HQ 0111489 - Protest No. 1703-90-000119; SS CAPE INSCRIPTION, Voyage No. 1; Vessel Repairs; casualty; one-round voyage; delicate and sensitive - United States International Trade Commision Rulings

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HQ 111489

October 28, 1991

VES-13-18 CO:R:IT:C 111489 BEW

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations c/o Regional Commissioner
New Orleans, Louisiana 70130-2341

RE: Protest No. 1703-90-000119; SS CAPE INSCRIPTION, Voyage No. 1; Vessel Repairs; casualty; one-round voyage; delicate and sensitive

Dear Sir:

This is in reference to a memorandum from your office which transmitted protest No. 1703-90-000119, relating to vessel repair entry No. C17-0001381-1, concerning the SS CAPE INSCRIPTION, Voyage No. 1, which arrived at the port of Savannah, Georgia, on December 9, 1989. The entry was filed on December 9, 1989.

FACTS:

In November 1989, while in Livorno, Italy, and Alexandria, Egypt, respectively, the vessel CAPE INSCRIPTION underwent various shipyard operations. The dutiability of these operations has previously been considered by your office. The protestant filed an Application for Relief on January 29, 1990. The entry was liquidated on April 27, 1990. The protest was timely filed on June 14, 1990. Included in your considerations was the matter of whether the cost associated with the installation of the following items is dutiable under the statute:

Item #5 - Purchase of batteries for the general alarm system.

Item #6 - Repairs to the 3CM Radar system.

These are the only items which are presently being protested.

The protestant claims that the subject items should be duty free for the following reasons:

Item #5 was purchased for the general alarm system. The general alarm system is the basic design method on vessels to alarm the crew advising status of emergencies including, but not limited to fire, abandon ship and other incidents. It claims that the general alarm batteries were satisfactorily tested for the USCG at New Orleans on October 2, 1989. It states that on October 6, 1989, the vessel sustained a fire with casualty at sea. The general alarm system was used in connection with this casualty. It claims that the vessel proceeded to Savannah, Georgia, for repairs relating to the fire casualty and the system was again satisfactorily checked prior to her departing on her assigned foreign Military Sealift Command voyage activity.

It is claimed that the radar system failed during the foreign voyage for unexplained and unforeseen reasons. The protestant claims that the radar installations are part of the navigation equipment for vessels of this size and is mandated by USCG regulations. It claims that maintenance service had been performed on the radar system and that it was satisfactorily checked by a cognizant authority immediately prior the subject voyage.

ISSUE:

Whether sufficient evidence is presented to establish that the foreign repairs which were made to the alarm system and to the radar system were necessitated by a "casualty" which are remissible under the vessel repair statute (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 documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to be employed in such trade.

Paragraph (1), subsection (d) of section 1466 provides that duty may also 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. It is Customs position that "port of destination" means a port in the United States."

The statute thus sets a three-part test which must be met in order to qualify for remission under the subsection, these being:

1. The establishment of a casualty occurrence.

2. The establishment of unsafe and unseaworthy conditions.

3. The inability to reach the port of destination without obtaining foreign repairs.

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, or spontaneous explosion of such dimensions as to be immediately obvious to ship's personnel, 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 event, we must consider the repair to have been necessitated by normal wear and tear (ruling letter 106159, September 8, 1983).

In addition, if the above requirements are satisfied by evidence, the remission is restricted to the cost of the minimal repairs necessary to enable the vessel to reach her port of destination. Repair costs beyond that minimal amount are not subject to remission.

Customs Regulations require that certain supporting evidence be submitted with an application for relief for damages resulting from stress of weather. This evidence includes photocopies of the relevant parts of the vessel's logs, certification of any claimed casualty by the master or other responsible vessel officer with personal knowledge of the facts, and a certification by the master that the repairs were necessary for the safety and seaworthiness of the vessel to enable her to reach her port of destination in the United States (19 C.F.R.

It is clear from the evidence that the vessel was in need of repairs to secure her safety and seaworthiness, however, the evidence is insufficient to show what actually caused the break down of the alarm and radar systems. Absent clear proof of an identifiable event to show an unexpected force or violence, such as fire, explosion, or collision resulting in damage, such cost of repairs is not remissible (see C.I.E. 1826/58). The documentation submitted is insufficient to support a finding of a casualty as provided in section 1466(d)(1). The petitioner has not submitted documentation to substantiate that the damage was due to an identifiable event of some sort which caused the damage.

The "one round voyage" rule is abstracted in Treasury Decision (T.D.) 71-83(38), 5 Cust. B. & Dec. 160, 167 (1971). That Treasury Decision provides:

If satisfactory evidence is furnished clearly showing any part of a vessel to have been repaired and/or serviced just prior to the commencement of a voyage from a United States port, it is reasonable to assume that the part is seaworthy for a round voyage, foreign and return. Unless evidence indicates some other reason necessitated the repairs during the voyage, failure of that part to function within six month after the repair and/or servicing in the United States may be considered a casualty within the meaning of [19 U.S.C. 1466(d)]. However, remission of duty under that statute in the circumstances is limited to duty on the essential, minimum foreign repairs to the parts.

Section 4.14(c)(3)(i), Customs Regulations (19 C.F.R. 4.14(c)(3)(i)), provides, with regard to the "one round voyage" rule, that:

For the purposes of this section, the term "casualty" does not include any purchases or repairs necessitated by ordinary wear and tear, but does include a part's failure to function if satisfactory evidence shows that the specific part was repaired or serviced immediately before starting the voyage from the United States port and that the part failed to function within six months of such repair or servicing.

With regard to electronic equipment, Customs has held that if evidence furnished clearly shows that electronic equipment has been repaired and/or serviced just prior to the commencement of a voyage from a United States port, it is reasonable to assume that the equipment is seaworthy for a round voyage, foreign and return. The protestant has not submitted any evidence to show that any repairs and/or service were made on the alarm system or the radar system prior to the vessel's departure from the United States.

Accordingly, the protest is denied as set forth in the findings above.

HOLDINGS:

The evidence presented is insufficient to substantiate that the subject repairs were necessitated by a casualty or that repairs and/or service were made to the alarm system or radar system prior the vessel departing the United States for foreign. The protest is denied.

Sincerely,

B. James Fritz
Chief

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