HQ 0111350 - Vessel Repair; Painting; 19 U.S.C. 1466. - United States International Trade Commision Rulings

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HQ 111350

December 10, 1990

VES-13-18-CO:R:P:C 111350 RAH

CATEGORY: CARRIER

Chief, Residual Liquidation and Protest Branch U.S. Customs Service
6 World Trade Center
New York, N.Y.

RE: Vessel Repair; Painting; 19 U.S.C. 1466.

Dear Sir:

This is in response to your memorandum of October 3, 1990, forwarding a petition for review on vessel repair entry number 514-3004240-1.

FACTS:

The record reflects that the SEA-LAND CRUSADER, voyage 029, arrived at the port of Elizabeth, New Jersey on June 27, 1990, and a vessel repair entry was filed on the same day.

An application for relief was filed on August 22, 1990, which was denied in part by the New York Region for lack of proof that paint was of U.S. origin. The subject of this ruling is a petition for review in the form of a letter dated September 14, 1990, claiming that all paint supplied to the SEA-LAND CRUSADER in Haina, Dominican Republic was manufactured in the United States.

ISSUE:

Whether the paint for which the petitioner seeks relief is dutiable under 19 U.S.C. 1466.

LAW AND ANALYSIS:

Title 19, United States Code, section 1466(a), 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 the foreign or coastwise trade, or vessels intended to be employed in such trade.

Painting, including labor and materials, has long been held
to be a dutiable repair. T.D. 49532. There are limited situations in which painting is not subject to duty. For example, it is not subject to duty if it is an integral part of a repair necessitated by a casualty, and necessary to restore the safety and seaworthiness of the vessel. C.I.E. 1043/60.

It is Customs position with regard to materials such as paint, which have been manufactured and purchased in the United States and installed aboard a U.S. documented vessel by other than U.S. residents or regular crew, the labor alone is dutiable. See, T.D. 75-257. In our adherence to the policy set forth in T.D. 75-257, however, it has come to our attention in the past that affidavits have been submitted which misrepresent the place of manufacture of the article in question. Inasmuch as we have come to learn of this misrepresentation, it is our policy to require evidence beyond an affidavit from an interested party to establish U.S. manufacture and U.S. purchase.

In support of its claim, the petitioner submits a "FAX" dated July 26, 1990, from International Paint (USA) Inc., stating that "...all marine paints supplied [to the petitioner] under blanket order No. 185-NC-18 O.E. (annual contract) in the United States will be manufactured by International Paint in the United States." The petitioner also submits a self-serving document providing:

In order to be able to maintain our vessels, it is unavoidable that we use foreign labor in certain ports during the vessels voyage. This labor immediately will be instructed to use their tools when doing maintenance on our vessels and charge us for it. However when applying paints such paint will be supplied by our vessels. All paints we purchase are bought from a vendor in the United States. This vendor is selected after a bid process and once selected is given the exclusive contract for supplying paints to our vessels at agreed upon prices which are fixed for the entire duration of the contract
(approximately one year).

There are two invoices from Bobo's Maintenance in Rio Haina, Dominican Republic, regarding the painting in question. One invoice, Job No. CD-6118, is entitled "Work Report" and describes the labor to paint the vessel and includes the cost. The other invoice, Job No. CD-6118, entitled "Report of Items Consumed" lists the paint. The latter invoice does not contain any evidence that the paint was owner-supplied or of U.S. manufacture. Furthermore, there is no proof, other than a self serving statement by the petitioner, that the paint "consumed"
was supplied to the petitioner by International Paint (USA), Inc., or that it was U.S. manufactured, as the petitioner claims. Accordingly, the paint is dutiable.

HOLDING:

Following a thorough review of the evidence provided, and as detailed in the law and analysis section of this ruling, the petition for review is denied in full.

If you have any further questions regarding this matter, please do not hesitate to contact our office.

Sincerely,

B. James Fritz
Chief

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