HQ 0111294 - Casualty; collision; inflatable life rafts; ineffective radar repairs; untimely entry - United States International Trade Commision Rulings

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HQ 111294

May 23, 1991

VES-13-18-CO:R:IT:C 111294 KVS

CATEGORY: CARRIER

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

RE: Casualty; collision; inflatable life rafts; ineffective radar repairs; untimely entry
Vessel: ASHLEY LYKES V-84
Vessel Repair Entry No. 84-103943
Date of Arrival: May 17, 1984
Port of Arrival: Detroit, Michigan

Dear Sir:

This is in response to your memorandum dated October 20, 1989 (received by our office on September 18, 1990) which transmits for our review an application for relief from vessel repair duties filed in connection with the ASHLEY LYKES, vessel repair entry no. 84-103943. Our findings are set forth below.

FACTS:

The ASHLEY LYKES, an American-flag vessel, while afloat at Port Said Harbor, Egypt on April 23, 1984, made contact with the M/V GULL, a Greek-flag vessel, and sustained damage to its #2 port side lifeboat and port side gangway. The vessel subsequently underwent various repair operations before returning to the United States. The vessel arrived in the United States on May 17, 1984 at Detroit, Michigan. Formal entry was made on June 25, 1984.

Although an application for relief from vessel repair duties was filed with the formal entry documents, these documents were apparently misplaced. In response to a notice of action dated July 27, 1989, a duplicate entry and application was filed.

These documents, together with an accompanying memorandum dated October 20, 1989, were apparently transmitted to Customs Headquarters but never received. The documents were re- transmitted to Headquarters and received on September 18, 1990.

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 occurence 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, spontaneous explosion of such dimensions as to be immediately obvious to the vessel's personnel or collision (see 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.

Three elements necessary under the statute to qualify for remission after a casualty has been proven are, 1) evidence of unsafe and unseaworthy condition, 2) the inability of the vessel to reach its port of destination without first obtaining foreign repairs and 3) the performance of only those minimal repairs necessary to enable the vessel to reach its port of destination. 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)).

After thorough review of American Bureau of Shipping (A.B.S.) damage report no. PD1284, A.B.S. certificate no. PD1284X, statements from the responsible vessel's officers, extracts of the ships logs as well as other documents, we find that, in addition to proving the occurence of a casualty, the applicant has satisfied the criteria detailed above. Therefore, we find the cost of the inflatable liferafts ($12,300) to be non- dutiable.

We concur with the applicant's assessment that the costs of repairs to the vessel's radar listed on Pan-Arab Marine Electronic Services # P.112/8 in the amount of $300.00 and Electronica Radiomare invoice in the amount of 550,500 lire. The Customs Service has held that the cost of transporting men and material is non-dutiable (C.I.E. 970/60). Therefore, we find
cost of a boat launch ($75.00) and traveling and waiting time ($75.00) listed on Eastern Electronics invoice # 534 to be non- dutiable. We agree with the applicant that the remainder of the charges ($960.00) are dutiable.

The applicant asserts that the cost of radar repairs listed on Atlas invoice # 01018 is non-dutiable as an unsucessful repair. In support of this assertion, the applicant has submitted a copy of a telex dated May 15, 1984, stating "radar not able to be repaired - no parts available."

C.S.D. 82-119 addressed the dutiability of repairs to a vessel's radar system when the completed repairs are ineffective. In that case, as in the instant case, the repairs made to the vessel's radar were ineffective in the sense that the radar was not made operational as a result of the work. The case, in discussing Customs precedent referred to C.I.E. 1128/60, which held that repairs which are completely ineffective and consequently of no value to the vessel are non-dutiable. The case also referred to C.I.E. 1156/62, which distinguished the completely ineffective repairs contemplated by C.I.E. 1128/60 and those repairs made "as a temporary expediency which prove insufficient to restore continued operation," which were held to be dutiable.

In holding similar repairs to be dutiable, C.S.D. 82-119 stated, "we cannot say that the work was of no value to the vessel because the cause of the radar not being functional was diagnosed and a partial remedy was effected even though the radar was not made operational as a result."

In the case before us, although the radar was not made operational, certain parts were purchased for the vessel. Furthermore, notwithstanding the fact that certain other replacement parts were not available, the cause of the malfuction was diagnosed. Therefore, consistent with our holding in C.S.D. 82-119, since the trouble-shooting and replacement of radar parts were of considerable value to the subject vessel, we find the cost of the repair (Can.$ 472.74) to be dutiable. The segregated charge for transportation (Can.$ 20.00), however, is non- dutiable.

Finally, we note that, in the case under consideration, the ASHLEY LYKES arrived in the United States on May 17, 1984. Section 4.14(b)(2), Customs Regulations (19 CFR 4.14(b)(2) provides that, "entry shall be filed with the appropriate Customs officer at the port of first arrival within five working days after arrival." Here, the vessel did not make formal entry until June 25, 1984. Therefore, you may want to refer the matter for appropriate action.

HOLDING:

1). Where satisfactory evidence has been submitted indicating the existence of a casualty, the unsafe and unseaworthy condition of the vessel, the inability of the vessel to reach its port of destination without obtaining foreign repairs and the performance of only those minimal repairs necessary to enable the vessel to reach its port of destination, the cost of the those repairs are non-dutiable.

2). Where the repairs made to a vessel's radar system consist of the diagnosis of the source of the radar malfunction, as well as the replacement of certain parts, the repairs are of considerable value to the vessel and the cost of the repairs are dutiable notwithstanding the fact that the radar system was not made operational as a result of the repair.

Sincerely,

B. James Fritz

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