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HQ 110694


February 7, 1990

VES-13-18:CO:R:P:C 110694 LLB

CATEGORY: CARRIER

Chief, Technical Branch
Pacific Region
U.S. Customs Service
One World Trade Center
Long Beach, CA 90831

RE: Vessel Repair Entry No. C27-0075210-1; Date of Arrival: May 8, 1989;
Port of Arrival: San Pedro, California;
Vessel: MV PRESIDENT WASHINGTON

Dear Sir:

This is in response to your transmittal of November 20, 1989, regarding the above-referenced vessel repair entry.

FACTS:

The record reflects that the subject vessel arrived at the Port of San Pedro, California, from Yokohama, Japan, on May 8, 1989. An incomplete entry was filed the same day reflecting foreign repairs made to the vessel in Kaohsiung, Republic of China, and Kobe and Yokohama, Japan. An extension of time to file an application for relief and evidence of cost was granted through August 7, 1989. A timely application for relief was filed on July 17, 1989, which is the subject of this ruling.

You specifically request our advice on the following items listed on China Shipbuilding Corporation Kaohsiung Shipyard Invoice, which the applicant claims are modifications to the vessel and, therefore, not subject to duty:

535 - piping modification;
537 - engine room deck drains;
538 - spare main engine cylinder lines;
539 - spare accommodation ladders;
557 - salt water piping;
560 - pilot ladder davit;
579 - steam valves;
580 - engine room monorail;
588 - fuel oil settling tank;
591 - stern tube vent line.

ISSUE:

Whether the work performed on the subject vessel for which the applicant seeks relief is dutiable under 19 U.S.C. 1466

LAW AND ANALYSIS:

Title 19, United States Code, section 1466(a) (19 U.S.C. 1466(a)), provides in pertinent part that the equipment, or any part thereof, including boats, purchased for or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States to engage in the foreign or coastwise trade, or a vessel intended to be employed in such trade, shall, on the first arrival of such vessel in any port of the United States be liable to entry and the payment of an ad valorem duty of 50 per cent on the cost thereof in such foreign country.

Customs has held that for an item to be characterized as a nondutiable modification, it must encompass the installation of an item as a new design feature, not as a replacement for, or restoration of, parts now performing a similar function. We have also held that the decision in each case as to whether an installation constitutes a nondutiable addition to the hull and fittings of the vessel depends to a great extent on the detail and accuracy of the drawings and invoice descriptions of the actual work performed. Even if an article is considered to be part of the hull and fittings of a vessel, the repair of that article, or the replacement of a worn part of the hull and fittings, is subject to vessel repair duties.

In the present case, we find that the invoice descriptions of the work performed in conjunction with the claims in the application for relief provide sufficient proof that no repairs were made to the items in question. We further find that these items involved installation of new design features and not mere replacement of existing parts. Accordingly, the items in question constitute nondutiable modifications to the hull and fittings of the vessel.

HOLDING:

Following a thorough review of the evidence provided, and as detailed in the law and analysis section of this ruling, we recommend that the application for relief regarding the items under consideration be granted in full.

Sincerely,

B. James Fritz
Chief

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