Yacht; Dutiability; Documentation; Importation; Exportation

HQ 114301 March 25, 1998 VES-12-02-RR:IT:EC 114301 GEV CATEGORY: Carriers Josann M. Reynolds 25 Hickory Hollow Madison, Wisconsin 53705 RE: Yacht; Dutiability; Documentation; Importation; Exportation Dear Ms. Reynolds: This is in response to your letter dated March 18, 1998, concerning potential duty to be paid on a personal purchase of a motor cruiser. Our position on this matter is set forth below. FACTS: The vessel in question was originally built in Taiwan and brought into the U.S. circa 1985 by Marine Traders International of New Jersey. It was formally entered, duty-paid, and documented by the U.S. Coast Guard with a recreation endorsement. There were two prior private owners and the purchase presently being contemplated is from the third and current owner, a Canadian citizen. For insurance and business purposes the current owner found it necessary to remove its U.S. documentation and register it under the laws of Canada. Although such Canadian registration occurred in 1995, the vessel itself has never entered Canada and no Canadian duty was ever paid on it. Under the current ownership the vessel has remained in U.S. waters on a cruising license with the exception of annual holiday cruises by the owners to the Bahamas. The speculative owners now propose to purchase the vessel and redocument it under the laws of the United States. ISSUE: Whether, under the facts of this case, the above-described foreign-built vessel would again be subject to duty upon its sale to U.S. citizens. - 2 - LAW AND ANALYSIS: The determination as to whether or not a yacht is dutiable when it has previously been subject to Customs entry and payment of duty is dependent on whether it has been exported from the United States after its first importation. In this regard we note that  101.1(k), Customs Regulations (19 CFR  101.1(k)) defines "exportation" as "...a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country." Intent is to be determined from the facts and circumstances surrounding a given case. It should be noted, however, that in interpreting  101.1(k), it has been held that the intention of the parties at the time of shipment abroad is the controlling factor in the determination of whether or not the shipment is an exportation. F.W. Meyers & Co., Inc., v. United States, 29 Cust. Ct. 202, C.D. 1468 (1952) With respect to an imported, duty-paid, U.S.-flagged yacht, Customs has held that "[m]erely removing a yacht from U.S. territorial waters on a temporary foreign pleasure cruise with the intent to return the yacht to the United States would not constitute an exportation." (see Customs ruling letter 103386, dated September 27, 1978, published as C.S.D. 79-85) In addition, it should be noted that any past or future transfers of ownership do not affect its duty-paid status provided the circumstances surrounding the transfers of ownership do not indicate that an exportation has occurred within the meaning of  101.1(k). (Customs ruling letter 109248, dated December 9, 1987) Our position as to whether an exportation has occurred with respect to an imported, duty-paid yacht that, for whatever reason, is foreign-flagged would be in concert with that regarding a U.S.-flagged yacht as stated above. A yacht's country of documentation is not in and of itself determinative as to whether an importation has occurred, but rather, is one of any number of factors to be considered in determining whether the person bringing it into the United States did so with the intent that it remain in this country permanently. (See American Customs Brokerage Co., Inc., A/C Astral Corp. v. United States, 72 Cust. Ct. 245, 254, C.D. 4556, citing Estate of Lev H. Prichard v. United States, 43 CCPA 85, 87-88; see also Customs ruling letter 223889, dated July 8, 1998) The same rationale applies when speaking in terms of whether an exportation has in fact taken place (i.e., country of documentation is but one of any number of factors to be considered and not per se the controlling factor). (See Estate of Lev H. Prichard v. U.S., 43 CCPA 85, 89; see also David B. Roberts v. U.S., 17 CCPA 215, 217) Upon reviewing this matter, we note that the vessel in question was previously imported into the United States and documented under the laws of this country. Although its current owner is a Canadian citizen who had the vessel documented under the laws of Canada, the vessel has never entered Canada and no Canadian duty was ever paid on it. Furthermore, during this ownership the vessel has remained in the United States with the exception of annual holiday cruises to the Bahamas. Given the totality of these circumstances, we have determined that the subject vessel has not been exported from the United States within the meaning of  101.1(k), Customs Regulations. - 3 - HOLDING: Under the facts of this case, the above-described foreign-built vessel would not be subject to duty upon its sale to U.S. citizens. Sincerely, Jerry Laderberg Chief Entry Procedures and Carriers Branch