19 U.S.C. 1466; MAERSK CONSTELLATION; Vessel Repair EntryNo. C28- 0229828-4; Protest; Exchange rate

HQ 114431 August 5, 1998 VES-13-18-RR:IT:EC 114431 GOB CATEGORY: Carriers Port Director of Customs Attn.: Vessel Repair Liquidation Unit, Room 107 P.O. Box 2450 San Francisco, CA 94126 RE: 19 U.S.C. 1466; MAERSK CONSTELLATION; Vessel Repair Entry No. C28- 0229828-4; Protest; Exchange rate Dear Madam: This ruling is in response to your memorandum dated July 20, 1998, which forwarded the protest submitted by Maersk Line Ltd. ("protestant") with respect to the above-referenced vessel repair entry. FACTS: The MAERSK CONSTELLATION (the "vessel"), a U.S.-flag vessel, arrived at the port of Concord, California on December 2, 1997. The subject vessel repair entry was filed on December 8, 1997. Four items are protested - nos. one, three, four, and five on the CF 226 (hereinafter referred to as items one, three, four, and five). The protestant claims that the wrong invoice amount was used with respect to item one. It further asserts that the wrong exchange rates were used with respect to items one, three, four, and five. ISSUES: Whether the invoice amount for item one is correct? Whether the correct exchange rates were used? LAW AND ANALYSIS: 19 U.S.C. 1466 provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to be employed in such trade. The evidence of record reflects that, notwithstanding its obligation to do so (See 19 CFR 4.14.) and notwithstanding Customs' request for the same, the protestant did not submit an invoice for item one until it submitted the subject protest. Based upon the submission of the invoice with this protest, we determine that the value thereon, including the value added tax, is the appropriate value for this item. It has long been Customs' position that a value added tax is part of the dutiable cost of an item. See, for example, Ruling 113187 dated September 13, 1994 which cited numerous earlier Customs rulings. Based upon conversations with your office, we further determine that, because of the earlier absence of the invoice for item one, the incorrect exchange rate was used. The protestant provided the incorrect exchange rate on the CF 226. The correct exchange rate is .140766. That exchange rate is to be used in calculating the vessel repair duty for item one. Based upon conversations with your office, we find that the correct exchange rates were used with respect to items three, four, and five. These rates were the rates in effect on the date that the vessel sailed from the port where the work was performed i.e., October 9, 1997 for items three, four, and five. In Ruling 111691 dated December 19, 1991, we stated: In regard to the conversion rate of foreign currency used in liquidating entries of merchandise, pursuant to 19 CFR 159.32 (referencing 19 CFR 152.1(c)) the rate is that which is in effect on the date of exportation (i.e., the actual date the merchandise finally leaves the country of exportation for the United States). In regard to vessel repair entries, the date of sailing (i.e., the date the vessel left the foreign country where repair work was done) is considered the date of exportation. 19 CFR 159.32 provides that "[t]he date of exportation for currency conversion shall be fixed in accordance with 152.1(c) of this chapter." 19 CFR 152.1(c) provides in pertinent part that " [d]ate of exportation,' or the time of exportation' referred to in section 402, Tariff Act of 1930, as amended (19 U.S.C. 1401a), means the actual date the merchandise finally leaves the country of exportation for the United States." HOLDINGS: As detailed above, the protest is granted in part (item one) and denied in part (items three, four, and five). In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, the Freedom of Information Act and other public access channels. Sincerely, Jerry Laderberg Chief, Entry Procedures and Carriers Branch