HQ 0111770 - Vessel Repair; Entry No. C27-0054151-2; PRESIDENT JOHNSON V-239; Casualty; Seaworthiness - United States International Trade Commision Rulings

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HQ 111770

December 17, 1991

VES-13-18-CO:R:IT:C 111770 GEV

CATEGORY: CARRIER

Chief, Technical Branch
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90731

RE: Vessel Repair; Entry No. C27-0054151-2; PRESIDENT JOHNSON V-239; Casualty; Seaworthiness

Dear Sir:

This is in response to your memorandum dated June 18, 1991, transmitting an application for relief from duties assessed pursuant to 19 U.S.C. 1466. Our findings are set forth below.

FACTS:

The PRESIDENT JOHNSON is a U.S.-flag vessel owned and operated by American President Lines, Ltd. (APL), of Oakland, California. The subject vessel had foreign shipyard work performed in Kaohsiung, Taiwan, and Yokohama, Japan, during April of 1991. Subsequent to the completion of the work the vessel arrived in the United States at Los Angeles, California, on April 22, 1991. A vessel repair entry covering the work in question was filed on the date of arrival.

An application for relief, dated May 13, 1991, was timely filed requesting remission pursuant to 19 U.S.C. 1466(d)(1). The applicant states that while at anchor offshore Kaohsiung (Lat. 22-33.4N, Long. 120-14.9E) on April 6, 1991, at 1:40 p.m., the vessel encountered a severe cyclone causing the ship to drag anchor and resulting in extensive damage to the vessel.

In support of their claim the applicant has submitted the following: (1) all itemized bills, receipts, and invoices covering items specified for relief; (2) an American Bureau of Shipping damage survey report and the accompanying invoice; (3) a National Weather Service Barogram of April 5-6, 1991, which recorded the sudden extreme change in barometric pressure evidencing the existence of the cyclone and the force with which it hit the vessel; (4) a Marine Note of Protest filled out by the
master describing the incident in question; (5) an APL Damage Report filled out by the master referencing the ABS damage survey; (6) a telefax transmission to APL from the U.S. Coast Guard Resident Inspector, Singapore, granting the vessel permission to proceed from Kaohsiung to Yokohama with its starboard hand propeller lifeboat inoperable due to storm damage; (7) a U.S. Coast Guard Report of Marine Accident; and (8) a telefax transmission from The Salvage Association reporting the extent of the damage found as a result of their survey of the vessel.

ISSUE:

Whether evidence is presented sufficient to prove that the foreign repairs performed on the vessel for which relief is sought were necessitated by a casualty occurrence thus warranting remission pursuant to 19 U.S.C. 1466(d)(1).

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, provides in part for payment of an ad valorem duty of 50 percent of 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 engage in such trade. Section 1466(d)(1) provides that the Secretary of the Treasury is authorized to remit or refund such duties if the owner or master of the vessel was compelled by stress of weather or other casualty to put into such foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination.

The term "casualty", as it is used in the vessel repair statute (19 U.S.C.1466) 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 (see Dollar Steamship Lines, Inc., v. United States, 5 Cust. Ct. 28- 29, C.D. 362 (1940)). 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 106159, September 8, 1983).

It is noted that section 4.14(c)(3)(i), Customs Regulations (19 CFR 4.14(c)(3)(i), provides that "port of destination" means such port in the United States. This point is not in dispute, however, it is an embellishment upon section 1466(d)(1) which, as stated above, sets forth the following three-part test which must be met in order to qualify for remission:

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.

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.

In the case under consideration, the evidence supports the establishment of a casualty occurrence (i.e., a cyclone). The damage incurred to the vessel (i.e., damaged communications, navigation and lifesaving equipment) rendered the vessel unsafe and unseaworthy to reach its port of destination without obtaining foreign repairs. Accordingly, remission of the duties assessed on the repairs in question is warranted.

HOLDING:

The evidence presented is sufficient to prove that foreign repairs performed on the subject vessel for which relief is sought were necessitated by a casualty occurrence thereby warranting remission pursuant to 19 U.S.C. 1466(d)(1).

Sincerely,

B. James Fritz

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