[Federal Register Volume 59, Number 75 (Tuesday, April 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9282]
[[Page Unknown]]
[Federal Register: April 19, 1994]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 4
RIN 1515-AB42
[T.D. 94-41]
Extension of Time Limit in Which To File Vessel Repair Documents
AGENCY: Customs Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs Regulations to extend the
time limit allowed to vessel operators to file documentation submitted
in connection with vessel repair entries, including applications for
relief from the assessment of duties under the vessel repair statute.
It also amends the regulations to require that any shipyard cost
estimates available be submitted at the time that a vessel repair entry
is made. These changes will expedite the decision process in
determining duty liability.
EFFECTIVE DATE: May 19, 1994.
FOR FURTHER INFORMATION CONTACT: Bruce Friedman, Office of Trade
Operations, 202-343-0024 (operational matters), or Larry L. Burton,
202-482-6940 (legal matters).
SUPPLEMENTARY INFORMATION:
Background
On January 13, 1993, a document was published in the Federal
Register (58 FR 4114) soliciting comments regarding a Customs proposal
to amend the Customs Regulations regarding the time limit available for
the submission of documentation in support of required vessel repair
entries.
Section 1466 of title 19 of the United States Code provides that a
duty of 50 per cent ad valorem shall be assessed upon the value of
repairs accomplished outside of the United States on certain American-
flag vessels. The statute itself and numerous judicial and
administrative interpretations provide exceptions to the assessment of
duty under specific circumstances.
The statutory mandate is implemented under section 4.14 of the
Customs Regulations (19 CFR 4.14), which provides the necessary working
guidelines for Customs as well as vessel operators. Among the matters
set forth in Sec. 4.14 are the procedures for making entry and for
seeking administrative refund or remission of assessed duty. It is
required that American-flag vessels submit a vessel repair entry to
Customs within 5 days of arrival from a foreign port following any
shipyard work. Depending upon whether actual shipyard invoices are
available at the time an entry is submitted, the regulations provide
that such entry may be denominated either a complete or incomplete
submission.
The regulations provide, absent the grant of an extension, that in
the case of entries submitted as incomplete accounts, a full and
complete account of foreign shipyard costs incurred must be submitted
to Customs within 60 days from the date of vessel arrival in the United
States (19 CFR 4.14(b)(2)(ii)).
It has long been heard from vessel operators that the matter of
final charges is frequently the subject of negotiation between
themselves and foreign shipyards. It was claimed that this process
often makes it impossible to meet the regulatory submission deadline
without the necessity of seeking an extension from Customs. Customs had
been reluctant to extend the filing period, recognizing that extending
the period for the gathering of all evidence has the inevitable effect
of delaying the eventual collection of the revenue. Customs has come to
believe, however, that such a delay already existed owing to the large
number of operators seeking extensions, and that a savings could be
realized by not having to process numerous requests for extension. With
publication of the January 13, 1993, notice, Customs proposed extending
the filing period from the 60-day limit to a period of 90 days.
At the same time, Customs took the opportunity to propose an
additional amendment to the vessel repair regulations. In the case of
vessel repair entries submitted as incomplete accounts, Customs
requires that the best estimate of foreign repair costs be provided
pending receipt of actual final invoices. Such statements of cost are
used to calculate the amount of the bond or duties that must be
deposited with Customs prior to departure of vessels from port.
It has been noted that on some occasions, final invoice amounts
vary greatly from initially estimated costs, and that the revenue has
been inadequately protected by small deposits or bonds. It is also
known that in many cases, written estimates from foreign shipyards have
been provided to vessel operators prior to the commencement of repair
operations. Customs merely proposed to require that when a written
estimate has been provided to a vessel operator, documentary evidence
of that estimated cost must be filed at the time of submission of an
incomplete vessel repair entry.
Discussion of Comments
Five comments were received in response to the proposal. Four were
from vessel operators and interested industry members, and one was from
within the Customs Service. A discussion of the specific comments
follows.
Comment: The additional time proposed to submit documentation is
needed and its addition is welcomed. However, a major and much more
general review of the regulations should be undertaken. As for the
proposal to require the submission of written cost estimates which may
be in the possession of a vessel operator, that element should be
deleted. Such estimates are not always accurate and inclusion of this
element in the regulations may be interpreted by Customs officers in
the field as a requirement for all vessel entries.
