[Federal Register Volume 65, Number 116 (Thursday, June 15, 2000)]
[Proposed Rules]
[Pages 37501-37504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-15202]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 4 and 113

RIN 1515-AC58


Deferral of Duty on Large Yachts Imported for Sale

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend the Customs Regulations to set 
forth procedures for the deferral of entry filing and duty collection 
on certain yachts imported for sale at boat shows in the United States. 
The proposed regulatory amendments reflect a change in the law effected 
by section 2406 of the Miscellaneous Trade and Technical Corrections 
Act of 1999.

DATES: Comments must be received on or before August 14, 2000.

ADDRESSES: Written comments may be addressed to, and inspected at, the 
Regulations Branch, U.S. Customs Service, 1300 Pennsylvania Avenue, 
NW., 3rd Floor, Washington, DC 20229.

FOR FURTHER INFORMATION CONTACT:
    Legal matters: Larry L. Burton, Office of Regulations and Rulings 
(202-927-1287).
    Operational matters: Robert Watt, Office of Field Operations (202-
927-3654).

SUPPLEMENTARY INFORMATION:   

Background

    Section 2406(a) of the Miscellaneous Trade and Technical 
Corrections Act of 1999 (the Act, Public Law 106-36, 113 Stat. 127) 
amended the Tariff Act of 1930 by the addition of a new section 484b 
(19 U.S.C. 1484b). Section 484b provides that an otherwise dutiable 
``large yacht'' (defined in the section as ``a vessel that exceeds 79 
feet in length, is used primarily for recreation or pleasure, and has 
been previously sold by a manufacturer or dealer to a retail 
consumer'') may be imported without the payment of duty if the yacht is

[[Page 37502]]

imported with the intention to offer for sale at a boat show in the 
United States. The statute provides generally for the deferral of 
payment of duty until the yacht is sold but specifies that the duty-
deferral period may not exceed 6 months.
    In order to qualify for deferral of duty payment at the time of 
importation of a large yacht, the statute provides that the importer of 
record must: (1) certify to Customs that the yacht is imported pursuant 
to section 484b for sale at a boat show in the United States; and (2) 
post a bond, having a duration of 6 months after the date of 
importation, in an amount equal to twice the amount of duty on the 
yacht that would otherwise be imposed under subheading 8903.91.00 or 
8903.92.00 of the Harmonized Tariff Schedule of the United States 
(HTSUS). The statute further provides that if the yacht is sold within 
the 6-month period after importation, or if the yacht is neither sold 
nor exported within the 6-month period after importation, entry must be 
completed and duty must be deposited with Customs (with the duty 
calculated at the applicable HTSUS rate based on the value of the yacht 
at the time of importation) and the required bond will be returned to 
the importer. The statute further provides that no extensions of the 6-
month bond period will be allowed, that any large yacht exported in 
compliance with the 6-month bond period may not be reentered for 
purposes of sale at a boat show in the United States (in order to 
receive duty-deferral benefits) for a period of 3 months after that 
exportation, and that the Secretary of the Treasury is authorized to 
make rules and regulations as may be necessary to carry out the 
provisions of the statute. Finally, under section 2406(b) of the Act, 
the amendment made by section 2406(a) of the Act applies with respect 
to any large yacht imported into the United States after July 10, 1999.
    In order to reflect the terms of new section 484b, Customs proposes 
in this document to amend the Customs Regulations by the addition of a 
new Sec. 4.94a (19 CFR 4.94a). In addition, Customs proposes to amend 
part 113 of the Customs Regulations (19 CFR part 113), which sets forth 
provisions regarding Customs bonds, by the addition of a new 
Sec. 113.75 and a new appendix provision setting forth the text of the 
bond required to be posted by the importer of record under new section 
484b.
    In light of the above statutory amendment and its effective date, 
and pending adoption of appropriate amendments to the Customs 
Regulations, Customs formulated and implemented interim nonregulatory 
procedures for processing the arrival of qualifying yachts under the 
statutory provision in order to ensure that the public receives the 
benefits under the statute as intended by Congress. Those interim 
procedures, which included special bond requirements, will cease to 
apply upon the effective date of final action on the regulatory 
proposals set forth in this document.

Comments

    Before adopting this proposal as a final rule, consideration will 
be given to any written comments timely submitted to Customs, including 
comments on the clarity of this proposed rule and how it may be made 
easier to understand. Comments submitted will be available for public 
inspection in accordance with the Freedom of Information Act (5 U.S.C. 
552), Sec. 1.4, Treasury Department Regulations (31 CFR 1.4), and 
Sec. 103.11(b), Customs Regulations (19 CFR 103.11(b)), on regular 
business days between the hours of 9 a.m. and 4:30 p.m. at the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1300 Pennsylvania Avenue, NW., 3rd Floor, Washington, DC.

