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HQ 111620




March 15, 1995

VES-13-18-CO:R:IT:C 111620 GEV

CATEGORY: CARRIER

Port Director
U.S. Customs Service
Vessel Repair Liquidation Unit, Room 303
423 Canal Street
New Orleans, Louisiana 70130-2341

RE: Vessel Repair Entry No. VR-C20-0035715-5; S/S ULTRASEA; Removal of Debris; Protective Coverings; 19 U.S.C. ? 1466

Dear Sir:

This is in response to a memorandum from the DARC, Commercial Operations Division, dated March 28, 1991, forwarding for our review an application for relief from duties assessed pursuant to 19 U.S.C. ? 1466. Specifically, you seek our advice regarding the removal of debris after repairs, protective coverings and the painting of anchor shots. Our findings are set forth below.

FACTS:

The S/S ULTRASEA is a U.S.-flag vessel owned by American Maritime Transport, Inc. The vessel had foreign shipyard work performed on her at Sembawang Shipyard in Singapore in October of 1990. The vessel arrived in the United States at the port of New Orleans on December 3, 1990. A vessel repair entry was filed on the date of arrival.

An application for relief was timely filed on February 1, 1991. Included in the applicant's claims are the following items on the shipyard invoice which include the removal of debris after dutiable repairs: Items 204, 304 and 305. The applicant also claims relief for the cost of protective coverings included in the following items: Items 204, 205 and 321.

In addition to the above, Item 226 which covers an anchor chain inspection also includes the painting of anchor chain shots.

ISSUE:

Whether the foreign shipyard costs for which the applicant seeks relief are dutiable pursuant to 19 U.S.C. ? 1466.

LAW AND ANALYSIS:

Title 19, United States Code, ? 1466, 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 engage in such trade.

Pursuant to the "but for" test enunciated by the U.S. Court of Appeals for the Federal Circuit in Texaco Marine Services, Inc. and Texaco Refining and Marketing, Inc. v. United States, Docket No. 93-1354, decided December 29, 1994 (affirming the decision of the U.S. Court of International Trade at 815 F.Supp. 1484 (1993)), post-repair cleaning and protective coverings for repair work are dutiable under 19 U.S.C. ? 1466. Accordingly, the subject costs for removal of debris and protective coverings are dutiable.

In regard to Item 226, the painting of the anchor chain shots is not segregated from the cost of the anchor chain inspection. In the absence of this segregation, the entire cost of this item is dutiable.

HOLDING:

The foreign shipyard costs for which the applicant seeks relief are dutiable pursuant to 19 U.S.C. ? 1466 as discussed in the Law and Analysis portion of this ruling.

Sincerely,

Arthur P. Schifflin

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