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HQ 112232


January 27, 1993

VES-13-18-CO:R:IT:C 112232 BEW

CATEGORY: CARRIER

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

RE: Vessel Repair Entry No. 335-0100604-4; PRESIDENT JOHNSON V-242; Machinery Breakdown; Casualty

Dear Sir:

This is in response to your memorandum dated June 2, 1992, forwarding a petition for relief from duties assessed under 19 U.S.C. 1466.

FACTS:

The PRESIDENT JOHNSON is a U.S.-flag vessel owned by American President Lines, Ltd., of Oakland, California. The subject vessel underwent foreign repairs during August-September, 1991. After the completion of the repairs the vessel arrived in the United States at Seattle, Washington, on September 15, 1991. A vessel repair entry was filed on September 20, 1991.

Pursuant to an extension of time, an application for relief was timely filed on December 16, 1991. The application did not contain a basis for granting relief but merely requested remission of duty for Items 12-20 and 22. Submitted with the application were various invoices, job control orders and ABS surveys covering the work in question. Upon reviewing the documentation submitted it appeared that the repairs for which remission was requested were necessitated due to the failure of the ship's service turbo generator that self-destructed at 4:15 p.m. on August 21, 1991, while the vessel was enroute from Dutch Harbor, Alaska, to Yokohama, Japan. Although not stated in the application, the supporting documentation characterized this damage as a casualty. Based on the evidence submitted, in ruling No. 112078 GEV, dated February 19, 1992, it was held that:

In regard to the case under consideration, at the outset we note that the application submitted is deficient in that it does not meet the requirements set forth in section 4.14, Customs Regulations (19 CFR 4.14) for an application in that no claim for relief is made under either paragraph (a) (items that are not subject to duty) and/or paragraph (c) (circumstances allowing remission of duty otherwise due). Furthermore, Item 13 for our review is a foreign invoice which is not accompanied by an English translation as it required by 19 CFR 4.14(d)(1)(iv).

Notwithstanding the documentary deficiencies noted above, the record contains no conclusive evidence as to what caused the failure of the ship's service turbo generator. Pursuant to C.S.D. 79-32, Customs has held that a breakdown or failure of machinery may not be regarded as a casualty within the meaning of section 1466(d)(1) in the absence of a showing that it was caused by some extrinsic force. Accordingly, remission in this case is denied with the exception of the following expenses which are classifiably free under the vessel repair statute: Item 14 (equipment rental, meals, transportation costs); Item 17 (equipment rental, meals, crane, staging, rigging, transportation costs); Item 18 (transportation costs).

The petition for relief centers primarily around the alleged casualty.

The petition contains affidavits from Frank Harrison, Marine Service Engineer, Houma, Louisiana, concerning the inspection of, and service to the vessel's engines prior to its voyage overseas; relevant pages from the vessel's log; Notice of Damage to company officials; the English translation of Item 13, a foreign invoice, and ABS surveys relating to the alleged casualty.

ISSUE:

Whether sufficient evidence is presented to establish that foreign repairs were necessitated by a "casualty" which is remissible under the vessel repair statute (19 U.S.C.

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 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 that must be met in order to qualify for remission under the subsection, this 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 that, like stress of weather, comes with unexpected force or violence, such as fire, 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 "secure the safety and seaworthiness of the vessel to enable her to reach her port of destination" (19 U.S.C. 1466(d)(1)). Repair costs beyond that minimal amount are not subject to remission.

Customs Regulations require that certain supporting evidence be submitted with an application for relief from duties on repairs resulting from stress of weather. This evidence includes photocopies of the relevant parts of the vessel's logs, certification of any claimed casualty by the master or other responsible vessel officer with personal knowledge of the facts, and a certification by the master that the repairs were necessary for the safety and seaworthiness of the vessel to enable her to reach her port of destination in the United States (19 C.F.R. It is clear from the evidence submitted with the petition that on August 21, 1991, the vessel's service turbo generator suffered major damage due to failure of hydraulic amplifier controlling throttle, compounded by failure of overspeed trip device to operate when overspeed occurred. With regard to the evidence that the vessel was in need of repairs to secure her safety and seaworthiness, however, the documents show that the permanent repairs were not made until September 6, 1991, when the vessel was in the port of Yokohama. The evidence contained in the file shows that after the explosion, the vessel proceeded from the port of Yokohama to Kobe where temporary repairs were made, and returned to Yokohama for permanent repairs.

