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

HQ 113443 May 30, 1995 VES-5-R:IT:C 113443 GEV CATEGORY: Carriers Jerry Aguirre Operation Manager Kokusai Soko America, Inc. 11105 South La Cienega Blvd. Los Angeles, California 90045 RE: Harbor Maintenance Fee; Exemption; 26 U.S.C. §§ 4461, 4462 Dear Mr. Aguirre: This is in response to your facsimile of May 11, 1995, regarding the applicability of the harbor maintenance fee (HMF) to certain ground support equipment used in retrieving a spacecraft. Our ruling on this matter is set forth below. FACTS: Kokusai Soko America, Inc., a freight forwarder, is currently studying the process involved in the retrieval of a NASA spacecraft which will have been launched in Japan. As part of this process, ground support equipment will be imported from Japan by vessel to possibly be entered under an ATA carnet. The importer of record would be Astrotech as a sub-contractor for both the Japanese Government and NASA. However, all items and equipment would always be Japanese-owned. ISSUE: Whether Japanese-owned ground support equipment imported by a sub-contractor for both the Japanese Government and NASA is exempt from the HMF pursuant to 19 CFR § 24.24(c)(7).  - 2 - LAW AND ANALYSIS: Title 26, United States Code, §§ 4461 and 4462, provide for the imposition of the HMF, 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 HMF 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), the specific statutory authority from which § 24.24(c)(7) was promulgated.) In regard to the applicability of the above exemption to the Japanese-owned ground support equipment in question, the fact that a company is a sub-contractor for both the Japanese Government and NASA renders it other than an agency or instrumentality of the U.S. for purposes of § 24.24(c)(7). Furthermore, since the cargo in question will be Japanese-owned at the time of unloading from a vessel at a port subject to the HMF (and will remain so subsequent to the unloading), it cannot be said to be cargo of the U.S. or any agency or instrumentality of the U.S. Accordingly, § 24.24(c)(7) is inapplicable to the importation of the subject ground support equipment. HOLDING: Japanese-owned ground support equipment imported by a sub-contractor for both the Japanese Government and NASA is not exempt from the HMF pursuant to 19 CFR § 24.24(c)(7). Sincerely, Arthur P. Schifflin Chief Carrier Rulings Branch