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HQ 111904


December 17, 1991

VES-13-18-CO:R:IT:C 111904 LLB

CATEGORY: CARRIER

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

RE: Vessel Repair; Scavenger air spaces; Cleaning or maintenance; Stacking frame modification; Vessel SEALAND EXPRESS, V-156; Vessel repair entry No. 110-0104147-1

Dear Sir:

Reference is made to your memorandum of September 3, 1991, which forwards for our consideration the Application for Relief from vessel repair duties filed by Sea-Land Services, Inc., in relation to the above-captioned vessel repair entry.

FACTS:

The record reflects that the subject vessel, the M/V SEALAND EXPRESS, arrived at the port of Tacoma, Washington, on May 27, 1991. Vessel repair entry, number 110-0104147-1, was filed on the same day. The entry indicates that the vessel underwent repairs while in Japan, Hong Kong, and Singapore. Specifically, you refer for our consideration the dutiability of the cost of removing carbon and oil deposits from the main engine air scavenger spaces, and operations performed on hatch covers and stacking frames.

ISSUE:

Whether removing carbon and oil deposits from diesel engine air scavenger spaces constitutes a nondutiable cleaning or a dutiable maintenance operation under 19 U.S.C. 1466, and whether certain operations performed on hatch covers and stacking frames may be considered nondutiable modifications rather than repairs under the statute.

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.

The applicant seeks relief for the cleaning of certain main engine air scavenger spaces. The scavenging spaces of a diesel engine are steel chambers that are permanently attached to the cylinders of the engine. The scavenging spaces serve two functions. First, the scavenging spaces receive the discharge from the turbo-chargers and deliver the charged air to each cylinder via reed valves and intake ports. Second, air from the piston underside is pumped into the scavenging space via reed valves to supplement turbo-charger-delivered air. This air enters the cylinders via inlet ports uncovered when the piston gets to the bottom end of its stroke and serves to "scavenge" the burnt gasses out of the cylinder. This process cleans the cylinders of spent energy and provides a clean air discharge for the next fuel injection. As a result of this process, some gasses containing unburnt carbon may be left and deposited in the scavenging spaces.

These carbon deposits and other oily deposits in the scavenger spaces may result in fire or explosion. They also reduce the efficient operation of the engine. Diesel engine maintenance manuals therefore require periodic cleaning of the scavenger spaces to permit the safe and efficient operation of the vessel. The maintenance of a scavenger space involves removing access plates and scraping, wire brushing, and wiping the inside of the space. This operation is labor intensive and would take a single worker up to two working days to clean a single cylinder.

In analyzing the dutiability of foreign vessel work, the Customs Service has consistently held that cleaning is not dutiable unless it is performed as part of, in preparation for, or in conjunction with dutiable repairs or is an integral part of the overall maintenance of the vessel. E.g., Headquarters Ruling Letter 110841, dated May 29, 1990 (and cases cited therein). The Customs Service considers work performed to restore a part to good condition following deterioration or decay to be maintenance operations within the meaning of the term repair as used in the vessel repair statute. See generally, Headquarters Ruling Letter 106543, dated February 27, 1984; C.I.E. 142/61, dated February 10, 1961.

The dutiability of maintenance operations has undergone considerable judicial scrutiny. The United States Court of Customs and Patent Appeals, in ruling that the term repair as used in the vessel repair statute includes "maintenance painting," gave seminal recognition to the dutiability of maintenance operations. E. E. Kelly & Co. v. United States, 55 Treas. Dec. 596, T.D. 43322 (C.C.P.A. 1929). The process of chipping, scaling, cleaning, and wire brushing to remove rust and corrosion that results in the restoration of a deteriorated item in preparation for painting has also been held to be dutiable maintenance. States Steamship Co. v. United States, 60 Treas. Dec. 30, T.D. 45001 (Cust. Ct. 1931).

Most recently, the United States Customs Court examined whether the scraping and cleaning of Rose Boxes constituted dutiable repairs. Northern Steamship Company v. United States, 54 Cust. Ct. 92, C.D. 1735 (1965). Rose Boxes are parts fitted at the ends of the bilge suction to prevent the suction pipes from being obstructed by debris. In arriving at its decision, the court focused on whether the cleaning operation was simply the removal of dirt and foreign matter from the boxes or whether it resulted in the restoration of the part to good condition after deterioration or decay. Id. at 98. The court determined that the cleaning did not result in the restoration of the boxes to good condition following deterioration and consequently held that the work was not subject to vessel repair duties. Id. at 99. The Customs Service has ruled that the regular cleaning of filters in most instances does not result in liability for duty. See Headquarters Ruling Letter 107323, dated May 21, 1985.

From these authorities, we determine that the cost of cleaning the air scavenger spaces is subject to duty under 19 U.S.C. 1466. The term deterioration is defined to mean degeneration, which in turn denotes declined function from a former or original state. See The American Heritage Dictionary of the English Language 376, 387 (2d ed. 1985). The principal function of the air scavenger spaces is to either deliver turbo- charged air to the cylinders or receive spent gasses from the cylinders. The collection of carbon and other oily deposits poses a fire or explosion hazard and results in a diminished engine function. The removal of the carbon deposits through scraping, wire brushing, and wiping results in a restoration of the scavenger spaces to good condition following a decline in function of the scavenger spaces. Such an operation can be distinguished from cleaning a Rose Box or other filter, for the collection of debris by these parts results not in a diminution of function, but alternatively demonstrates the proper function of the part.

The applicant also seeks relief from duty for certain operations performed on hatch covers and stacking frames to adapt the hatch covers to international specifications and to alter the dimensions of the frames to accommodate larger containers. This matter was the subject of a specific prior ruling from Customs Headquarters (Ruling number 110835), which found that the described operation would be duty-free if borne out by documents submitted with a specific entry. The documentation associated with this entry verifies that the work performed in this case was in the nature of duty-free modifications.

HOLDING:

The removal of carbon and oil deposits from the main engine scavenger spaces is a maintenance operation the cost of which is subject to duty under 19 U.S.C. 1466.

The evidence in this case supports a finding that hatch cover and stacking frame modification work performed on this voyage, as described above, should be considered a nondutiable modification.

Sincerely,

B. James Fritz
Chief

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