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HQ 110711


July 13, 1990

VES-13-18-CO:R:P:C 110711 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. C11-0002189-3, dated August 11, 1988; Date of Arrival: August 9, 1988; Port of Arrival: Philadelphia, Pennsylvania; Vessel: M/V AMERICAN FALCON, Voyage No. 034

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 11, 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 Rotterdam, Holland, during the month of July 1988.

The subject vessel arrived in the United States at the port of Philadelphia, Pennsylvania, on August 9, 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 $7,576.77.

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:

1. SAACKE invoice No. 13591 - insufficient evidence to sustain that this was a free exchange item, all items are dutiable.

2. Sigma Coatings invoice No. 963280/000168 - all items are dutiable.

3a. Aug. Kopeke & Co. invoice No. 27967 - all items are dutiable.

3b. Aug. Kopeke & Co. invoice No. 27981 - all items are dutiable.

4a. Ship Spares invoice No. 1505 - all items are dutiable.

4b. Ship Spares invoice No. 1506 - all items are dutiable.

4c. Ship Spares Invoice No. 1631 - all items are dutiable, except those costs for transportation.

5. Fuji Trading (America) Inc. invoice No. 306870 - all items are dutiable, except those costs transportation.

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

9. Diesel Power Services invoice T.160 - all items are dutiable, except those costs for rail/air travel, taxi, meals and transportation.

10. EB Communications invoice No. 05770 - all items are dutiable, except those costs for rail/air travel, taxi, meals and transportation.

11. Felixstowe Marine Electronics No. 5000 - all items are dutiable.

12. D. Van de Wetering B.V. invoice No. JVR/SR S 907/8475 - all items are dutiable.

13a. & 13b. Mobiltec invoice No. 187/88, pages 1 & 2 - all items are dutiable, except those costs for rail/air travel, taxi, meals and transportation.

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. 8 - Fleetserve Engineering invoice - items 1, 2, 3, and 6 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.

With regard to Item No. 6 - International Lashing Systems Limited invoice No. 2531, this invoice reveals that 600 pieces of web car lashing straps and 100 pieces of chain lashings were purchased. We cannot determine from the evidence submitted whether the lashings are being imported for installation on other vessels are whether they were installed on the subject vessel. Under the provisions of T.D. 70-214(24), copy enclosed,
we held that equipment imported into the United States for installation on a vessel other than the importing vessel is not dutiable under the vessel repair statute but is dutiable under the Harmonized Tariff Schedules of the United States as other merchandise imported into the United States.

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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