HQ 0112857 - Vessel Repair; 19 U.S.C. 1466; Petition; S.S. GLACIER BAY, V- 9115; Entry No. C31-0005022-9 - United States International Trade Commision Rulings

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HQ 112857

October 18, 1993

VES-13-18-CO:R:IT:C 112857 GOB

CATEGORY: CARRIER

Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90831

RE: Vessel Repair; 19 U.S.C. 1466; Petition; S.S. GLACIER BAY, V- 9115; Entry No. C31-0005022-9

Dear Sir:

This is in response to your memorandum dated August 4, 1993, which forwarded the petition submitted by B.A. McKenzie & Co., Inc. on behalf of Trinidad Corporation ("petitioner"), the vessel operator.

FACTS:

The record reflects that the S.S. GLACIER BAY ("vessel") arrived at the port of Valdez, Alaska on December 14, 1991. Vessel repair entry C31-0005022-9 was filed on December 16, 1991. Shipyard work was performed on the vessel in Singapore.

By letter dated April 9, 1993 (112451), we issued our ruling with respect to the petitioner's application for relief, which was allowed in part and denied in part.

Petitioner's Claims

The petitioner requests relief with respect to the following items.

1. Item 514 on page 47 of the invoices - $1,000. Spare 24" angle valve. The petitioner claims that this item is a modification, not a repair. It states that a foundation was necessary in order to keep the subject valve, which was an existing spare, as a permanent spare in its pump room. A new angle valve was not purchased.

2. Item 816.1 on page 73 of the invoices - $4,406. Additional steel work - upper deck compensation plates. The petitioner contends that this item is a modification which was segregated from a repair which was declared under item 803. It
contends that a drawing shows that certain gouging and welding was accomplished prior to the attachment of the compensation plates by welding.

3. Item 816.7 on page 74 of the invoices - $130. FOT (S) modification. The petitioner asserts that, similar to item 816.1 supra, a repair was accomplished and invoiced under item 803 prior to this modification item which was performed to prevent future cracks.

4. Item 901 on pages 76-78 of the invoices - $45,240. Heating coil system retrofit in engine room. The petitioner states that this item is not a replacement of an existing item, but is an addition which permits the vessel operator to seek to carry cargo which it previously could not carry. It describes the work as "a new design system." The petitioner claims that cargo tanks were originally constructed without heating coils. Subsequently, heating coils were installed, but the steam supply and condensate return systems were not installed. These systems are necessary to make the cargo tank heating system functional. The petitioner states that the previous installation of the heating coils was reported and allowed as a nondutiable modification on a previous voyage.

ISSUE:

Whether the above-stated work is a nondutiable modification or a repair which is subject to duty under 19 U.S.C. 1466.

LAW AND ANALYSIS:

In its application of the vessel repair statute, the Customs Service has held that modifications, alterations, or additions to the hull and fittings of a vessel are not subject to vessel repair duties. The identification of work constituting modifications vis- a-vis work constituting repairs has evolved from judicial and administrative precedent. In considering whether an operation has resulted in a nondutiable modification, the following factors have been considered:

1. Whether there is a permanent incorporation into the hull or superstructure of a vessel, either in a structural sense or as demonstrated by means of attachment so as to be indicative of the intent to be permanently incorporated. See United States v. Admiral Oriental Line, 18 C.C.P.A. 137 (1930).

2. Whether in all likelihood an item would remain aboard a vessel during an extended lay-up.

3. Whether an item constitutes a new design feature and does not merely replace a part, fitting, or structure that is performing a similar function.

4. Whether an item provides an improvement or enhancement in operation or efficiency of the vessel.

After a consideration of the evidence of record, we find that the petitioner's claims are substantiated. The information submitted by the petitioner in its petition has been responsive to certain questions which were not answered in the application stage or by an examination of the invoices. With respect to the second and third items supra (816.1 and 816.7), the petitioner's statement that repairs were declared in item 803 is substantiated. We find that the items at issue are modifications which are not subject to duty under 19 U.S.C. 1466.

HOLDING:

The petition for relief is granted.

Sincerely,

Arthur P. Schifflin
Chief

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