Regulatory Flexibility Act and Executive Order 12866

    Pursuant to the provisions of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), it is certified that the proposed amendments, if 
adopted, will not have a significant economic impact on a substantial 
number of small entities. The proposed amendments directly reflect a 
statutory provision that accords procedural and financial benefits to 
members of the general public who import large yachts for purposes of 
sale. Accordingly, the proposed amendments are not subject to the 
regulatory analysis or other requirements of 5 U.S.C. 603 and 604. 
Furthermore, this document does not meet the criteria for a 
``significant regulatory action'' as specified in Executive Order 
12866.

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507).
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    The collection of information in this document is in Sec. 4.94a. 
This information is required and will be used to effect the deferral of 
duty collection on certain pleasure vessels, in order to ensure 
enforcement of the Customs and related laws and the protection of the 
revenue. The likely respondents are owners of large pleasure vessels.
    Estimated annual reporting and/or recordkeeping burden: 28 hours.
    Estimated average annual burden per respondent/recordkeeper: 1 
hour.
    Estimated number of respondents and/or recordkeepers: 28.
    Estimated annual frequency of responses: 1.
    Comments on the collection of information should be sent to the 
Office of Management and Budget, Attention: Desk Officer of the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503. A copy should also be sent to the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1300 Pennsylvania Avenue, NW., 3rd Floor, Washington, DC 
20229. Comments should be submitted within the time frame that comments 
are due regarding the substance of the proposal.
    Comments are invited on: (a) Whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information shall have practical utility; (b) the 
accuracy of the agency's estimate of the burden of the collection of 
the information; (c) ways to enhance the quality, utility, and clarity 
of the information to be collected; (d) ways to minimize the burden of 
the collection of information on respondents, including through the use 
of automated collection techniques or other forms of information 
technology; and (e) estimates of capital or startup costs and costs of 
operations, maintenance, and purchase of services to provide 
information.

List of Subjects

19 CFR Part 4

    Customs duties and inspection, Entry, Imports, Reporting and 
recordkeeping requirements, Vessels, Yachts.

19 CFR Part 113

    Bonds, Customs duties and inspection, Imports, Reporting and 
recordkeeping requirements, Surety bonds, Vessels.

Proposed Amendments to the Regulations

    For the reasons stated above, it is proposed to amend parts 4 and 
113, Customs Regulations (19 CFR parts 4 and 113), as set forth below.

[[Page 37503]]

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

    1. The general authority citation for part 4 continues to read, and 
a specific authority citation for Sec. 4.94a is added to read, as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624; 
46 U.S.C. App. 3, 91.
* * * * *
    Section 4.94a also issued under 19 U.S.C. 1484b;
* * * * *
    2. A new Sec. 4.94a is added to read as follows:


Sec. 4.94a  Large yachts imported for sale.

    (a) General. An otherwise dutiable vessel used primarily for 
recreation or pleasure and exceeding 79 feet in length that has been 
previously sold by a manufacturer or dealer to a retail consumer and 
that is imported with the intention to offer for sale at a boat show in 
the United States may qualify at the time of importation for a deferral 
of entry completion and deposit of duty. The following requirements and 
conditions will apply in connection with a deferral of entry completion 
and duty deposit under this section:
    (1) The importer of record must certify to Customs in writing that 
the vessel is being imported pursuant to 19 U.S.C. 1484b for sale at a 
boat show in the United States;
    (2) The certification referred to in paragraph (a)(1) of this 
section must be accompanied by the posting of a single entry bond 
containing the terms and conditions set forth in appendix C of part 113 
of this chapter. The bond will have a duration of 6 months after the 
date of importation of the vessel, and no extensions of the bond period 
will be allowed;
    (3) The filing of the certification and the posting of the bond in 
accordance with this section will constitute a release of the 
merchandise by Customs;
    (4) All subsequent transactions with Customs involving the vessel 
in question, including any transaction referred to in paragraphs (b) 
through (d) of this section, must be carried out in the same port of 
entry in which the certification was filed and the bond was posted 
under this section; and
    (5) The vessel in question will not be eligible for issuance of a 
cruising license under Sec. 4.94.
    (b) Exportation within 6-month period. If a vessel for which entry 
completion and duty payment are deferred under paragraph (a) of this 
section is not sold but is exported within the 6-month bond period 
specified in paragraph (a)(2) of this section, the importer of record 
must inform Customs in writing of that fact within 30 calendar days 
after the date of exportation. The bond posted with Customs will be 
returned to the importer of record and no entry completion and duty 
payment will be required. The exported vessel will be precluded from 
reentry under the terms of paragraph (a) of this section for a period 
of 3 months after the date of exportation.
    (c) Sale within 6-month period. If a vessel for which entry 
completion and duty payment are deferred under paragraph (a) of this 
section is sold within the 6-month bond period specified in paragraph 
(a)(2) of this section, the importer of record within 15 calendar days 
after the sale must complete the entry by filing an Entry Summary 
(Customs Form 7501) and must deposit the appropriate duty (calculated 
at the applicable rates provided for under subheading 8903.91.00 or 
8903.92.00 of the Harmonized Tariff Schedule of the United States and 
based upon the value of the vessel at the time of importation). Upon 
entry completion and deposit of duty under this paragraph, the bond 
posted with Customs will be returned to the importer of record.
    (d) Expiration of bond period. If the 6-month bond period specified 
in paragraph (a)(2) of this section expires without either sale or 
exportation of a vessel for which entry completion and duty payment are 
deferred under paragraph (a) of this section, the importer of record 
within 15 calendar days after expiration of that 6-month period must 
complete the entry by filing an Entry Summary (Customs Form 7501) and 
must deposit the appropriate duty (calculated at the applicable rates 
provided for under subheading 8903.91.00 or 8903.92.00 of the 
Harmonized Tariff Schedule of the United States and based upon the 
value of the vessel at the time of importation). Upon entry completion 
and deposit of duty under this paragraph, the bond posted with Customs 
will be returned to the importer of record, and a new bond on Customs 
Form 301, containing the bond conditions set forth in Sec. 113.62 of 
this chapter, may be required by the appropriate port director.

