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HQ 111809


December 24, 1991

VES-13-18-CO:R:IT:C 111809 GEV

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations
ATTN: Regional Vessel Repair Liquidation Unit New York, New York 10048-0945

RE: Vessel Repair Entry No. 744-2053034-2; SUGAR ISLANDER; Casualty; 19 U.S.C. 1466(d)(1)

Dear Sir:

This is in response to your memorandum dated July 19, 1991, transmitting an application for relief from duties assessed pursuant to 19 U.S.C. 1466(d)(1). Our findings are set forth below;

FACTS:

The SUGAR ISLANDER is a U.S.-flag vessel owned and operated by Eastern Upper Peninsula Transportation Authority (EUPTA) of Kincheloe, Michigan. The subject vessel had foreign shipyard work performed in Sault Ste. Marie, Ontario, Canada, during March of 1991. Subsequent to the completion of the work the vessel arrived in the United States at Sault Ste. Marie, Michigan on March 8, 1991. A vessel repair entry was filed on the date of arrival.

An application for relief, dated March 11, 1991, was timely filed requesting remission for the repairs performed. The specifics of this case are as follows.

The vessel is operated by EUPTA as a ferry to transport passengers between Mission Point, Michigan and Sugar Island, Michigan. On March 2, 1991, a man was sighted attempting to walk across the ice of the frozen St. Mary's River from the Canadian shore to the United States shore. He fell through the ice and the subject vessel was requested to render assistance to the ensuing rescue operation. During the rescue operation the vessel ran aground on the Canadian side of the St. Mary's River and sustained extensive damage to its rudders, propeller shafts, bushings, etc.

The repairs in question were performed by Purvis Marine Ltd., a Sault Ste. Marie, Ontario facility. The record indicates that an employee of the U.S. facility normally utilized by EUPTA in performing repair work on the subject vessel supervised the repairs in the Canadian yard.

It is contended that remission of the duties assessed on the repairs in question should be granted pursuant to 19 U.S.C. 1466(d)(1). In support of this claim the applicant has submitted the following: (1) a U.S. Coast Guard Certificate of Inspection; (2) a U.S. Coast Guard Consolidated Certificate of Enrollment and License; (3) copies of local newspaper articles covering the grounding in question, including photographs of the damaged portions of the vessel as well as the surplus Corps of Engineers tug used as the only transportation between Sugar Island and the mainland while the damaged vessel was being repaired; (4) a copy of a letter dated March 4, 1991, from the Deputy Chief of Police, Sault Ste. Marie, Ontario, thanking the operators of the vessel during the rescue operation; (5) a letter dated March 21, 1991, from John V. Carr & Son, Inc., Custom Brokers forwarding an amended invoice from Purvis Marine Ltd.; and (6) an invoice from Purvis Marine Ltd. listing the charges for the repairs in question.

ISSUE:

Whether evidence is presented sufficient to prove that the foreign repairs performed on the subject vessel 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 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. Pursuant to Presidential Proclamation 5923 of December 14, 1988, effective January 1, 1989, all such costs incurred in Canada are dutiable at a rate of 45 percent ad valorem and shall decrease at 5 percent increments on January 1 of each successive year until January 1, 1998, when duty on Canadian work assessed pursuant to 19 U.S.C. 1466 will be eliminated.

Section 1466(d)(1) provides for 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" necessary 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 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 106159, September 8, 1983).

The Customs Service has consistently held that the grounding of a vessel constitutes a "casualty" as that term is used in section 1466(d)(1), and that duties on repairs necessitated by a grounding are remissible if the repairs are performed to secure the safety and seaworthiness of the vessel (see C.S.D. 89-61, citing C.I.E.'s 1822/58, 1823/58 and 1160/60).

Upon reviewing the record in its entirety, it is apparent that the applicant has met the evidentiary requirements of 19 U.S.C. 1466(d)(1). Accordingly, remission is granted.

HOLDING:

The evidence presented is sufficient to prove that the foreign repairs performed on the subject vessel for which relief is sought were necessary for its safety and seaworthiness therefore remission pursuant to 19 U.S.C. 1466(d)(1) is granted.

Sincerely,

B. James Fritz

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