A vessel puts into the port of Kobe, Japan, to discharge cargo. The vessel contracts a local shipyard to have the hull chipped and scaled. If the vessel provides the primer and paint, which statement is TRUE?
• U.S. customs duty on foreign shipyard repairs when a U.S.-documented vessel goes to a foreign port • Difference between what must be declared to Customs and what is actually dutiable • Whether materials (paint, primer) and labor are treated the same for reporting and duty purposes
• Ask yourself: When a U.S. vessel has work done in a foreign shipyard, does U.S. Customs want to know only about materials, only about labor, or about the entire repair invoice? • Consider whether the absence of duty on a particular item (like labor) automatically means it does not have to be reported at all. • Think about why Customs requires a detailed breakdown of a foreign repair bill (labor vs. parts) and how that might affect what must be declared.
• Verify whether all foreign repair work (including labor) has to be declared to Customs upon return, regardless of whether each component is dutiable. • Check if labor charges are themselves subject to duty, or if only equipment, parts, and materials are dutiable. • Confirm which option correctly separates the ideas of declaration requirement and duty actually charged.
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