HQ 112508: Tonnage Taxes; Entry of vessels; Two or More Ports; 46 U.S.C. App. 121; 19 CFR 4.20

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 112508

                         April 15, 1993

VES-11-11 CO:R:IT:C  112508 BEW 

CATEGORY: Carriers
 
District Director of Customs
Miami, Florida, 33131

RE:  Tonnage Taxes; Entry of vessels; Two or More Ports; 46 U.S.C.
     App. 121; 19 CFR 4.20

Dear Madam:

     This is in reference to your memorandum of October 23, 1992,
in which you request a ruling regarding the proper tonnage tax
assessment for vessels arriving with cargo or passengers taken at
two or more ports to which different rates of tonnage taxes are
applicable.

FACTS:

     You state the following scenario:

     1.  A vessel loads cargo in Chile for discharge in  U.S.
     ports;

     2.  The vessel then proceeds to Panama, where it loads
     additional cargo for discharge in U. S. ports;

     3.  The vessel proceeds to Miami, Florida, its first U.S.
     port;

     4.  Upon formal entry in Miami, it is determined that five
     (5) payments of tonnage taxes at the 27-cent rate have already
     been collected during the current tonnage year, i.e., the
     vessel is "paid up" at the 27-cent rate;

     5.  Additionally, two (2) payments at the 9-cent rate have
     also been collected during the current tonnage year. 

     Since the vessel has made five (5) payments at the higher rate
of 27-cents for this tonnage year, you ask whether the vessel is
required to pay tonnage tax at the 9-cent rate since the vessel had
on board cargo which had been loaded at Panama, a 9-cent port, and
cargo which had been loaded at Chile, a 27-cent port when it
arrived at the first U.S. port of entry.

ISSUES:

     1.  Whether a vessel which arrives with cargo from two or more
     foreign ports to which different rates of tonnage tax are
     applicable is subject to the assessment of tonnage at the
     higher rate of 27-cent.

     2.   Whether a vessel which arrives with cargo from two or
     more foreign ports to which different rates of tonnage tax
     are applicable and has paid five payments tonnage tax at the
     27-cent rate is subject to the assessment of tonnage at the
     lower 9-cent rate.
 
LAW AND ANALYSIS:

     The Omnibus Budget Reconciliation Act of 1990, amended 46
U.S.C. App. 121, to increase the tonnage taxes collected from
vessels arriving in the United States from foreign ports.  For all
vessels entering a port of the United States from any foreign port
or place in North America, Central American, the West Indies, the
Bahamas Islands, the Bermuda Islands, Newfoundland, or the coast
of South American bordering on the Caribbean Sea (considered to
include the mouth of the Orinoco River), or the high seas adjacent
to the United States or the above listed locations, to 9 cents per
ton, not to exceed in the aggregate of 45 cents per ton in any one
year.  For vessels entering a port of the United States from any
other foreign port or place, the amount of tonnage tax was
increased to 27 cents per ton, not to exceed $1.35 per ton per
year.

     The Customs Regulations pertaining to tonnage taxes and light
money are found in section 4.20-4.24, Customs Regulations (19 CFR
4.20-4.24).  Section 4.20 (a)(4) provides:

          If the vessel arrives in the United States with cargo or
          passengers taken at two or more ports to which different
          rates are applicable, tonnage tax shall be collected at
          the higher rate.

     Under the foregoing section of the Customs Regulations, the
tonnage taxes would be assessed against the subject vessel at the
higher rate of 27-cent, unless exempted under section 4.21 of the
Customs Regulations (19 CFR 4.21).
     Section 4.20(b) as amended on March 10, 1993 provides:

          There may be 5 payments at the maximum (27-
          cent) and 5 at the minimum (9-cent) rate
          during a tonnage year, so that the maximum
          assessment of tonnage duty may amount to $1.80
          per net ton for the tonnage year of a vessel
          engaged in alternating trade.

     In Headquarters letter MA 214.1 E, dated June 12, 1963,
Customs ruled that a vessel coming in to Puerto Rico with cargo
taken on board at both 2 and 6-cent ports, would be subject to the
payment of tonnage tax at the higher rate under the provisions of
4.20(a)(4) of the Customs Regulations.  However, since five
previous payments had been made at the 6-cent rate during the
tonnage year, the vessel was exempted from the payment of tonnage
upon the entry at Puerto Rico.
     
     Based on the foregoing, under the above stated scenario, the
subject vessel would be subject to the 27-cent rate.  However,
since the vessel operator has paid the maximum payments at the
higher rate, under the above circumstances the vessel would be
exempted from the payment of tonnage tax upon entry at a U.S. port
during the current tonnage year.

HOLDING:
     
     1.  A vessel which arrives with cargo from two or more foreign
     ports to which different rates of tonnage tax are applicable
     is subject to the assessment of tonnage at the higher rate of
     27 cents.

     2.   A vessel which arrives with cargo from two or more
     foreign ports to which different rates of tonnage tax are
     applicable, and has paid the maximum of five payments of
     tonnage tax at the 27-cent rate, is exempt from the payment
     of tonnage tax upon entry at a U.S. port during the current
     tonnage year.

                                   Sincerely,




               
                                   Acting Chief
                                   Carrier Rulings Branch