HQ 0110951 - Modification; installation of purifier feed pump Vessel: SEA-LAND DEVELOPER V-102 - United States International Trade Commision Rulings

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HQ 110951

September 26, 1990

VES-13-18-CO:R:P:C 110951 KVS

CATEGORY: CARRIER

Chief
Residual Liquidation and Protest Branch
6 World Trade Center
New York, NY 10048-0954

RE: Modification; installation of purifier feed pump Vessel: SEA-LAND DEVELOPER V-102
Vessel repair entry no. 514-3003248-5
Protest no. 1001-8-005589

Dear Sir:

This is in response to your memorandum of March 22, 1990, which forwards for our consideration protest no. 1001-8-005589, filed in connection with the Sea-Land DEVELOPER V-102, vessel repair entry no. 514-3003248-5. Our findings are set forth below.

FACTS:

The Sea-Land DEVELOPER, an American-flag vessel, made two calls at Rotterdam, Holland. During the first call, on December 14, 1987, the vessel began shipyard operations involving the installation of a purifier feed pump. Following completion of the first phase of installation on voyage 101, the vessel arrived in the United States on December 26, 1987 at Elizabeth, New Jersey. Formal entry was made on December 30, 1987.

The installation of the purifier pump was completed during the second call to Rotterdam, on January 5, 1988. Soon thereafter, the vessel arrived at the United States at Elizabeth, New Jersey, on January 16, 1988. Formal entry was made on January 20, 1988 (vessel repair entry no. 514-3003248-5). Regarding the purifier work completed on voyage 102, the protestant listed $5,100.00 in column 23 for the Entered U.S. Cost on the 226 Customs Entry Form.

Liquidation for the entry for voyage 102, vessel repair entry no. 514-3003248-5, took place on June 3, 1988. The protest under consideration, which was timely filed on June 27,

1988, seeks relief on the basis that the cost included on the entry for the second voyage represents a duplication of the cost declared on voyage 101 (vessel repair entry no. 514-3003218-8).

ISSUE:

Whether the work performed on the subject vessel is dutiable pursuant to 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 engaged, intended to engage, or documented under the laws of the United States to engage in the foreign or coastwise trade.

The protest under consideration seeks relief for duties levied on the subject vessel repair entry (voyage 102, no. 514- 3003248-5) pursuant to 19 U.S.C. 1466, on the basis that the entire cost of the installation was included on the entry for a previous entry (voyage 101, no. 514-3003218-8).

Examination of that previous entry (no. 514-3003218-8, filed in connection with voyage 101) discloses that, contrary to the assertations of the protestant, the cost of the installation was not included in the dutiable value for that entry. Instead, in declaring the installation work, the protestant listed "Pending Next Voyage" in column 23 for the Entered U.S. Cost on the 226 Customs Entry Form.

In light of the unambiguous evidence before us, we are denying the protest. In addition, we are referring this matter to the Office of Commercial Fraud Enforcement for investigation and appropriate action to determine if the assertions of the protestant were a deliberate attempt to mislead and defraud the Customs Service in the performance of its official duties.

Although the protest asserts no other basis for relief other than the duplicate declaration assertion previously discussed, we note parenthetically that the invoice included with the protest includes a handwritten notation that that the purifier feed pump installation was a "permanent modification."

In its application of 19 U.S.C. 1466, the Customs Service has held that modifications/alterations/additions to the hull and fittings of a vessel are not subject to vessel repair duties. 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 (Customs Memorandum 108871 GV (dated 4/16/87)).

Customs has 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 (Customs Memorandum 108871 (4-16-87)), citing C.S.D. 83-35. 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. See C.I.E. 233/60.

In the case under consideration, an examination of the Van Ingen invoice in question (no. 880001/1175410) reveals that the existing pump assembly was dismantled and replaced by the new purifier pump and 3 purifier pump by-pass lines. The invoice does not describe the work performed in sufficent detail to determine whether the installation was a new design feature or merely the replacement or restoration of parts now performing a similar function. Furthermore, no blueprints or plans have been submitted which would indicate that the installation was part of a new design feature.

Additionally, we have held that a modification to a purifier system of a vessel performed to effect a repair, i.e., for the purpose of bringing the system up to normal operating specifications, is dutiable (Customs Letter Ruling 105385 JL (dated January 25, 1982)).

Therefore, in the absence of evidence that the installation of the purifier feed pump is a not a replacement but a modification, and that the modification was not performed to bring the system up to normal operating specifications, we find the cost to be dutiable. Accordingly, the protest is denied.

HOLDING:

After thorough review of the evidence presented, and as detailed in the Law and Analysis portion of this ruling, the protest is denied.

Sincerely,

Stuart P. Seidel

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