PART 113--CUSTOMS BONDS

    1. The general authority citation for part 113 continues to read, 
and a specific authority citation for Sec. 113.75 and appendix C is 
added to read, as follows:

    Authority: 19 U.S.C. 66, 1623, 1624.
* * * * *
    Section 113.75 and Appendix C also issued under 19 U.S.C. 1484b.

    2. Part 113 is amended by adding a new Sec. 113.75 to read as 
follows:


Sec. 113.75  Bond conditions for deferral of duty on large yachts 
imported for sale at United States boat shows.

    A bond for the deferral of entry completion and duty deposit 
pursuant to 19 U.S.C. 1484b for a dutiable large yacht imported for 
sale at a United States boat show must conform to the terms of appendix 
C to this part. The bond must be filed in accordance with the 
provisions set forth in Sec. 4.94a of this chapter.
    3. Part 113 is amended by adding at the end a new appendix C to 
read as follows:

Appendix C to Part 113--Bond for Deferral of Duty on Large Yachts 
Imported for Sale at United States Boat Shows

Bond for Deferral of Duty on Large Yachts Imported for Sale at 
United States Boat Shows

    ________________, as principal, and ________________, as surety, 
are held and firmly bound to the UNITED STATES OF AMERICA in the sum 
of ________________ dollars ($________), for the payment of which we 
bind ourselves, our heirs, executors, administrators, successors, 
and assigns, jointly and severally, firmly by these conditions.
    Pursuant to the provisions of 19 U.S.C. 1484b, the principal has 
imported at the port of ________ a dutiable large yacht (exceeding 
79 feet in length, used primarily for recreation or pleasure, and 
previously sold by a manufacturer or dealer to a consumer) 
identified as ________________ for sale at a boat show in the United 
States with deferral of entry completion and duty deposit and has 
executed this obligation as a condition precedent to that deferral.
    If the principal fails to comply with any condition of this 
obligation, which includes compliance with any requirement or 
condition set forth in 19 U.S.C. 1484b or 19 CFR 4.94a, the 
principal and surety jointly and severally agree to pay to Customs 
an amount of liquidated damages equal to twice the amount of duty on 
the large yacht that would otherwise be imposed under subheading 
8903.91.00 or 8903.92.00 of the Harmonized Tariff Schedule of the 
United States. For purposes of this paragraph, the term ``duty'' 
includes any duties, taxes, fees and charges imposed by law.
    The principal will exonerate and hold harmless the United States 
and its officers from or on account of any risk, loss, or expense of 
any kind or description connected with or arising from the failure 
to store and deliver the large yacht as required, as well as from 
any loss or damage resulting from fraud or negligence on the part of 
any officer, agent, or other person employed by the principal.
    WITNESS our hands and seals this ____ day of ________ (month), 
________ (Year).


[[Page 37504]]


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(Name)    (Address)

__________________________________[SEAL]
(Principal)

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(Name)    (Address)

__________________________________[SEAL]
(Surety)

Certificate as to Corporate Principal

    I, ________________, certify that I am the *________________ of 
the corporation named as principal in the attached bond; that 
________________, who signed the bond on behalf of the principal, 
was then ________________ of that corporation; that I know his 
signature, and his signature to the bond is genuine; and that the 
bond was duly signed, sealed, and attested for and in behalf of the 
corporation by authority to its governing body.

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[CORPORATE SEAL]

(To be used when no power of attorney has been filed with the port 
director of customs.)
*May be executed by the secretary, assistant secretary, or other 
officer of the corporation.

    Approved: April 14, 2000.
Raymond W. Kelly,
Commissioner of Customs.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.

[FR Doc. 00-15202 Filed 6-14-00; 8:45 am]
BILLING CODE 4820-02-P