HQ 0112065 - Jackson, Florida, Vessel Repair Entry No. C18-0016861-4; SS CHESTNUT HILL, V/150; Application; casualty; crew negligence - United States International Trade Commision Rulings

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HQ 112065

April 15, 1992

VES-13-18 CO:R:IT:C 112065 BEW

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations Division
South Central Region
New Orleans, Louisiana 70130

RE: Jackson, Florida, Vessel Repair Entry No. C18-0016861-4; SS CHESTNUT HILL, V/150; Application; casualty; crew negligence

Dear Sir:

This is in reference to your memorandum of January 6, 199(1) which transmitted an application for relief from duties filed by Keystone Shipping Co., on behalf of Mellon Bank (East) N.A., in relation to the above referenced vessel repair entry dated August 23, 1991. The entry and the application were timely filed. The vessel arrived at the port of Jacksonville, Florida, on August 23, 1991.

FACTS:

The SS CHESTNUT HILL is a U.S.-flag vessel owned by Mellon Bank (East) N.A. The record shows that foreign repairs were performed on the subject vessel at Dubai, United Arab Emirates (UAE) on November 24 through November 30, 1990 and February 3 through 16, and April 11 through 17, 1991; Algeciras, Spain, on November 1, 1990; Jeddah, KSA on December 8, 1990 and January 8, 1991, and in Trieste, Italy.

The applicant claims that the following invoices relate to the repairs necessary because of a casualty:

Invoice No. 2 - Item No. 2 - Nico Int'l Invoice 14459 Invoice No. 5 - ABS Tech invoice
Invoice No. 8 - Marine Technical Services, Inc. Invoice No. 10 - Nico International UAE
Invoice No. 11 - Dubai Drydocks
Invoice No. 13 - Nico International UAE
Invoice No. 14 - Marine Technical Services, Inc.

The applicant contends that the alleged casualty was caused by crew negligence which resulted in the rupturing of the No. 2 main cargo pump expansion joint. You have referred for our review the vessel operator's claim of remissible casualty due to negligence by a crew member.

ISSUE:

Whether sufficient evidence is presented to establish that the foreign repairs which were made to the vessel main cargo pump expansion joint were necessitated by a "casualty" i.e. crew negligence, thus warranting remission pursuant to 19 U.S.C. 1466(d)(1).

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.

The statements of the Chief Engineer and Third Assistant Engineer, the Engineer's and Official log books, and the Coast Guard Form 2692, Casualty Report, indicate that on October 31, 1990, the expansion joint of the No. 2 main cargo pump blew out due to improper shut down by the Third Assistant Engineer.

The documents submitted with the application substantiates that the improper shut down of the Main Cargo No. 2 pump caused damage to the subject pump and the foreign repairs were necessary for the safety and seaworthiness of the vessel.

Upon reviewing the record in its entirety, we find that the damage sustained to the subject vessel which occurred on October 31, 1990, was the result of a "casualty" within the meaning of section 1466.

The Customs Service has ruled that single acts of negligence of crewmembers which cause damage to vessels, whether attributable to officers or not, will be considered "other casualties" within the meaning of section 1466(d)(1), provided no evidence of owner direction or inducement is present (see C.S.D. 82-42).

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, and is therefore remissible as a part of the foreign repairs made to the No. 2 main cargo pump.

HOLDING:

Following a thorough review of the facts and evidence, and after an analysis of the law and applicable precedent decisions, we have determined to allow the Application for Relief, as specified in the law and analysis portion of this decision.

Sincerely,

B. James Fritz

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