HQ 0112937 - Vessel Repair; 19 U.S.C. 1466(d)(1); Entry No. C15-0019314- 4; GALVESTON BAY, V-27; Application; Casualty - United States International Trade Commision Rulings

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HQ 112937

February 2, 1994

VES-13-18-CO:R:IT:C 112937 GOB

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations Division
Attn: Regional Vessel Repair Liquidation Unit New Orleans, Louisiana 70130

RE: Vessel Repair; 19 U.S.C. 1466(d)(1); Entry No. C15-0019314- 4; GALVESTON BAY, V-27; Application; Casualty

Dear Sir:

This is in response to your memorandum dated October 21, 1993, which forwarded the application for relief submitted on behalf of Afram Lines (USA) Inc. ("applicant") with respect to the above- referenced vessel repair entry.

FACTS:

The S.S. GALVESTON BAY ("vessel") is a U.S.-flag vessel owned and operated by the applicant. Certain foreign shipyard work was performed on the vessel between March 24, 1992 and August 15, 1992 at (a) Freetown, Sierra Leone; (b) Dakar, Senegal; (c) Las Palmas, Canary Islands; (d) Newport, Wales; and (e) Tilbury, England.

The evidence of record indicates that the vessel made contact with the "Carpenter Rock Shoal" and ran aground on March 17, 1992. The vessel sustained damage in the form of propeller damage and holes and indentations in its bottom hull. On March 24, 1992, the vessel was permitted to proceed to Dakar, Senegal, where the vessel was examined and temporary repairs were accomplished. The vessel then proceeded to Las Palmas, Canary Islands, where permanent repairs were effected.

ISSUES:

Whether certain items are dutiable pursuant to 19 U.S.C. 1466. Whether, pursuant to 19 U.S.C. 1466(d)(1), good and sufficient evidence has been submitted which warrants the remission of vessel repair duties which are dutiable.

LAW AND ANALYSIS:

19 U.S.C. 1466 provides for the payment of duty at a rate 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 be employed in such trade.

19 U.S.C. 1466(d)(1) provides in part that the Secretary of the Treasury is authorized to remit or refund such duties if the owner or master of the vessel furnishes good and sufficient evidence that the vessel was compelled by stress of weather or other casualty to put into a foreign port and make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination.

19 CFR 4.14(c)(3)(i) provides that "port of destination" means such port in the United States and "...only the duty on the cost of the minimal repairs needed for the safety and seaworthiness of the vessel is subject to remission or refund."

19 U.S.C. 1466 and 19 CFR 4.14 essentially set forth a three- part test, each of the elements of which must be established by good and sufficient evidence to qualify for remission:

1. a casualty occurrence;

2. an unsafe and unseaworthy condition; and

3. the inability to reach the port of destination without foreign repairs.

We make the following findings with respect to the items for which you have requested our review.

The applicant has submitted good and sufficient evidence in satisfying the three-part test, supra. Accordingly, duty on certain of the work performed on the vessel in (a) Freetown, Sierra Leone; (b) Dakar, Senegal; and (c) Las Palmas, Canary Islands is remissible pursuant to 19 U.S.C. 1466(d)(1).

The duty on items 0107 through 0135 on Astican invoice 316/92 (Exhibit C8) is remissible because there is a sufficient nexus between these items and the work which was required as a result of the casualty.

The duty on items 8822 and 9094 on Astican invoice 316/92 (Exhibit C8) is not remissible because these repairs were not related to the casualty.

The drydocking survey, annual hull-machinery surveys, and annual load line survey invoiced on American Bureau of Shipping

("ABS") invoice no. SP007959 (Exhibit C8) are dutiable and not remissible because these items include dutiable repairs which are not related to the casualty and which are not separately invoiced.

All transportation costs which are segregated are nondutiable.

Freon gas is nondutiable as a consumable supply. See CIE 887/64 and C.S.D. 80-197.

The annual cargo gear survey invoiced on ABS invoice no. SP007961 (Exhibit 6) is dutiable and not remissible because the item includes dutiable repairs which are not related to the casualty and which are not separately invoiced.

We concur with your analysis with respect to the work performed after Las Palmas, Canary Islands, i.e., the work performed in Newport, Wales and Tilbury, England. This work is dutiable and not remissible with the exception of the "classifiably free" items which you have indicated to be nondutiable.

The survey items listed on ABS invoice no. UK323185 (Exhibit 7), a loadline survey and an annual cargo gear inspection, are dutiable and not remissible. That invoice lists repairs which are not separately itemized.

HOLDING:

As detailed supra, the application is granted in part and denied in part.

Sincerely,

Arthur P. Schifflin
Chief

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