Vessel Equipment Temporarily Landed for Repair

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 4

RIN 1515-AC35

Vessel Equipment Temporarily Landed for Repair

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend 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). It is proposed that such

equipment be permitted to be landed for repair and relading aboard the

same vessel, subject to Customs issuance of a special permit or license

for the landed equipment, under an International Carrier Bond.

Uncertainty exists whether the relading of repaired equipment on

vessels departing the United States would satisfy the TIB requirement

that such merchandise be exported. The proposed amendments will

eliminate this uncertainty while still allowing Customs adequate

control over such unladings and ladings.

DATES: Comments must be received on or before May 17, 1999.

ADDRESSES: Written comments may be addressed to and inspected at the

Regulations Branch, U.S. Customs Service, 1300 Pennsylvania Avenue,

N.W., 3rd Floor, Washington, D.C. 20229.

[[Page 13371]]

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 that are landed and delivered from such a vessel are

considered and treated as imported merchandise.

The cited statute is implemented by Sec. 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

reladed, 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 exists 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 Sec. 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 that is

intended to remain aboard that vessel meets the definition of

exportation so that TIB bond liability may 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

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

Sec. 113.64, Customs Regulations (19 CFR 113.64). Paragraph (b) of that

bond provision (Sec. 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.

This proposal would add a new paragraph (g) to Sec. 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, may be landed temporarily in order to be

repaired. Unlading and relading would be in accord with the permit

provisions of Sec. 4.30, and the appropriate International Carrier Bond

would be obligated as provided under Sec. 113.64(b).

Comments

Before adopting this proposal, consideration will be given to any

written comments that are timely submitted to Customs. Comments

submitted will be available for public inspection in accordance with

the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4, Treasury

Department Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs

Regulations (19 CFR 103.11(b)), on regular business days between the

hours of 9:00 a.m. and 4:30 p.m. at the Regulations Branch, U.S.

Customs Service, 1300 Pennsylvania Avenue, N.W., 3rd Floor, Washington,

D.C.

Regulatory Flexibility Act and Executive Order 12866

Because the proposed rule would merely provide 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, if adopted, the proposed

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 E.O. 12866.

Paperwork Reduction Act

The collections of information contained in this notice of proposed

rulemaking have been previously reviewed and approved by the Office of

Management and Budget (OMB) in accordance with the Paperwork Reduction

Act of 1995 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)). 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 assigned by

OMB. Although this document restates the collections of information

without substantive change, comments are specifically requested

concerning:

Whether the proposed collections of information are necessary for

the proper performance of the functions of the agency, including

whether the information will have practical utility;

The accuracy of the estimated burden associated with the proposed

collections of information (see below);

How to enhance the quality, utility, and clarity of the information

to be collected;

How to minimize the burden of complying with the proposed

collections of information, including the application of automated

collection techniques or other forms of information technology; and

Estimates of capital or start-up costs and costs of operation,

maintenance, and purchase of services to provide information.

The collection of information in this proposed regulation is in

Sec. 4.39. This information is required and will be used to effect the

temporary unlading and lading of vessel equipment landed for repair, in

order to ensure enforcement of the Customs and related laws and the

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protection of the revenue. The likely respondents are business or other

for-profit institutions.

Estimated annual reporting and/or recordkeeping burden: one hour.

Estimated average annual burden per respondent/recordkeeper: one

hour.

Estimated number of respondents and/or recordkeepers: one.

Estimated annual frequency of responses: one.

Comments concerning suggestions for reducing the burden of the

collections of information should be sent to the Regulations Branch,

Office of Regulations and Rulings, U.S. Customs Service, 1300

Pennsylvania Avenue, N.W., 3rd Floor, Washington, D.C. 20229. A copy

should also be sent to U.S. Customs Service, Information Services

Group, Attention: J. Edgar Nichols, Room 3.2-C, 1300 Pennsylvania

Avenue, N.W., Washington, D.C. 20229. Comments should be submitted

within the time frame that comments are due regarding the substance of

the proposal.

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 in 19 CFR Part 4

Customs duties and inspection, Entry, Inspection, Merchandise,

Reporting and recordkeeping requirements, Vessels.

Proposed Amendments to the Regulations

It is proposed to amend part 4, Customs Regulations (19 CFR part

4), 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 Sec. 4.39 would 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. It is proposed to amend Sec. 4.39 by adding a new paragraph (g)

to read as follows:

Sec. 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 Sec. 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 Sec. 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.

Approved: February 23, 1999.

Raymond W. Kelly,

Commissioner of Customs.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 99-6640 Filed 3-17-99; 8:45am]

BILLING CODE 4820-02-P