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HQ 112394


December 14, 1992

VES-13-18 CO:R:IT:C 112394 GFM

CATEGORY: CARRIER

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

RE: Vessel Repair; Casualty; Stevedore Negligence; Evidentiary Requirements; Coast Guard Documentation; Seaworthiness; SEA-LAND EXPLORER; Application; Entry No. C27-0067825-6; 19 U.S.C. 1466(d)(1); 19 C.F.R. 4.14.

Dear Sir:

This letter is in response to your memorandum of July 22, 1992, which forwards for our review the above referenced application for relief from the assessment of vessel repair duties.

FACTS:

The subject vessel, the SEA-LAND EXPLORER, is a U.S.-flag vessel owned and operated by Sea-Land Services, Inc. On April 10-11, 1992, while docked at Kaohsuing, Taiwan, the vessel undertook foreign repairs to the #7B hatch and #7B hatch coaming which allegedly resulted from stevedore negligence said to have occurred while the vessel undertook cargo operations in Naha, Japan. On June 23, 1992, an application for relief was filed requesting remission for the above mentioned repairs as well as charges for a damage survey conducted by the American Bureau of Shipping (ABS). Our findings are set forth below.

ISSUE:

Whether sufficient evidence is presented to establish that the subject repairs were necessary to insure the vessel's safety and seaworthiness thus warranting remission pursuant to 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 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 establishes a three-part test which must be satisfied 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.

In addition, if the above requirements are satisfied by acceptable 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.

Regarding the establishment of a casualty, the term, as it is used in the statute, has been interpreted as something, like stress of weather, which 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 (Headquarters Ruling Letter 106159, September 8, 1983).

In order to properly document such a casualty occurrence, Customs Regulations require that certain supporting evidence be submitted with the application for relief for damages resulting from stress of weather. This evidence includes, but is not limited to, 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. 4.14(d)(1)(iii)(D)-(F) see, Headquarters Ruling Letters 106461, 105669).

With regard to stevedore negligence, the Customs Service has previously ruled that where parts of vessels are damaged by the negligence of stevedores, repairs to such parts are considered to be necessitated by a casualty and are entitled to remission provided there is no evidence showing lack of maintenance or wear and tear. (C.I.E. 1161/62, Headquarters Ruling Letters 105811, 105813, 105788, 111572).

In the present case, no supporting evidence to sustain a casualty claim is submitted. The only documents which mention the alleged casualty consist of the application letter, the vessel repair entry and the ABS damage survey report. Accordingly, as the applicant has not provided the requisite proof that a casualty occurred.

With regard to the remaining requirements, the establishment of the safety and seaworthiness of the vessel and the vessel's ability to reach its port of destination, 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 C.F.R 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 which 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."

The standard of proof necessary to establish "safety and seaworthiness" is set forth in Headquarters Ruling Letter 112060 GEV. That ruling established the clear rule that where a vessel which is damaged foreign proceeds between two foreign locations in a state of disrepair prior to being repaired foreign, and subsequently sails to its U.S. port of destination, notwithstanding any established practice of verbally reporting foreign casualties to the USCG and that agency's subsequent verbal instructions in response thereto, 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 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).

Again, with regard to the present case, no such documentary evidence is presented. As stated previously, the only documents which mention circumstances relating to the alleged casualty are the vessel repair entry, the application request, and the ABS damage survey report. As none of these documents is sufficient to establish the safety and seaworthiness of the vessel in accordance with established authority, remission pursuant to 19 U.S.C. 1466(d)(1) cannot be granted.

HOLDING:

As the evidence provided is insufficient to prove either that a casualty occurrence existed or that the vessel was unsafe and unseaworthy and thus unable to proceed to its port of destination, remission pursuant to 19 U.S.C. 1466(d)(1) cannot be granted.

Sincerely,

Acting Chief

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