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HQ 112633


August 13, 1993

VES-13-18 CO:R:IT:C 112633 BEW

CATEGORY: CARRIER

Chief, Residual Liquidation and Protest Branch U.S. Customs Service
6 World Trade Center
New York, New York 10048-0945

RE: New York Vessel Repair Entry No. C46-0015866-0, NOSAC RANGER, Voyage 79; Application; casualty; 19 U.S.C. 1466(d)(1); 19 CFR 4.14

Dear Sir:

This is in reference to your memorandum of March 12, 1993, which transmitted an application for relief from duties filed by Pacific-Gulf Marine, Inc., in relation to the above-referenced vessel repair entry, dated November 10, 1992. The entry and the application were timely filed. The vessel arrived at the port of Newark on November 6, 1992.

FACTS:

The NOSAC RANGER, is a U.S.-flag vessel owned by Car Carrier, Inc. The record shows that the shipyard work in question was performed on the subject vessel in Antwerp, Belgium, on October 22, 1992, and Bremerhaven, Germany, on October 24, 1992.

The applicant requests review for remission of duty on the following items:
a. Kvaerner Invoice N. 920129 b. Kvaerner Invoice No, 920130 c. UMC International PLC Invoice No, R.1751 Det Norske Veritas Invoice No. 367718
LIPS Invoice No. 142040

Customs and the vessel operator are in substantial agreement on the issue of dutiability, and only item c. is offered for our review.
The applicant claims that the subject invoices listed in item c. relate to the repairs necessary because of a casualty. The applicant claims that the costs were incurred as a result of propeller damage, first discovered by divers in Antwerp, Belgium on October 22, 1992. The applicant alleges that on October 20, 1992, the vessel began to reduce speed for arrival in LeHavre, France, and at 0100 the vessel experienced abnormally high vibration or "bucking" The incident was recorded in the vessel's log, and the master advised Pacific-Gulf of the problem by telephone on October 21, 1992. The vessel proceeded to Southhampton, England. Divers could not be mobilized prior to the vessel's departure from Southhampton. The vessel arrived at the next port, Antwerp, Belgium, on October 22, 1992. An underwater survey was done, and it was found that the propeller was heavily damaged, missing approximately 2 feet from the tip of one of the blades. Pacific- Gulf contacted Det Norske Veritas, a classification society, and LIPS to advise them of the damage. The vessel departed Antwerp on October 23, and proceeded to her next port, Bremerhaven, Germany, where DNV surveyed the damaged area, and advised that the propeller damage had to be dealt with prior to departure from Bremerhaven.

ISSUE:

Whether sufficient evidence is presented to establish that the subject repairs were necessitated by a "casualty" which is remissible under the vessel repair statute (19 U.S.C. 1466).

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 application that the vessel's propeller was damaged when she came in contact with an unknown object while enroute to LeHavre, France. Subsequently, the vessel proceeded to the ports of Southhampton, England, Antwerp, Belgium, and Bremerhaven, Germany, where the repairs were made.

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."

Our review of the evidence submitted with the application reveals that the damage was caused by a casualty. The report shows that the damage to the vessel was possibly caused on October 20, 1993, when the vessel was entering the port of LeHavre. 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 repairs to the propeller were not made until October 24, 1992, when the vessel arrived in the port of Bremerhaven, subsequent to a survey of the damage at the port of Antwerp.

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 applicant has not met a burden of proof that is provided for by federal regulations.

Accordingly, in the absence of any determination of the USCG regarding the subject vessel's safety and seaworthiness, and absent the evidence that would be adduced by the required USCG determination on the issue of seaworthiness, the applicant has failed to substantiate its claim for remission under 1466(d)(1).

HOLDINGS:

The evidence presented is insufficient to substantiate that the subject repairs were necessitated by a casualty. The foreign work for which the applicant seeks remission is therefore dutiable under 19 U.S.C. 1466.

Sincerely,

Acting Chief

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