HQ 0110952 - Vessel repair; one round voyage rule; casualty; boilers; steering system - United States International Trade Commision Rulings

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HQ 110952

October 1, 1990

VES-13-18-CO:R:P:C 110952 KVS

CATEGORY: CARRIER

Chief, Technical Branch
Commercial Operations Division
6 World Trade Center
Long Beach, CA 90831

RE: Vessel repair; one round voyage rule; casualty; boilers; steering system
Vessel: LIBERTY BELLE V-5
Date of Arrival: December 9, 1989
Port of Arrival: Los Angeles, California
Vessel Repair Entry No. C27-0011743-8

Dear Sir:

This is in response to your memorandum of March 26, 1990, which forwards for our consideration an application for relief filed in connection with the LIBERTY BELLE V-5, vessel repair entry no. C27-0011743-8. Our findings are set forth below.

FACTS:

The LIBERTY BELLE, before departing upon the voyage in question, underwent various repairs in the United States, including repairs to the boilers and the steering system. After departing the United States, and within six months of the domestic repairs, the subject vessel underwent various foreign shipyard operations at Singapore on September 19, 1989, for miscellaneous repairs; at Pakistan on October 6 and 27, 1989, for repairs which included boiler repairs; and Indonesia on November 18, 1989, for repairs to the steering system. The vessel arrived in the United States on December 9, 1989, at Los Angeles, California.

The applicant requested and received an extension of time to file an application for relief. The application for relief currently under consideration was timely filed on February 28, 1990. Two items have been presented for our determination.

ISSUE:

Whether the foreign shipyard operations carried out aboard the subject vessel are subject to duty 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. 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 provides good and sufficient evidence that the vessel was compelled be 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 Customs Service, in T.D. 71-83(38) (dated March 11, 1971), held that when evidence shows that any part of a vessel failed while on the first round trip voyage immediately following domestic repair of that part, such failure occurring within six months of domestic repairs will be considered a casualty occurrence which qualifies for remission under section 1466. However, T.D. 71-83(38) states that remission of duty is "limited to duty on the essential, minimum foreign repairs to the part."

In the case currently under consideration, foreign invoices, domestic invoices indicating repairs to the same areas less than six months before the foreign repairs, and a telex indicating the development of problems en route are evidence of the failure of the domestically-repaired parts while in the course of the first round trip voyage following the repair.

Accordingly, we find the labor charge for steering repairs invoiced on Ray-Control Services invoice no. 89/1119 to be non- dutiable. Transportation charges listed on the invoice are also non-dutiable.

Likewise, we find the charge for boiler repairs listed on Diamond Engineering invoice no. VSL/057/89-90 to be non-dutiable. Additionally, we find that the amount listed under item 3 for the cost of a Chemist Certificate should be apportioned between dutiable and non-dutiable items. All other items are listed on the invoice are dutiable.

HOLDING:

Where satisfactory evidence exists demonstrating that a vessel part which fails while on the first round trip voyage immediately following domestic repair of that part, such failure occurring within six months of domestic repairs will be considered a casualty and and remission may be granted pursuant to 19 U.S.C. 1466(d)(1).

Sincerely,

B. James Fritz

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