b)(2)(i)(C), by removing the word “shall” and adding in its place the word “will”;

l. In paragraph (b)(2)(ii), by removing the word “shall” wherever it appears and adding in each place the word “will”; and

m. In paragraph (c)(1), by removing the words “CBP Office of Finance, Indianapolis, Indiana” and adding in their place the language “CBP's Revenue Division, Office of Administration”.

Alan Bersin,

Commissioner, U.S. Customs and Border Protection.

Approved: March 29, 2011,

Timothy E. Skud,

Deputy Assistant Secretary of the Treasury.