HQ 0111038 - Casualty; seals; communications equipment; modification; navigation equipment - United States International Trade Commision Rulings

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HQ 111038

October 2, 1990

VES-13-18-CO:R:P:C 111038 KVS

CATEGORY: CARRIER

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

RE: Casualty; seals; communications equipment; modification; navigation equipment
Vessel: LIBERTY SPIRIT V-009A
Vessel Repair Entry No. 718-000393-2
Port of Arrival: Portland, Oregon
Date of Arrival: March 12, 1990

Dear Sir:

This is in response to your memorandum of May 11, 1990, which forwards for our consideration an application for relief filed in conneciton with the LIBERTY SPIRIT, vessel repair entry no. 718-000393-2. Our findings are set forth below.

FACTS:

The LIBERTY SPIRIT, an American-flag vessel, underwent foreign shipyard operations to the stern tube seals, navigation equipment and communications equipment from February 7, 1990, until February 13, 1990, at several different shipyards in the Netherlands.

The vessel arrived in the United States at Portland, Oregon on March 12, 1990 and made formal entry on March 19, 1990. The application for relief currently under consideration was timely filed on April 20, 1990.

ISSUE:

Whether the foreign shipyard operations carried out aboard the subject are dutiable repairs 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.

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, it is necessary that in order to qualify for duty remission, the party seeking relief must show both the occurrence of a casualty and the minimum repairs necessary for safety and seaworthiness.

The term "casualty" as it is used in the statute, has been interpreted as 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 casualty, we must consider a repair to have been necessitated by normal wear and tear (Custom letter ruling 105159 (dated September 8, 1983)).

In the instant case, the applicant alleges that the repairs made to the subject vessel were made necessary due to damage resulting from heavy weather. Upon review of the supporting documentation, however, we find nothing to support the applicant's assertion; the record contains no copies of the vessel log nor an affidavit from the master of the vessel. Furthermore, A.B.S. report no. RO 34991, which contains the report of the examination of the repairs, does not indicate the presence of bad weather. In the absence of such evidence demonstrating both the occurrence of a casualty and that the repiars were those minimally necessary for the safety and seaworthiness of the vessel, we are unable grant relief pursuant to 19 U.S.C. 1466(d)(1).

The applicant also asserts that the costs resulting from the installation of navigation equipment should be non-dutiable as a modification. 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 (4-16-87).

The Customs Service 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 support of its position that the installation of the navigation equipment is a modification, the applicant submits only the shipyard invoice. No evidence has been submitted indicating that the installation of the navigation equipment was part of a new design feature and not a replacement of parts performing a similar function. In the absence of such evidence, we find the cost to be dutiable.

HOLDING:

In view of the applicant's failure to meet its burden of proof both as to the occurrence of a casualty under 19 U.S.C. 1466(d)(1) as well as to the existence of a modification, the foreign shipyard work performed aboard the subject vessel constitutes dutiable repairs.

Sincerely,

B. James Fritz

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