HQ 0113025 - Vessel Repair Entry No. 110-6461439-6; 19 U.S.C. 1466; 19 U.S.C. 1466(d)(1); 19 U.S.C. 1466(d)(2); PRESIDENT JEFFERSON, V-299 - United States International Trade Commision Rulings

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HQ 113025

March 7, 1994

VES-13-18-CO:R:IT:C 113025 GOB

CATEGORY: CARRIER

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

RE: Vessel Repair Entry No. 110-6461439-6; 19 U.S.C. 1466; 19 U.S.C. 1466(d)(1); 19 U.S.C. 1466(d)(2); PRESIDENT JEFFERSON, V-299

Dear Sir:

This is in response to your memorandum dated February 4, 1994, which forwarded the application for relief submitted by American President Lines, Ltd. ("applicant") with respect to the above- referenced vessel repair entry.

FACTS:

The record reflects the following. The PRESIDENT JEFFERSON ("vessel") is a U.S.-flag vessel owned and operated by the applicant. Certain foreign shipyard work was performed on the vessel on voyage 299. The vessel arrived at the port of Seattle, Washington on October 26, 1993 and filed a vessel repair entry.

Your office has asked us to review the following work:

1. The items listed as "General Services" on page one of the spreadsheets.
2. The items listed under "Stern Tube Repair Work" on pages one and two of the spreadsheet.
3. Items 12 and 13 under "Owners Account General Repairs" on page two of the spreadsheet.
4. Item 14 on the CF 226.
5. Item 15 on the CF 226.

ISSUES:

Whether the items at issue are dutiable pursuant to 19 U.S.C. 1466. Whether duty on certain of the items is subject to remission pursuant to 19 U.S.C. 1466(d).

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) Issue

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.

The evidence of record includes the following.

The application states, in part:

The emergency drydocking of this vessel at Kobe Japan on October 15-18, 1993 was occasioned as a consequence of the USCG citation (Encl. C) which dictated that the leading aft stern tube seal be permanently repaired prior to returning to the next US port. To make these mandatory permanent repairs it was physically necessary to drydock the vessel in Kobe, Japan. See also ABS Report KO 19397, dated 17 October 1993 (Encl. G).

A U.S. Coast Guard "Worklist" dated October 17, 1993 states:

Make permanent repairs to leaking aft stern tube seal prior to returning to next U.S. port.

A document entitled "American President Lines Job Control Form" states:

Vessel stern seal has been fouled by a fish net and requires seal renewal.

We find that the applicant has not established that a casualty occurred. Evidence which is typically submitted to establish a casualty occurrence includes documents such as a vessel's log and statement or affidavit of the master.

Accordingly, the following items are dutiable and the duty is not remissible: the items listed under "Stern Tube Repair Work" on pages one and two of the spreadsheets; and item 14 on the CF 226, described as "Stern Seal Repair."

19 U.S.C. 1466(d)(2) Issue

19 U.S.C. 1466(d) provides in part that:

(d) If the owner or master of such vessel furnishes good and sufficient evidence that -
...
(2) such equipments or parts thereof or repair parts or materials, were manufactured or produced in the United States, and the labor necessary to install such equipments or to make such repairs was performed by residents of the United States, or by members of the regular crew of such vessel; or
... then the Secretary of the Treasury is authorized to remit or refund such duties... (Emphasis supplied.)

19 CFR 4.14(c)(3)(ii) states that remission or refund of duty is authorized if good and sufficient evidence shows:

(ii) United States parts and equipment installed with American labor. The equipment, equipment parts, repair parts or materials used on the vessel were manufactured or produced in the United States and purchased by the owner of the vessel in the United States, and the labor necessary to install such equipment or to make such repairs was performed by residents of the United States or by members of the regular crew of the vessel. (Emphasis supplied.)

The applicant has submitted documentation indicating that "one seal kit" used in the subject repairs was purchased by it in the United States. However, no documentation has been submitted to establish that the seal kit was installed by residents of the U.S. or by the vessel's crewmembers. Accordingly, the second part of the statutory and regulatory test for remission is not satisfied.

Accordingly, the cost of the seal kit, which is listed as item 15 on the CF 226, is dutiable and the duty is not remissible.

Other Items

The items listed on page one of the spreadsheets under "General Services" are nondutiable. These items are drydocking, telephone installation, fresh water, and other similar charges.

Item 12 on page two of the spreadsheets under "Owners Account General Repairs" is described as "Net Cutter JCF #JE299-805 (MODIFICATION)." A drawing of the net cutter has been submitted. We find that this item is a nondutiable modification.

Item 13 on page two of the spreadsheets under "Owners Account General Repairs" is described as on the spreadsheet "Spare Parts JCF #JE299-806 (Transportation & Crane Service)." The pertinent invoice states, in part: "Owner's spare parts taken onboard. (Transportation & Crane Service Only)." We find that this item is nondutiable as transportation and crane services.

HOLDING:

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

Sincerely,

Arthur P. Schifflin
Chief

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