Response: Customs is planning to undertake a total revision of the
vessel regulations, to include those governing vessel repair matters,
as soon as practicable. As to the accuracy of written estimates,
Customs prefers to have some written benchmark for establishing cost
rather than just a best guess. Further, there are only three Vessel
Repair Liquidation Units, all of which are familiar with and well
practiced at applying the Customs Regulations. All three Units are in
frequent contact with Customs Headquarters and thus any interpretive
problems could be quickly resolved.
Comment: The focus should be on elimination of the 50 per cent duty
on foreign repairs to United States vessels. The duty is an operational
and administrative burden to vessel operators.
Response: The comment is non-responsive to the published notice and
solicitation of comments. The Customs Service merely enforces the
statute as enacted by the Congress. Any change regarding the amount of
the vessel repair duty would require Congressional action. If repeal of
the statute is desired, it would be appropriate to lobby the Congress
and not Customs.
Comment: While in general agreement with the proposal, it should be
recognized that the final cost of foreign repairs is invariably less
than the written estimates received from shipyards. It is unfair to
liquidate entries 90 days after entry based upon such high estimates.
Response: In addition to the initial filing period, the regulations
also provide for a 30-day field-granted filing extension as well as an
additional filing extension of unspecified length to be granted by
Customs Headquarters. These combined periods in addition to the initial
90 days should provide sufficient time to obtain final cost figures
upon which liquidation may be based.
Comment: The extension to a 90-day filing period is needed and
welcomed. In regard to the additional element concerning the submission
of cost estimates, the wording of the proposal should be altered to
make it clear that actual estimate documents need not be submitted, and
that only the estimated cost amounts are needed.
Response: Customs does not expect cost estimates to be obtained by
all vessel operators anticipating the filing of vessel entries.
However, to the extent that such documentation already exists, Customs
does not believe it to be overly burdensome to require the submission
of copies of those documents. Given the fact that the regulations allow
five working days after arrival for the submission of a vessel repair
entry, it should be possible to provide existing written cost estimates
to Customs by the time the entry process is completed.
Comment: The addition of 30 days to the filing time is unnecessary
and will only serve to further delay the entry liquidation process.
Further, the language of the proposal should have been written to
require the submission of written estimates with all entries which are
filed as incomplete.
Response: Customs disagrees. The proposal was limited to requiring
the submission of existing estimated cost documents. Customs does not
wish to require that each operator generate new documentation and
submit it during the entry process.
Conclusion
After careful consideration of all comments received and further
review of the matter, it has been determined that the amendments should
be adopted.
Executive Order 12866
This document is not a ``significant regulatory action'' as defined
in E.O. 12866.
Regulatory Flexibility Act
Based on the above discussion, pursuant to the provisions of the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.), it is certified that
the amendment will not have a significant economic impact on a
substantial number of small entities. Accordingly, they are not subject
to the regulatory analysis or other requirements of 5 U.S.C. 603 and
604.
Drafting Information
The principal author of this document was Larry L. Burton, Carrier
Rulings Branch, U.S. Customs Service. However, personnel from other
Customs offices participated in its development.
List of Subjects in 19 CFR Part 4
Customs duties and inspection, Reporting and recordkeeping
requirements, Vessels.
Amendments to the Regulations
Part 4, Customs Regulations (19 CFR part 4), is amended as set
forth below:
PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES
1. The general authority citation for part 4, Customs Regulations
(19 CFR part 4) and the relevant specific authority citation for
Sec. 4.14 (19 CFR 4.14) 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 4.14 also issued under 19 U.S.C. 1466, 1498;
* * * * *
Sec. 4.14 [Amended]
2. Section 4.14(b)(1) is amended by removing the reference to
``Sec. 113.14(m)'' and adding in its place ``Sec. 113.13''.
3. Section 4.14(b)(2)(ii) introductory text, (b)(2)(ii)(B), and
(d)(1)(ii) are amended by removing the references to ``60'' where they
appear, and adding in their places references to ``90.''
4. Section 4.14(b)(2)(ii) introductory text is amended by adding
after the word ``arrival'' in the second sentence, the following new
language: ``, except that evidence of estimated foreign shipyard cost
in the possession of or known to the vessel operator must be submitted
at the time entry is made.''
Samuel H. Banks,
Acting Commissioner of Customs.
Approved: March 31, 1994.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 94-9282 Filed 4-18-94; 8:45 am]
BILLING CODE 4820-02-P
