HQ 0111944 - Vessel repair; Casualty alleged; Repair; Scavenger air spaces; Vessel PRESIDENT ADAMS, V-24; Port of arrival, Los Angeles, California; Vessel repair number C27-0189100-7 - United States International Trade Commision Rulings

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HQ 111944

January 27, 1992

VES-13-18-CO:R:IT:C 111944 LLB

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations Division
Pacific Region
One World Trade Center
Long Beach, California 90731

RE: Vessel repair; Casualty alleged; Repair; Scavenger air spaces; Vessel PRESIDENT ADAMS, V-24; Port of arrival, Los Angeles, California; Vessel repair number C27-0189100-7

Dear Sir:

Reference is made to your memorandum of October 2, 1991, which forwards for our review and determination the Petition for Review submitted by American President Lines, Ltd., in connection with the above-captioned vessel repair entry.

FACTS:

The items under consideration on this appeal relate to two separate voyages of the vessel. On the voyage prior to the one in question the satellite navigation system antenna "came adrift" in allegedly heavy weather. It is stated that attempted repairs made by the crew proved by the next voyage to be insufficient. On the voyage in question, the vessel experienced a breakdown of both steering systems shortly after departing Oakland, California. The vessel returned to the United States that same day where one unit was replaced and the other was "jury rigged" to enable the vessel to sail to Japan where parts air freighted from Germany were to be installed. Also while in Japan, the vessel's scavenger air spaces were cleaned out.

ISSUE:

Whether sufficient evidence is submitted to permit a finding that antenna and steering system repairs were casualty-related so as to qualify for refund or remission of duty under the vessel repair statute. Further, whether operations involving the scavenger might be considered non-dutiable cleaning procedures.

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.

Title 19, United States Code, subsection 1466(d)(1), states that the Secretary of the Treasury is authorized to remit or refund such duties if the owner or master furnishes good and sufficient evidence that the vessel was compelled to put into a foreign port and 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 statute, has been interpreted as something which, like stress of weather, comes with unexpected force or violence, such as fire, explosion, 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. See Customs Ruling Letter 106159 LLB (9-8-83).

In the present case, there is no direct evidence of a heavy weather incident leading to damage to the antenna. Further, any question regarding the sufficiency of repairs made by the crew should have been settled on the vessel's prior call in the United States. In the matter of the steering system repairs, there is not even an allegation put forward regarding any extrinsic force causing the systems to fail. In fact, it is stated that a design defect was responsible. It is well settled that such claims are not allowed (Customs Ruling 110740, July 16, 1990).

The final point on appeal concerns 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.

HOLDING:

Following a thorough review of the evidence submitted as well as analysis of the applicable law and precedents, we have determined that, for the reasons set forth in the Law and Analysis portion of this ruling, the Petition for Review should be denied.

Sincerely,

B. James Fritz

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