HQ 0110995 - Vessel repair; casualty; preliminary ruling Vessel: SURF CITY - United States International Trade Commision Rulings

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HQ 110995

June 18, 1990

VES-13-18-CO:R:P:C 110995 KVS

CATEGORY: CARRIER

Mr. John W. Lovel
President
Gleneagle Ship Management Co.
6220 Westpark
Suite 225
Houston, TX 77057

RE: Vessel repair; casualty; preliminary ruling Vessel: SURF CITY

Dear Mr. Lovell:

This is in response to your letter of April 16, 1990, which requests a preliminary ruling regarding the damage sustained by the SURF CITY.

FACTS:

Your letter states that the SURF CITY, owned by Chesapeake Shipping Inc., sailed from Kuwait loaded with a mixed cargo of Naptha and Gas Oil. While en route to Italy, approximately 50 miles NW of Dubai, U.A.E., the vessel suffered an explosion in the No. 4 ballast tank. The explosion occurred on February 22, 1990, at approximately 10:15 a.m. local time. The resulting fire was not completely extinguished until the evening of March 6, 1990, by which time the vessel had been towed to a position in the Gulf of Oman, off Fujairah, U.A.E.

Your letter requests a preliminary ruling, on behalf of the vessel's owner (who has received an offer for the sale of the vessel), regarding the dutiability of any repairs to the SURF CITY.

ISSUE:

Whether the duty on the alleged casualty-related foreign repair is remissable pursuant to 19 U.S.C. 1466(d)(1).

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.

Paragraph (1), subsection (d) of section 1466 provides that duty may be remitted if good and sufficient evidence is furnished establishing that the vessel was compelled by stress of weather or other casualty to put into a foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. Thus, in order to qualify for duty remission, it is necessary that the party seeking relief must show both the occurrence of a casualty, and the minimal repairs necessary for the safety and seaworthiness of the vessel.

The term "casualty", as it is used in the statute, has been interpreted to mean something which, like stress of weather, comes with unexpected force or violence, such as fire, explosion or collision (Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 28-29, C.D. 362 (1940)). In this sense, a "casualty" arises from an identifiable event of some sort. In the absence of evidence of such a casualty, we must consider a repair to have been necessitated by normal wear and tear (Customs Letter Ruling 105159 (dated September 8, 1983).

Under this interpretation of 19 U.S.C. 1466(d), an explosion resulting in fire damage would fall within the category of a "casualty" within the meaning of the statute, and thus, qualify the applicant for remission of duty assessed on those repairs.

The information given in this ruling is subject to the caveat that sufficient evidence of casualty must be submitted upon the vessel's entry for remission of vessel repair duty to be granted.

In addressing the issue of supporting documentation, the Customs Regulations, in section 4.14(d)(1)(iii) provide, in pertinent part, that each application for relief shall include duplicate copies of the following evidence:

(A) All itemized bills, receipts, and invoices covering items specified in paragraph (a)(1) of this section, segregating the cost of those items for which relief is sought from all other items listed in the vessel repair entry.

(B) Full and complete photocopies of the relevant parts of the vessel's logs.

(C) Photocopies of any American Bureau of Shipping or other classification society report of the cause and
type of damage and the nature of the remedial action taken, together with photocopies of any certifications of seaworthiness.

(D) A certification by the master or other responsible vessel officer with personal knowledge of the facts relating to the relief sought, including, but not limited to, details of the claimed stress of weather or other casualty, when and where it occurred, the damages due to such stress of weather or other casualty, and the place and date where the vessel was repaired or the equipment for the vessel was purchased.

(E) A certification by the master as to whether the repairs or equipment purchases were necessary for the safety and seaworthiness of the vessel to enable it to reach its port of destination in the United States.

In addition to the above-mentioned list, the applicant is free to submit any other documents in support of the appication for relief. Regarding the 4.14(d)(1)(iii)(C) requirement of a damage report by a classification society, we are unfamiliar with Henderson Marine Consultants of Dubai. But assuming that they are a qualified marine surveyor or that a qualified marine surveyor would verify their findings, it is probable that remission would lie.

HOLDING:

Although the evidence presented would indicate that the subject vessel has suffered damage due to casualty, thus permitting remission of vessel repair duties, we require that additional documentation, as detailed in the Law and Analysis section of this ruling, be submitted before remission can be granted pursuant to 19 U.S.C. 1466(d)(2).

Sincerely,

B. James Fritz

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