HQ 0111585 - Vessel Repair; Casualty; Heavy Weather; Modification; 19 U.S.C. 1466; 19 C.F.R. 4.14; M/V GALVESTON BAY; Entry No. 559-1237215-2. - United States International Trade Commision Rulings

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HQ 111585

October 11, 1991

VES-13-18 CO:R:IT:C 111585 JBW

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Classification and Value Division
ATTN: Regional Vessel Repair Liquidation Unit 6 World Trade Center
New York, New York 10048-002980

RE: Vessel Repair; Casualty; Heavy Weather; Modification; 19 U.S.C. 1466; 19 C.F.R. 4.14; M/V GALVESTON BAY; Entry No. 559-1237215-2.

Dear Sir:

This letter is in response to your memorandum dated March 15, 1991, which forwards for our review the application for relief filed in conjunction with the above-referenced vessel repair entry.

FACTS:

The record reflects that the subject vessel, the M/V GALVESTON BAY, arrived at the port of Boston, Massachusetts, on December 26, 1990. Vessel repair entry, number 559-1237215-2, was filed on the same day as arrival. The entry reflects that foreign shipyard work was performed to the vessel in Rotterdam between December 16, 1990, and December 17, 1990. Specifically, the vessel was required to have repairs made to correct damages to the pilot hoist ladder, port and starboard gangways, and intake louvers in the emergency diesel space that resulted from heavy weather encountered by the vessel on December 4, 1990, and December 12, 1990. The vessel also had its existing starboard side accommodation ladder repaired and extended.

ISSUES:

(1) Whether the evidence submitted demonstrates that the repairs performed to the ship's pilot hoist ladder, port and starboard gangways, and intake louvers in the emergency diesel space were necessitated by stress of weather and were necessary to secure the safety and seaworthiness of the vessel.

(2) Whether the repair and extension of the ship's starboard side accommodation ladder constitute a modification that is not subject to duty under 19 U.S.C. 1466.

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, 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 foreign or coastwise trade, or vessels intended to engage in such trade. The statute provides for the remission of the above duties in those instances where good and sufficient evidence is furnished to show that foreign repairs were compelled by "stress of weather or other casualty" and were necessary to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. 19 U.S.C. 1466(d)(1).

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. 4.14(d)(1)(iii) (1991). The applicant submits invoices and a statement by the master as to the claimed heavy weather. However, without the other corroborative evidence--in particular the vessel's log and the certification by the master that the repairs were necessary for the safety and seaworthiness of the vessel--the applicant fails to meet the evidentiary requirements for heavy weather claims established by regulation. This claim must therefore be denied, and the costs related to the repairs of the pilot hoist ladder, port and starboard gangways, and intake louvers in the emergency diesel space are therefore dutiable.

The applicant also seeks relief for the repair and extension of the ship's starboard side accommodation ladder, which the applicant claims is a modification. In its application of the vessel repair statute, the Customs Service has held that modifications, alterations, or additions to the hull and fittings of a vessel are not subject to vessel repair duties. Over the course of years, the identification of work constituting modifications on the one hand and repairs on the other has evolved from judicial and administrative precedent. In considering whether an operation has resulted in a modification that is not subject to duty, the following elements may be considered:

1. Whether there is a permanent incorporation into the hull or superstructure of a vessel (see United States v. Admiral Oriental Line, 18 C.C.P.A. 137 (1930)), either in a structural sense or as demonstrated by the means of attachment so as to be indicative of the intent to be permanently incorporated. This element should not be given undue weight in view of the fact that vessel components must be welded or otherwise "permanently attached" to the ship as a result of constant pitching and rolling. In addition, some items, the cost of which is clearly dutiable, interact with other vessel components resulting in the need, possibly for that purpose alone, for a fixed and stable juxtaposition of vessel parts. It follows that a "permanent attachment" takes place that does not necessarily involve a modification to the hull and fittings.

2. Whether in all likelihood an item under consideration would remain aboard a vessel during an extended lay-up.

3. Whether, if not a first time installation, an item under consideration constitutes a new design feature and does not merely replace a part, fitting, or structure that is performing a similar function.

4. Whether an item under consideration provides an improvement or enhancement in operation or efficiency of the vessel.

The Customs Service has 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. 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.

The question of whether the extensions of the accommodation ladders are modifications was considered by this office in Headquarters Ruling Letter 110703, dated January 23, 1990. This office determined that the proposed extensions of the accommodation ladders constitute modifications, with the caveat that the conclusions reached in the letter were subject to entry and invoices consistent with the facts upon which those conclusions were based. The work described in the D. van de Wetering B.V. invoice relating to the extension is generally consistent with the facts of the earlier information letter; we therefore conclude that such work constitutes a modification to the vessel that is not subject to duty. We note, however, that item 1 of the D. van de Wetering B.V. invoice describes repairs to the existing starboard accommodation ladder that were made in preparation to the modification. We find this cost to be dutiable.

HOLDING:

(1) The applicant failed to meet the evidentiary requirements to establish that repairs to the pilot hoist ladder, port and starboard gangways, and intake louvers in the emergency diesel space were necessitated by stress of weather and were necessary to secure the safety and seaworthiness of the vessel. These costs are therefore dutiable.

(2) The work to extend of the starboard side accommodation ladder constitutes a modification to the vessel. The costs associated with this work are not subject to duty. Item 1 of the D. van de Wetering B.V. invoice describes repairs to the existing starboard side accommodation ladder that were made in preparation to the modification. We find this cost to be dutiable.

Sincerely,

B. James Fritz
Chief

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