Laws, Regulations and Annotations


Business Taxes Law Guide—Revision 2024

Sales and Use Tax Annotations

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325.0000 Interstate and Foreign Commerce—Regulation 1620

Annotation 325.1390

(c) Shipments from California to Points Outside State

(5) Exports

325.1390 Sale of Vessel to Foreign Purchaser. A vessel designed to carry lumber was sold to a foreign purchaser who has never conducted any business in this state. All of the necessary paperwork and approvals were obtained from the Maritime Administration and the Collector of Customs, including the surrender of the ship's Certificate of Enrollment and License. The seller also filed a Customs Declaration listing the vessel as an export and showing a foreign port as the place and country of ultimate destination. After a foreign crew was placed aboard, the vessel was moved to a repair facility in California where it was determined that repairs would be too costly. The vessel was taken to a salvage yard in California.

In Matson Navigation Co. v. SBE, 136 Cal.App.2d 577, the court held that the sale and delivery of a steam ship of American registry to a nonresident alien buyer never having done business in this state commits the ship irrevocably to foreign trade, in view of 46 U.S. Code 883, which prohibits such a ship from thereafter engaging in domestic trade. The court held that the act of sale itself constitutes exportation. While the vessel did not leave port, this is an incident of foreign rather than domestic commerce. The sale to the foreign purchaser is exempt as an export. Should the vessel be scrapped or sold to a California customer for some other purpose, the transaction should be classed as an import. 4/10/68.