HQ 0111015 - Vessel Repair; Entry No. C18-0014538-0; S/S ULTRAMAR V-96B; Casualty; Degrees of Seaworthiness - United States International Trade Commision Rulings

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HQ 111015

July 27, 1990

VES-13-18-CO:R:P:C 111015 GV

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations c/o Regional Commissioner
New Orleans, Louisiana 70130-2341

RE: Vessel Repair; Entry No. C18-0014538-0; S/S ULTRAMAR V-96B; Casualty; Degrees of Seaworthiness

Dear Sir:

This is in response to your memorandum dated April 25, 1990, forwarding an application for relief from duties assessed pursuant to 19 U.S.C. 1466 on the cost of foreign repairs performed on the subject vessel. Our findings are set forth below.

FACTS:

The S/S ULTRAMAR is a U.S.-flag vessel owned by Bankers Trust Company, and operated by American Maritime Transport, Inc. The subject vessel had foreign shipyard work performed in Palermo, Sicily, during the period of November 23-December 6, 1989. Subsequent to the completion of the work the vessel arrived in the United States at Tampa, Florida, on December 23, 1989. A vessel repair entry covering the work in question was apparently untimely filed on January 2, 1990 (we note that Box 25E on the CF 226 for the entry date is blank, however, the handwritten date of "1/2/90" appears in Box 18).

An application for relief, dated February 1, 1990, was filed requesting remission pursuant to 19 U.S.C. 1466(d)(1). The applicant states that on November 3, 1989, while the S/S ULTRAMAR was anchored and discharging cargo to a lightering vessel in Chittagong, Bangladesh, the M/V ADEL, for reasons unknown, struck the S/S ULTRAMAR with her bow making a deep indentation in the port side in way of the hold and ballast tanks 1 and 2, extending approximately 80 feet in length. The applicant states that, "After examination by the American Bureau of Shipping it was agreed that permanent repairs would be required before the vessel could return to oceangoing service. Because there were no
adequate repair facilities in the area, temporary repairs only were accomplished by the crew in Chittagong. The ABS surveyor recommended that the vessel proceed in ballast to Malta for the required permanent repairs prior to returning to the U.S. Pursuant to the recommendations of ABS, the vessel sailed to Palermo, Sicily (near Malta) where the required repairs were accomplished."

In support of their claim the applicant has submitted the following: the vessel log of November 3, 1989 (Exhibit A(1)); the vessel log of November 4, 1989 (Exhibit A(2)): a fax from the Master dated November 3, 1989 (Exhibit B); a Note of Protest (Exhibit C); a U.S. Coast Guard Report of Accident (Exhibit D); an American Bureau of Shipping (ABS) letter dated November 20, 1989; ABS Report no. CI 1252 (Exhibit F(1)); ABS Report no. PL6963 (Exhibit F(2)); a picture of the repairs in progress (Exhibit F(3)); an affidavit of the Master (Exhibit G); a report from The Salvage Association (Exhibit H); and shipyard invoices.

ISSUE:

Whether evidence is presented sufficient to prove that the foreign repairs performed on the vessel for which relief is sought, were necessary for its safety and seaworthiness thus warranting remission pursuant to 19 U.S.C. 1466(d)(1).

LAW AND ANALYSIS:

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

The term "casualty" as it is used in the vessel repair statute, has been interpreted as something which, like stress of weather, comes with unexpected force or violence, such as fire, explosion or collision (see Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 28-29, C.D. 362 (1940). In the absence of evidence of such casualty causing event, we must consider the foreign repairs to have been necessitated by normal wear and tear and thus dutiable.

It is noted that section 4.14(c)(3)(i), Customs Regulations (19 CFR 4.14(c)(3)(i)), provides that "port of destination" means such port in the United States. This is an embellishment upon
section 1466(d)(1) which sets forth the following three-part test which must be met in order to qualify for remission:

1. The establishment of a casualty occurrence.

2. The establishment of unsafe and unseaworthy conditions.

3. The inability to reach the port of destination without obtaining foreign repairs.

Regardless of the interpretation of the phrase "port of destination", the establishment of the other elements remains essential. In the case under consideration, the evidence supports the claim that the subject vessel suffered a marine casualty. The extent of that casualty is, however, the critical issue upon which this case turns.

The applicant argues that the collision damage incurred by the subject vessel at Chittagong, Bangladesh, rendered it unseaworthy for crossing the Atlantic Ocean, yet after temporary repairs by the crew in Chittagong (it is contended that the facilities in Chittagong were inadequate for performing permanent repairs), it was considered seaworthy to proceed in ballast across the Indian Ocean, through the Suez Canal, and halfway across the Mediterranean Sea where permanent repairs were performed in Palermo, Sicily. We have previously stated that we are of the opinion that as a general proposition, there do not exist degrees of seaworthiness (see Customs Ruling 110027 LLB/110130 KMF/ 110138 KMF).

To support their argument the applicant relies heavily on the ABS letter of November 20, 1989 (Exhibit E) which states that, "The ABS Surveyor at Palermo concurred with our prior Chittagong surveys recommendation for permanent repairs to be carried out before the vessel be allowed to return to its intended ocean going [sic] service. Temporary repairs had been carried out at Chittagong which allowed the vessel to proceed in ballast from Chittagong to Malta (nearby Palermo)."

In regard to the applicant's claim that the facilities in Chittagong were inadequate for performing permanent repairs and therefore the vessel had to proceed in ballast to Palermo, we note that several ports closer to Chittagong capable of performing the subject repairs (most notably Singapore) were bypassed in favor of sailing a much greater distance to Palermo. Furthermore, although we have ruled that sailing totally within the confines of the Mediterranean Sea in a state of disrepair did not demonstrate a vessel's general seaworthiness so as to deny remission pursuant to section 1466(d)(1) (see Customs Ruling 110027 LLB/110130 KMF/110138 KMF, noted above) we note that in
the case now under consideration the S/S ULTRAMAR, after having obtained temporary repairs in Chittagong, then traversed the Indian Ocean, proceeded through the Suez Canal, and then halfway-
across the Mediterranean Sea. We are of the opinion that such a voyage is sufficient to demonstrate the subject vessel's seaworthiness so as to deny remission under section 1466(d)(1).

HOLDING:

The evidence presented is not sufficient to prove that the foreign repairs performed on the subject vessel for which relief is sought were necessary for its safety and seaworthiness therefore remission pursuant to 19 U.S.C. 1466(d)(1) is denied.

Sincerely,

B. James Fritz

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