HQ 0110710 - Vessel Repair Entry No. C11-0002186-9, dated August 10, 1988; Date of Arrival: July 30, 1988; Port of Arrival: Pennsauken, New Jersey; Vessel: M/V AMERICAN CONDOR, Voyage No. 033 - United States International Trade Commision Rulings

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HQ 110710

July 13, 1990

VES-13-18-CO:R:P:C 110710 BEW

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations
ATTN: Regional Vessel Repair Liquidation Unit New York, New York 10048-0945

RE: Vessel Repair Entry No. C11-0002186-9, dated August 10, 1988; Date of Arrival: July 30, 1988; Port of Arrival: Pennsauken, New Jersey; Vessel: M/V AMERICAN CONDOR, Voyage No. 033

Dear Sir:

This is in reference to an application for relief from duties filed by American Transport Lines, in relation to the above referenced vessel repair entry dated August 10, 1988, transmitted to this office by memorandum dated December 18, 1989. We have reviewed the entire record, and render the following advice.

FACTS:

The record shows that the shipyard work in question was performed on the subject vessel in Brixham, United Kingdom, during the month of July 1988.

The subject vessel arrived in the United States at the port of Pennsauken, New Jersey, on July 30, 1988.

The applicant claims that relief for the subject items should be granted because the items should be classified as nondutiable items covered under title 19, United States Code, section 1466 and sections 4.14(a) and 4.14(c) of the Customs Regulations.

The entire vessel repair entry involves a potential duty of $4,951.

You have requested our advice concerning the following items. We will refer to the work using the item numbers and invoice descriptions shown on the attachments and invoices submitted with your memorandum.

ISSUE:

Whether the foreign work performed on the subject vessel is dutiable under 19 U.S.C. 1466.

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, provides in pertinent part for payment of an ad valorem duty of 50 percent of the cost of foreign repairs to a vessel documented under the laws of the United States to engage in the foreign or coastwise trade.

Section 1466 (d)(1) provides that the Secretary of the Treasury is authorized to remit or refund such duties if the owner or master of the vessel was compelled by stress of weather or other casualty to put into such foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination.

We have reviewed all of the elements for which relief is sought and render the following advice:

2. DHS Services invoice - all items are dutiable. The evidence submitted is insufficient to sustain that these costs were labor for general cleaning operations or for cleaning operations relating to modifications/alterations/additions to the hull and fittings.

3. Aber Marine invoice - all items are dutiable, except those costs for rail/air travel, taxi, meals and transportation.

4. D. Van de Wetering B.V. invoice No. 8458 - all items are dutiable. We note that the invoice indicates that the total cost includes transportation and general expenses. Pursuant to C.I.E. 1325/58 and C.I.E. 565/55, duties may not be remitted where the invoice does not segregate the dutiable costs from the non- dutiable costs. Since the cost for transportation is not segregated, the entire cost is dutiable.

5. Bestobell C & I, order No. (80224/A) - all items are dutiable.

In its application of the vessel repair statute (19 U.S.C. 1466), Customs has consistently held that modifications/altera- tions/additions to the hull and fittings of a vessel which allow the vessel to operate more efficiently are not subject to vessel repair duties. Alterations to the hull and fittings of vessels are not within the purview of section 1466, and the cost of the work is not subject to duty. An article must be permanently attached to the vessel and it most be essential to the successful operation of the vessel (see Otte v. United States, 7 C.C.P.A. 166 (1916), and United States v. Richard & Co., 8 Ct. Cust. App. 231, T. D. 37496 (1917). To be found non-dutiable as a modification/alteration/addition, the work must involve no element of repair due to damages, deterioration or wear and tear. If those are present, the work will be considered a repair and dutiable. After reviewing the record, we consider the work done under the following item to be in the nature of non-dutiable modifications/alterations/additions to the hull and fittings rather than dutiable repairs to the vessel due to damage or deterioration:

Item No. 1 - Fleetserve Engineering invoice - items 1 and 4 are considered non-dutiable modifications to the hull and fittings. All other items are dutiable, except rail/air travel and taxi, which are nondutiable expenses.

HOLDING:

The foreign repair work for which the applicant seeks relief is dutiable under 19 U.S.C. 1466 with exception of those items noted above.

Sincerely,

B. James Fritz
Chief

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