HQ 0111039 - Vessel repair; Diesel fuel sludge removal; cleaning Vessel: NEWARK BAY V-20 - United States International Trade Commision Rulings

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HQ 111039

October 4, 1990

VES-13-18-CO:R:P:C 111039 KVS

CATEGORY: CARRIER

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

RE: Vessel repair; Diesel fuel sludge removal; cleaning Vessel: NEWARK BAY V-20
Vessel Repair Entry No. 559-1237157-6
Date of Entry: October 10, 1989
Port of Entry: Boston, Massachusetts

Dear Sir:

This is in response to your memorandum of April 18, 1990, which forwards for our consideration a petition for review filed in connection with the NEWARK BAY, vessel repair entry no. 559- 1237157-6. Our findings are set forth below.

FACTS:

The NEWARK BAY, an American-flag vessel, underwent foreign shipyard operations in Bremerhaven, West Germany, to remove sludge from the vessel. On October 1-2, 1990, the vessel underwent other shipyard operations at Rotterdam, The Netherlands. Shortly thereafter, the vessel arrived at the United States on October 10, 1989, at Boston, Massachusetts.

A submission purporting to be an application for relief dated January 4, 1990, was filed with the New York Vessel Repair Liquidation Unit. However, the vessel did not make formal entry until January 25, 1990. The applicant was notified of the decision on its application denying relief in part in a letter dated March 14, 1990. The petition for review currently under consideration was timely filed on March 27, 1990.

ISSUE:

Whether the removal of diesel engine fuel sludge, without more, is a dutiable repair operation within the purview of 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 petitioner asserts that removal of diesel fuel sludge is an operation that has no connection with the purchase of parts or materials and does not involve any repair, and is therefore, not subject to duty under 19 U.S.C. 1466.

We note that the Pusback u. Morgenstern Petrotank invoice which lists the work performed aboard the NEWARK BAY indicates that sludge removal also took place aboard the NEDLLOYD HUDSON (on 9/22/89), the SEA-LAND ATLANTIC (on 10/6/89) and the SEA-LAND INTEGRITY (on 9/21/89, 10/19/89 and 11/16/89).

Although the repetition of this operation aboard these vessels, suggests the possibility that the operation be classified as maintenance, based on the record before us, we find the discharge of sludge to be analagous to a cleaning operation. The Customs Service has held that cleaning operations are not subject to duty unless performed in preparation for, or as an integral part of repairs (see also C.D. 2514 (dated February 16, 1965)).

In the case currently before us, we find no indication that the fuel tanks which underwent sludge removal were the site of any repair. Therefore, we find the charge to be non-dutiable. Accordingly, the petition for review is granted.

HOLDING:

The removal of sludge from the fuel tank of a vessel, when unaccompanied by any repair work, is analagous to a cleaning operation and is non-dutiable within the purview of 19 U.S.C. 1466.

Sincerely,

B. James Fritz

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