The United States Coast Guard (USCG) is the controlling agency that determines questions of a vessel's fitness to proceed. The procedure by which the USCG renders such a determination is set forth in sections 2.01-15 and 31.10-25, USCG Regulations (46 CFR 2.10-15, 31.10-25). The former states that a vessel may not proceed from one port to another for repairs unless prior authorization is obtained from the USCG Officer-In- Charge, Marine Inspection (OCMI) either through the issuance of a USCG "Permit to Proceed to Another Port for Repairs" (CG-948) or a CG-835 that would specify the restrictions on, and duration of, any voyage undertaken prior to obtaining permanent repairs. The latter states that with respect to tank vessels, "No extensive repairs to the hull or machinery which affect the safety of a vessel shall be made without the knowledge of the Officer-In- Charge, Marine Inspection."

Notwithstanding the clear wording of the above USCG Regulations, specifically 46 CFR 2.10-15 that does not distinguish between foreign or domestic locations, Customs has been informed by the OCMI, New York, New York, in a letter dated November 7, 1991, that "A formal Permit to Proceed is not normally issued to a vessel transiting foreign waters because the Certificate of Inspection (COI) would have to be removed from the vessel that would cause problems in transiting foreign waters."

In addition, we have subsequently learned from the Chief, Merchant Vessel Inspection and Documentation Division, USCG Headquarters, in a letter dated April 14, 1992, that "Vessel operators often make casualty reports for U.S. flag vessels damaged overseas verbally to the proper Coast Guard Marine Inspection Office, followed by the required written report. The Coast Guard cannot always send a marine inspector to a damaged vessel overseas on short notice. In such cases, the Coast Guard may consider the classification society report and the report of the vessel's master to determine the required temporary repairs and voyage restrictions."
The ABS Report No. YO26228, dated August 22, 1991, reports that the vessel suffered damage as a "result of turbine over- speed due to control malfunction of governor at 16:15 hours on 21 August 1991 whilst generator turbine was under loaded service condition," however it further states, "It is recommended that the above recommendations to be dealt with to the satisfaction of ABS Surveyor at the vessel's next port of call Kobe, Japan, on 24 August 1991."

The ABS Report No. KO18154, dated August 24, 1991, reports that:
The damaged turbine and generator were re-examined at this time and found in accordance with the ABS Yokohama Report YO26228 dated 22 August 1991 and turbine and reduction gearing were considered beyond repair. Recommendations for permanent repair are not dealt with herein and remain outstanding as noted in Report No. YO226228. Further details of the damage are not considered necessary except as noted below.

The report further states that the vessel's owners tried to procure a suitable temporary packaged marine generator unit at this time but without success, and that temporary repairs were carried out in order to allow the vessel to proceed. The ABS considered the vessel fit to proceed to her intended voyage at that time relative to the temporary repairs and upon her return to Yokohama this current voyage and not later than 12 September 1991, a proper marine type packaged generator unit be fitted and properly installed. The ABS Report No. YO26233, dated September 6, 1991, shows that a diesel generator unit was installed.

In cases such as the one under consideration, (i.e., where a vessel that has been damaged foreign, proceeds in a state of disrepair between two foreign locations prior to being repaired foreign, and subsequently sails to its U.S. port of destination), notwithstanding any practice of verbally reporting foreign casualties to the USCG and that agency's subsequent verbal instructions, remission pursuant to 19 U.S.C. 1466(d)(1) will not be granted in the absence of documentary evidence that the casualty occurrence was timely reported to the USCG and that agency, directly or through the medium of a marine surveyor, permitted the vessel to proceed between two foreign locations in a damaged condition. The mere submission of a USCG Report of Marine Accident, Injury or Death (CG-2692), without accompanying documentation from the appropriate USCG OCMI (New York or Honolulu) authorizing the vessel to proceed in a damaged condition, will not suffice for granting remission pursuant to 19 U.S.C. 1466(d)(1).
The term "seaworthy" is admittedly relative. Whether a ship is seaworthy to traverse the Mediterranean during the summer or the northern Atlantic Ocean in mid-winter, are questions that involve disparate considerations. But as a practical matter questions of seaworthiness must often fall within limited factual circumstances that preclude such far-reaching speculations. We consider whether a particular ship with a particular mission, is seaworthy in terms of accomplishing that mission and about which recognized authorities exist that will aid us in making that determination. Our focus in issuing rulings must be toward narrowing questions rather than presenting or accepting the central issues in such a way as to preclude definable considerations.

Federal regulations provide for evidence that permits an expeditious resolution of the question of seaworthiness. The applicant has met the burden of proof that the particular repairs to the subject vessel were necessary for the safety and seaworthiness of the vessel.

Accordingly, we found from the evidence submitted with the petition that the damage was caused by a casualty, and that the ABS permitted the vessel to proceed between two foreign locations in a damaged condition. The petitioner has submitted evidence sufficient to substantiate its claim for remission under

HOLDING:

The evidence presented is 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. The petition is granted as to the casualty.

Sincerely,


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