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HQ 112914


January 21, 1994

VES-13-18-CO:R:IT:C 112914 GEV

CATEGORY: CARRIER

Regional Director
Commercial Operations Division
U.S. Customs Service
423 Canal Street
New Orleans, Louisiana 70130-2341

RE: Protest No. 1501-93-100015; Vessel Repair Entry No. C15- 0012350-5; M/V SENATOR V-118; Casualty; Crew Negligence

Dear Sir:

This is in response to your memorandum dated October 1, 1993, forwarding a protest of ruling 112268 on the above- referenced vessel repair entry. Our ruling on this matter is set forth below.

FACTS:

The M/V SENATOR is a U.S.-flag vessel owned by Crowley Maritime Corporation of Oakland, California. The subject vessel underwent foreign repairs in Ponta Delgada, Azores, during May of 1991. Subsequent to the completion of these repairs the vessel arrived in the United States at Wilmington, North Carolina, on July 6, 1991. A vessel repair entry was filed on the date of arrival.

An application for relief from duties assessed pursuant to the vessel repair statute was submitted to and denied by Customs New Orleans Vessel Repair Liquidation Unit (VRLU). Pursuant to an authorized extension of time, a petition for review of the decision by the New Orleans VRLU was submitted.

The damage in question occurred on May 14, 1991, when the vessel's main engine incurred a turbocharger failure while en route from Wilmington, North Carolina to Ad Damman, Saudi Arabia. As a result of this damage the vessel diverted to Ponta Delgada, Azores, where the main engine was repaired during May 16-19, 1991.

In the petition it was alleged that the engine failure was the direct result of the crew's improper setting of the lash valve and the inadequate repair by the Chief Engineer. Specifically, it was stated that during the above voyage, the ship's crew improperly set the lash valve in the number 5 cylinder which resulted in high exhaust temperatures. On May 11, 1991, because of the high exhaust temperatures, the ship's Chief Engineer stopped the engine and repaired the number 5 cylinder. However, rather than replace the entire head with a spare, or rebuilding the cylinder head completely, he installed used, uninspected spare parts. It was also claimed that he failed to properly inspect and clean the exhaust passages and that the waste left in the engine's exhaust system from this inadequate repair and inspection allowed parts to later be carried into the turbocharger causing blade and rotor failure on May 14, 1991.

In support of the above claim the following documentation was submitted: a letter from the alleged engine manufacturer stating that the engine failure was directly related to the improper setting of the lash valve by the crew; an affidavit of the master which states that the repairs were required for the safety and seaworthiness of the vessel, and that the crew misadjusted the exhaust valves which led to the valve failure and subsequent damage to the turbocharger; a statement of the Senior Port Engineer as to how the crew negligence resulted in the damage in question; a copy of a U.S. Coast Guard Report of Marine Accident; a copy of the main engine log for May 11, 1991; a copy of Customs ruling 108841 holding that crew negligence will be considered a "casualty" within the meaning of 19 U.S.C. 1466(d)(1). In addition to the above documentation, the record also includes, inter alia, photographs of the damage, a statement from the vessel's Chief Engineer, and copies of reports from The Salvage Association and the American Bureau of Shipping (ABS).

In ruling 112268, dated October 6, 1992, Customs determined that the record did not present evidence sufficient to prove that the repairs in question were necessitated by a casualty occurrence (i.e., crew negligence) and therefore denied the petition for relief. The entry was subsequently forwarded for liquidation which took place on January 22, 1993. A protest was timely filed. The protestant reiterates its previous claim that the engine failure was the direct result of the negligence of the crew, namely the improper setting of the lash valve and the inadequate repair work by the Chief Engineer. Further in support of these claims the protestant submits the following additional documentation: a letter dated December 31, 1992, the Principal Surveyor, The Salvage Association; a fax dated May 11, 1993, from an official from Wartsila Diesel; and Customs rulings 112232, dated January 27, 1993, and 112065, dated April 15, 1992.

ISSUE:

Whether evidence is presented sufficient to prove that the foreign repairs performed on the vessel for which relief is sought were necessitated by a casualty occurrence thus warranting remission pursuant to 19 U.S.C. 1466(d)(1).

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, provides in part for payment of an ad valorem duty of 50 percent of 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 engage in such trade. Section 1466(d)(1) provides that the Secretary of the Treasury is authorized to remit or refund such duties if the owner or master of the vessel was compelled by stress of weather or other casualty to put into such foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination.

The term "casualty", as it is used in the vessel repair statute (19 U.S.C.1466) has been interpreted as something which, like stress of weather, 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 (see Dollar Steamship Lines, Inc., v. United States, 5 Cust. Ct. 28- 29, C.D. 362 (1940)). 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 106159, September 8, 1983).

It is noted that section 4.14(c)(3)(i), Customs Regulations (19 CFR 4.14(c)(3)(i), provides that "port of destination" means such port in the United States. This point is not in dispute, however, it is an embellishment upon section 1466(d)(1) which, as stated above, sets forth the following three-part test which must be met in order to qualify for remission:

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 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.

In regard to the case under consideration, the petition was denied in view of the fact that the record at that time contained no conclusive evidence as to what caused the failure of the ship's engine. Specifically, the statements of the Master, Senior Port Engineer, and Chief Engineer, as to the cause of the engine failure (i.e., crew negligence) were not supported by Wartsila Diesel, the ABS, or The Salvage Association.

In regard to Wartsila Diesel, purportedly the engine manufacturer, it was stated in their telefax dated November 14, 1991, that the cause of the main engine valve failure was the "[i]mproper setting of valve lash by vessel crew..." However, this statement was discounted in ruling 112268 because the ABS report listed the engine manufacturer as "Brown Boveri & Company, Ltd" (BBC). The protestant has submitted a fax, dated May 11, 1993, from Wartsila Diesel stating that the engines in question were manufactured by Stork, a subsidiary of Wartsila Diesel. The letter reiterates that the cause of the valve failure remains as described in the aforementioned letter of November 14, 1991.

In ruling 112268, we also stated that neither the ABS report nor the report of The Salvage Association (the only evidence submitted by disinterested third parties) mention or imply crew negligence of any kind as the cause of the subject vessel's engine failure. The protestant has now included a facsimile transmission dated, December 31, 1992, from the Principal Surveyor, The Salvage Association, stating "...we could agree that the damage to the turbocharger was caused as a result of the crew not having ensured that all the debris from the repairs to the No. 5 unit was removed from the exhaust system. i.e., crew negligence."

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. However, pursuant to C.S.D. 82-42, it is Customs position that absent owner direction or inducement, negligence causing vessel damage is considered to be a casualty within the meaning of section 1466(d)(1). Upon reviewing the record in its entirety, we are of the opinion that evidence is presented sufficient to prove that the engine failure was due to crew negligence, (i.e., the improper setting of the lash valve and the inadequate repair work by the Chief Engineer). Accordingly, remission is granted.

HOLDING:

The evidence presented is sufficient to prove that foreign repairs performed on the subject vessel for which relief is sought were necessitated by a casualty occurrence thereby warranting remission pursuant to 19 U.S.C. 1466(d)(1).

Accordingly, the protest is granted.

In accordance with 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to customs personnel via the Customs Ruling Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

Arthur P. Schifflin

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