Harbor Maintenance Fee; Exemption; 26 U.S.C. 4461, 4462

HQ 113215 September 16, 1994 VES-5-CO:R:IT:C 113215 GEV CATEGORY: Carriers Stephen Murchake Tax Manager Steuart Petroleum Company 4646 Fortieth Street, N.W. Washington, 20016 RE: Harbor Maintenance Fee; Exemption; 26 U.S.C. 4461, 4462 Dear Mr. Murchake: This is in response to your letter dated August 30, 1994, requesting a ruling that certain jet fuel transported by your company be exempted from the harbor maintenance fee. Our ruling on this matter is set forth below. FACTS: Steuart Petroleum Company ("Steuart") has contracted with the Defense Fuel Supply Center ("DFSC") for the shipment of JP-5 jet fuel owned by the Defense Logistics Agency ("DLA"). Upon receipt of the fuel from Baton Rouge, Louisiana via pipeline at its terminal in Cockpit Point, Virginia, Steuart will transport it by barge to the following locations: Piney Point Industries, Washington, D.C.; Standard Transpipe, Virginia Beach, Va.; DFSP Norfolk, Craney Island and Yorktown, Va.; and the Naval Air Station at Patuxent River, Md. A copy of the aforementioned contract, effective May 13, 1981, was enclosed in the requesting letter. The particular jet fuel in question (JP-5) is a blend of kerosene and gasoline used exclusively in military aircraft. This is in contrast to JP-1 which is pure kerosene and used in commercial aviation. Furthermore, Steuart is licensed for all products except for aviation fuels for IRS purposes and therefore cannot trade in JP-5 jet fuel. ISSUE: Whether JP-5 jet fuel owned by the Defense Logistics Agency is exempt from the harbor maintenance fee pursuant to 24.24(c)(7), Customs Regulations (19 CFR 24.24(c)(7)). - 2 - LAW AND ANALYSIS: Title 26, United States Code, 4461 and 4462 provide for the imposition of the harbor maintenance fee, including special rules regarding its administration. The applicable regulatory authority promulgated pursuant to these statutes is found in 24.24, Customs Regulations (19 CFR 24.24). Specifically, 24.24(a) provides in pertinent part: "Commercial cargo loaded on or unloaded from a commercial vessel is subject to a port use fee of 0.125 percent (.00125) of its value if the loading or unloading occurs at a port within the definition of this section, unless exempted under paragraph (c) of this section..." (emphasis added) Included among the above-referenced exemptions is 24.24(c)(7) which provides that the harbor maintenance fee does not apply to, "Cargo or vessels of the U.S. or any agency or instrumentality of the U.S." (See also 26 U.S.C. 4462(e)) In regard to the JP-5 jet fuel under consideration, it is apparent that it is cargo of a U.S. agency (DLA). Accordingly, it is exempt from the harbor maintenance fee pursuant to 24.24(c)(7). HOLDING: The JP-5 jet fuel under consideration which is owned by the Defense Logistics Agency is exempt from the harbor maintenance fee pursuant to 19 CFR 24.24(c)(7). Sincerely, Arthur P. Schifflin Chief Carrier Rulings Branch