HQ 0110972 - Richmond, California, Vessel Repair Entry No. C28-0076726-4; GREEN BAY V-18 - United States International Trade Commision Rulings

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HQ 110972

July 9, 1990

VES-13-18-CO:R:P:C 110972 GV

CATEGORY: CARRIER

Chief, Technical Branch
Pacific Region
1 World Trade Center
Long Beach, California 90831

RE: Richmond, California, Vessel Repair Entry No. C28-0076726-4; GREEN BAY V-18

Dear Sir:

This is in response to your memorandum dated March 30, 1990, transmitting an application for relief from duties assessed pursuant to 19 U.S.C. 1466. You request that we review one (1) item contained in the above entry. Our finding is set forth below.

FACTS:

The GREEN BAY is a U.S.-flag vessel owned by Central Gulf Lines, Inc., (Central Gulf) of New Orleans, Louisiana. The subject vessel had the work in question performed on it during November 9-11, 1989, at Mitsui Engineering & Shipbuilding Co., Ltd., (Mitsui) in Nagoya, Japan. Subsequent to the completion of this work the vessel arrived in the United States at Richmond, California, on November 24, 1989. A vessel repair entry was filed on November 29, 1989. We also note that an "amended" entry was filed on February 20, 1990.

Pursuant to an authorized extension of time, an application for relief, dated February 20, 1990, was timely filed. The applicant claims that the work in question constituted a nondutiable modification. In support of this claim the applicant submitted the following work with the application: a shipyard invoice covering the work in question (Exhibit 1); a letter to Mitsui requesting that the work be considered under the shipbuilder's warranty (Exhibit 2); and a drawing of the work (Exhibit 3). In addition, a letter from the Vice-President, Marine, Central Gulf, dated March 9, 1990, was also submitted for the purpose of explaining Exhibit 2, noted above.

ISSUE:

Whether the foreign expenses for which the applicant seeks relief are dutiable under 19 U.S.C. 1466.

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, 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 foreign or coastwise trade, or vessels intended to engage in such trade.

Section 4.14(b)(2), Customs Regulations (19 CFR 4.14(b)(2)) provides, in pertinent part, that entry shall be filed with the appropriate Customs officer within five (5) working days after the vessel's arrival. Although the original entry, dated November 29, 1989, was timely filed, it should be noted that the Customs Regulations make no provision for "amended" entries such as the one dated February 20, 1990.

Furthermore, pursuant to section 4.14(d)(1)(ii), Customs Regulations, the application for relief, with supporting evidence, shall be filed within 60 days from the date of first arrival of the vessel, unless Customs grants an extension. Accordingly, pursuant to a letter dated January 24, 1990, from the Head, Liquidation Section II, Pacific Region, to the applicant, granting their request for an extension of time, the deadline for filing the supporting evidence and application for this entry was February 22, 1990. Any evidence submitted after that date (i.e, the March 9, 1990, letter) will not be considered in the liquidation of this entry. Furthermore, Central Gulf should be informed that absent Customs authorized extensions of time, failure to submit an application for relief with supporting evidence within the 60-day time period note above results in the entry being forwarded for immediate liquidation.

Notwithstanding the procedural deficiencies noted above, we note that a leading case in the interpretation and application of section 1466 is United States v. Admiral Oriental Line et al., 18 C.C.P.A. 137 (T.D. 44359 (1930)). That case distinguished between equipment and repairs on one hand and permanent modifications/alterations/additions to the hull and fittings on the other, the former being subject to duty under section 1466.

The Court in Admiral Oriental, supra., cited with approval an opinion of the Attorney General (27 Op. Atty. Gen. 288). That opinion interpreted section 17 of the Act of June 26, 1884, (23 Stat. 57, which allowed drawback on the vessels built in the U.S. for foreign account, wholly or in part of duty-paid materials. In defining equipment of a vessel, the Attorney General found that items which are not equipment are:

...those appliances which are permanently attached to the vessel, and which would remain on board were the vessel to be laid up for a long period... [and] are material[s] used in the construction of the vessel...

While the opinion of the Attorney General interpreted a provision of law other than section 1466 or a predecessor thereto, it is considered instructive and has long been cited in Customs Service rulings as defining permanent additions to the hull and fittings of a vessel.

For purposes of section 1466, dutiable equipment has been defined as:

...portable articles necessary or appropriate for the navigation, operation, or maintenance of a vessel, but not permanently incorporated in or permanently attached to its hull or propelling machinery, and not constituting consumable supplies. (T.D. 34150 (1914)).

It should be noted that the fact that a change or addition of equipment is made to conform with a new design scheme, or for the purpose of complying with the requirements of statute or code, is not a relevant consideration. Therefore, any change accomplished solely for these reasons, and which does not constitute a permanent addition to the hull and fittings to the vessel, would be dutiable under section 1466.

Upon reviewing the record with regard to the applicant's claim we note that the work in question (i.e., the reinforcement of Frame 117 with thicker steel) was necessitated as a result of the development of structural cracks around Frame 117. Although the work may have strengthened the weakened area to prevent future such cracks, it nonetheless constitutes dutiable repairs.

HOLDING:

The foreign work for which the applicant seeks relief is dutiable under 19 U.S.C. 1466.

Sincerely,

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