HQ 0111139 - Vessel repair; modification; installation of ground detection monitor. - United States International Trade Commision Rulings

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HQ 111139

October 12, 1990

VES-13-18-CO:R:P:C 111139 KVS

CATEGORY: CARRIER

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

RE: Vessel repair; modification; installation of ground detection monitor.
Vessel: SEA-LAND PATRIOT V-97
Vessel Repair Entry No. C27-0075242-4
Port of Arrival: Long Beach, California
Date of Arrival: July 3, 1989

Dear Sir:

This is in response to your memorandum of June 20, 1990, which forwards for our consideration protest number 27040-000151, filed in connection with the SEA-LAND PATRIOT, vessel repair no. C27-0075242-4. Our findings are set forth below.

FACTS:

The PATRIOT, an American-flag vessel, underwent foreign shipyard operations, one of which involved the installation of a 24 volt ground detection system while in Japan on June 7, 1989. The vessel arrived in the United States at Long Beach, California on July 3, 1989.

The application for relief from vessel repair duties filed in connection with this entry was denied and the entry was liquidated on October 13, 1989. The protest currently under consideration was timely filed on January 11, 1990.

ISSUE:

Whether the installation of a new ground detection system is a modification and is not 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.

In its application of section 1466, Customs has held that modifications/alterations/additions to the hull and fittings of a vessel are not subject to vessel repair duties. 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). Customs 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 the case under consideration, the application for relief filed in connection with this entry was denied because the documentation submitted contained no description of the work performed. In support of the current protest, however, additional documentation has been submitted. After careful review of the evidence before us, we find that the installation of a new ground detection system aboard the subject vessel is a modification and the cost incurred in its installation is non- dutiable. Accordingly, the protest is granted in full.

HOLDING:

The installation of a new ground dectection system aboard the subject vessel is a modification and is not subject to duty pursuant to 19 U.S.C. 1466.

Sincerely,

B. James Fritz

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