HQ 0111643 - Vessel Repair Entry No. 335-0100592-1 PRESIDENT MADISON V- 173; Vessel Repairs; casualty; evidence - United States International Trade Commision Rulings

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HQ 111643

February 7, 1992

VES-13-18 CO:R:IT:C 111643 BEW

CATEGORY: CARRIER

Chief, Technical Assistant
Pacific Region
Commercial Operations
One World Trade Center
Long Beach, California 90853

RE: Vessel Repair Entry No. 335-0100592-1 PRESIDENT MADISON V- 173; Vessel Repairs; casualty; evidence

Dear Sir:

This is in reference to an application for relief from duties filed by American President Lines, Ltd., in relation to the above referenced vessel repair entry dated February 6, 1991. The entry and the application were timely filed. The vessel arrived at the port of Seattle, Washington, on February 2, 1991.

FACTS:

The PRESIDENT MADISON is a U.S.-flag vessel owned by American President Lines, Ltd. The record shows that the shipyard work in question was performed on the subject vessel at the Tai Ho Marine Eng. Co., Ltd., in Kaohsiung, Taiwan, and at the Hong Kong United Dry Dock during the month of January 1991.

The applicant requests review for remission of duty on the following repairs:

Item # JCF# Vendor

01 MA 173-102 Tai Ho Marine Eng Co., Ltd. 02 MA 173-103 Tai Ho Marine Eng Co., Ltd. 03 MA 173-104 Marine SVC & Engineering
04 MA 173-105 Tai Ho Marine Eng Co., Ltd. 05 MA 173-106 Tai Ho Marine Eng Co., Ltd. 06 MA 173-107 Hongkong United Dockyards,
Ltd.
07 MA 173-108 Hongkong United Dockyards,
Ltd.
08 MA 173-109 American Bureau of Shipping 09 MA 173-110 American Bureau of Shipping 10 MA 173-111 Tai Ho Marine Eng Co., Ltd.

The applicant claims that each of the invoices submitted relate to the repairs necessary because of a casualty. The applicant contends that the vessel sustained the following damage as a result of heavy weather damage:

(A) Fractured D-Ring and base sockets
(B) Starboard pedestal destroyed
(C) Three cracks in No. 6 starboard fuel oil tank (D) Hatch cover guide ripped off at row No. 3 (E) Corner on hatch cover at row No. 8 cracked and gasket dislodged
(F) Box girder cracked through the deck.

You have requested our advice concerning repairs which relate to the alleged casualty.

ISSUE:

Whether sufficient evidence is presented to establish that the subject repairs were necessitated by a "casualty" which is 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.

In Treasury Decision 78-180, we set out guidelines to be used when relief is requested on the basis that the vessel encountered high winds. (T.D. 78-180, 12 Cust. B. & Dec. 382 (1978)). We held that winds of force 9 on the Beaufort Scale, a numerical scale rating winds according to ascending velocity from zero (calm) to twelve (hurricane), accompanied by a reasonable description of the conditions and verified as required in the regulations, raise a presumption that damages caused were due to stress of weather. (See Rene de Kerchove, International Maritime Dictionary 52 (2nd Ed. 1961).

The Marine Note of Protest subscribed to by the ship's master on January 10, 1991, in the port of Yokohama, Japan, indicates that the vessel experienced Force 6-9 Winds, Force 5-6 seas, and Force 4-7 swells on January 5, 1991, and again on January 8, from 1000 hours through 2400 hours on January 9, 1991, the vessel experienced "rough and boisterous seas and Force 6-9 Winds, Force 5-6 seas, and Force 6-8 swells. In addition to the Marine Note of Protest, the file contains copies of relevant pages from the ship's log and official log containing the sea and wind conditions during the crossing from Alaska to Yokohama, Japan.

It is clear from the evidence that the vessel encountered heavy weather conditions during the period of January 5 through January 10, 1991, that the vessel suffered damage due to severe weather conditions, and that the vessel was in need of repairs to secure her safety and seaworthiness. Our findings as to the entry are set forth below:

With respect to the following items, all items are non dutiable due to the casualty suffered by the vessel:

01 MA 173-102 Tai Ho Marine Eng Co., Ltd. 02 MA 173-103 Tai Ho Marine Eng Co., Ltd. 03 MA 173-104 Marine SVC & Engineering
04 MA 173-105 Tai Ho Marine Eng Co., Ltd. 05 MA 173-106 Tai Ho Marine Eng Co., Ltd. 06 MA 173-107 Hongkong United Dockyards,
Ltd.
07 MA 173-108 Hongkong United Dockyards,
Ltd.
10 MA 173-111 Tai Ho Marine Eng Co., Ltd.

In C.I.E. 429/61 we noted that:

... expenses which are incurred in conducting inspections made subsequent to the repairs, so as to ascertain whether the work had been properly performed, are dutiable as integral parts of the expenses of repairs although separatly [sic] itemized. Moreover, testing which is effected for the purpose of ascertaining whether repairs to certain machinery or parts of the vessel are required, or are performed in order to ascertain if the work is adequately completed, are also integral parts of the repairs and are accordingly dutiable.

Pursuant to the holdings in C.I.E. 429/61, and extending the concept to surveys as well as inspections, if a survey is conducted to ascertain the extent of damage sustained, or to ascertain if the work is adequately completed, the costs are dutiable as part of the repairs which are accomplished. In the subject case, the surveys were conducted as a part of the repairs relating to the casualty. With respect to the American Bureau of Shipping (ABS) Surveys, we find as follows:

Item No. 08- MA 173-109, American Bureau of Shipping invoice relating to Report No. HK8617, the documentation is incomplete in that only the two pages or the report relating to the Hull damage
survey have been submitted. Base on this submission, we cannot determine that the survey was related to the damage that was due to the subject casualty thereby rendering the vessel unseaworthy. Accordingly, we find this survey to be dutiable.

Item No. 09-MA 173-110, American Bureau of Shipping Invoice relating to ABS Report No. KS6887 - all costs are remissible.

HOLDING:

The evidence presented is sufficient to substantiate that the subject repairs were necessitated by a casualty, thus warranting remission pursuant to 19 U.S.C. 1466 as to all items except item No. 8.

The documentation submitted is incomplete as to the ABS survey listed in Item No. 08- MA 173-109, therefore, remission is denied as to this item.

Sincerely,

B. James Fritz
Chief

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