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HQ 111006

July 27, 1990

VES-13-18-CO:R:P:C 111006 GV

CATEGORY: CARRIER

Chief, Technical Branch
Pacific Region
1 World Trade Center
Long Beach, California 90831

RE: Vessel Repair; C27-0011777-6; SEA-LAND NAVIGATOR; Casualty; Fuel Oil Pipe Lines; Temporary Repairs

Dear Sir:

This is in reference to your memorandum dated April 13, 1990, transmitting an application for relief from duties assessed pursuant to 19 U.S.C. 1466. You request that we review eight (8) items contained in the above entry. Our findings are set forth below.

FACTS:

The SEA-LAND NAVIGATOR is a U.S.-flag vessel owned by Sea- Land Service, Inc. ("Sea-Land") of Edison, New Jersey. The subject vessel had the work in question performed on it in Kaohsiung, Taiwan, during January 15-22, 1990. Subsequent to the completion of the work the vessel arrived in the United States in Long Beach, California, on February 3, 1990. A vessel repair entry was filed on the date of arrival.

An application dated March 30, 1990, with supporting documentation was timely filed. The applicant states that the subject vessel, purchased from the now defunct U.S. Lines, has an inherent design problem with the fuel oil transfer main. These fuel oil pipe lines are laid in a pipe tunnel forward of the engine room under the cargo holds which runs the entire length of the vessel. This piping arrangement was modified by the vessel's pervious owner. The modification consisted of installing expansion joints in the lines in an effort to reduce future failures. In the case under consideration, a prior temporary repair in an expansion joint (which consisted of isolating the leaking expansion joint by encapsulating it in a cement box, until permanent repairs could be carried out) failed causing the pipe tunnel to become pressurized with fuel oil which leaked into several cargo holds and double bottom tanks.

Although future modifications to prevent a recurrence are contemplated, the applicant contends that duties assessed on the foreign repairs under consideration should be remitted because they were emergency repairs required by the U.S. Coast Guard (USCG). The applicant further states that, "...we had no choice but to perform the repairs in Kaohsiung." In support of this claim the applicant has submitted the following: (1) an unsigned copy of what is alleged to be a USCG Special Inspection Report; (2) a copy of a USCG permit to proceed from Honolulu, Hawaii, to Kaohsiung for the purpose of making repairs; (3) a copy of a letter from the USCG Officer in Charge, Marine Inspection, Honolulu, to Sea-Land stating the conditions under which the subject vessel was permitted to sail to Kaohsiung; (3) a sketch indicating the pipe location and the list of problems found; (4) two photographs of repairs to the No. 9 hatch; and (5) shipyard invoices of the work in question.

ISSUE:

Whether evidence is presented sufficient to prove that foreign repairs performed on the subject vessel for which relief is sought were necessitated by a casualty occurrence, thus warranting remission pursuant to 19 U.S.C. 1466(d)(1).

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, provides in pertinent part for payment of duty in the amount of 50 percent ad valorem on the cost of foreign repairs to vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to engage in such trade. Section 1466(d)(1) provides for remission of the above duties in those instances where good and sufficient evidence is furnished to show that foreign repairs were compelled by "stress of weather or other casualty" necessary to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination.

The term "casualty", as it is used in the vessel repair statute (19 U.S.C. 1466) has been interpreted by the Customs Court as something which, like stress of weather, comes with unexpected force or violence, such as a fire, explosion, or collision (see Dollar Steamship Lines, Inc., v. United States, 5 Cust. Ct. 28-29, C.D. 362 (1940)). It should be noted that absent specific evidence to the contrary, we consider foreign repairs to have been necessitated by normal wear and tear, a result which does not permit remission (see C.S.D. 79-32).

In regard to the applicant's claim, we note that in view of the Customs Court's interpretation noted above, damage attributed to the failure of a prior temporary repair cannot be considered a casualty for purposes of section 1466(d)(1), especially in view of the fact that the subject vessel proceeded in a state of disrepair from the U.S. (Honolulu) to a foreign shipyard (Kaohsiung). To grant remission under these circumstances would circumvent the intent of the vessel repair statute. Furthermore, the fact that the repairs in question may have been required by the USCG or, for that matter, any other federal agency, is not in and of itself sufficient for purposes of obtaining remission under section 1466(d)(1). In addition, we note that the USCG permit to proceed provides in part that, "The said Master requesting that the said vessel be permitted to proceed to the port of Kaohsiung, Taiwan, ROC for the purpose of making said repairs ..." Accordingly, although the subject repairs may have been required by the USCG, their being done in Kaohsiung was at the behest of the applicant and not the USCG.

HOLDING:

The evidence presented is insufficient to prove that the foreign repairs performed on the subject vessel for which the applicant seeks relief were necessitated by a casualty occurrence. Accordingly, remission pursuant to 19 U.S.C. 1466(d)(1) is denied.

Sincerely,

B. James Fritz

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