HQ 0112358 - Vessel Repair; Warranty; Modification; 19 U.S.C. 1466; Protest No. 30014-000554; PRESIDENT TYLER V-32. - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1993 HQ Rulings > HQ 0112134 - HQ 0112398 > HQ 0112358

HQ 112358

January 6, 1993

VES-13-18 CO:R:IT:C 112358 JBW

CATEGORY: CARRIER

Chief, Technical Branch
Commercial Operations
Pacific Region
1 World Trade Center
Long Beach, CA 90831

RE: Vessel Repair; Warranty; Modification; 19 U.S.C. 1466; Protest No. 30014-000554; PRESIDENT TYLER V-32.

Dear Sir:

This letter is in response to your memorandum of June 23, 1992, which forwards for our review and ruling the above- referenced protest against the assessment of vessel repair duties.

FACTS:

The record reflects that the subject vessel, the PRESIDENT TYLER, arrived at the port of Seattle, Washington, on May 20, 1983. Vessel repair entry, number 83-904761, was filed on the same day as arrival and indicates that shipyard work was performed in Yokohama and Kobe, Japan. An application for relief and a petition for review were filed in which the protestant claimed that work to repair the number 5 line shaft bearings was not dutiable because this work was performed pursuant to a warranty on modifications made on a previous voyage to the vessel by Mitsubishi Heavy Industries. This office denied this claim. Headquarters Ruling Letter 106361, dated October 4, 1983. The entry was liquidated on June 8, 1984, and the protest was timely filed on August 1, 1984.

ISSUE:

Whether the cost of foreign repairs performed pursuant to a warranty on a contract with a foreign shipyard for vessel modification is dutiable under 19 U.S.C. 1466 (1988).

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, provides in pertinent part for payment of duty in the amount of fifty 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.

The Customs Service has consistently held that duty allowance will not be made for foreign shipyard warranties. Headquarters Ruling Letter 110658, dated April 9, 1990. The Court of International Trade recognized one narrow category of foreign shipyard warranties as potentially eligible for duty refund. Sea-Land Service, Inc. v. United States, 683 F. Supp. 1404 (CIT 1988). The Court in that case found that, under certain conditions, warranties issued pursuant to new vessel construction contracts should be honored for duty refund purposes. Id. at 1409. This decision did not disturb, however, our long-standing position that disallows other classes of foreign warranty work.

The repair work performed by Mitsubishi Heavy Industries was not performed pursuant to a new vessel construction contract warranty. It does not, therefore, qualify under the exception established in the Sea-Land decision discussed in the previous paragraph. Failing qualification for this exception, we conclude that the work performed under warranty to repair the number 5 line shaft bearing is dutiable.

HOLDING:

The cost of repair work performed pursuant to a warranty on a vessel modification contract for which the vessel owner seeks relief is dutiable under 19 U.S.C. 1466.

Sincerely,

Stuart P. Seidel

Previous Ruling Next Ruling