HQ 113296 - Vessel Repair Entry No. 808-0515123-2; GREEN VALLEY, V- 47-50; 19 U.S.C. 1466; 19 U.S.C. 1466 (d)(2) and (h); T.D. 75-257 - United States International Trade Commision Rulings

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HQ 113296

January 12, 1995

VES-13-18-CO:R:IT:C 113296 GOB

CATEGORY: CARRIER

Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90831-0700

RE: Vessel Repair Entry No. 808-0515123-2; GREEN VALLEY, V- 47-50; 19 U.S.C. 1466; 19 U.S.C. 1466 (d)(2) and (h); T.D. 75-257

Dear Sir:

This is in response to your memorandum dated December 20, 1994, which forwarded the application for relief submitted by Central Gulf Lines, Inc. ("applicant") in connection with the above-referenced vessel repair entry.

FACTS:

The record reflects that the GREEN VALLEY (the "vessel") arrived at the port of San Francisco on June 5, 1994 and filed the subject vessel repair entry on June 9, 1994.

You request our determination with respect to the following items:

Item No. Description
71 consumables
75 ABS required gauging
76 ABS required inspection
81 spare parts
97 hull cleaning
117 ABS special survey various U.S. parts various U.S. labor

ISSUES:

Whether the subject items are dutiable pursuant to 19 U.S.C. 1466. If so, whether the duty is remissible.

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.

Consumables

Consumables are dutiable if they are related to repairs. The pertinent invoice indicates that repairs were accomplished in connection with the subject materials. Accordingly, the materials are dutiable.

ABS Required Gauging and ABS Required Inspection

Items 75 and 76 are described in the application for relief as ABS Required Gauging and ABS Required Inspection, respectively.

The invoice for item 75 describes the overall work as "underwater audio gaugings ... as required by ABS." The invoice indicates the following work was performed: underwater audio gaugings, underwater hull inspection, underwater still photography, underwater C.C.T.V. recording, underwater cleaning of sea chest gratings, and propeller polishing.

The invoice for item 76 describes the work as "ultrasonic thickness gauging."

The application for relief does not include a narrative description or explanation as to what work was accomplished for what reasons. The application merely lists the items for which relief is requested and cites 19 CFR 4.14 or 19 CFR 4.14(c)(3)(ii).

We have reviewed all of the invoices submitted with the application and have noted various repairs. For example, invoice 72 lists numerous repairs including tank sounding tube repairs, pipe tunnel deck/bulkhead penetration repairs, stack house deck repairs, tunnel frame repairs, engine room void suction repairs, gear box repairs, sewer sump manifold gasket repairs, and steam line valve renewal. Repairs on other invoices include cargo duct repair, steam turbine generator repair, megger tester repair, cardpak repair, coupling repair, rectifier repair, and deck louvers repair.

In the absence of a satisfactory explanation from the applicant to the effect that the underwater audio gaugings and ultrasonic thickness gaugings had no relation to any repair, we are unable to conclude that these items are nondutiable. Accordingly, we find that these items are dutiable.

Spare Parts

Based on the spreadsheet, the applicant requests duty-free treatment for item 81 based on the fact that the items listed thereon are U.S. spare parts.

However, the applicant has not submitted documentation establishing that these items are of U.S. origin. See the discussion under U.S. Parts and Labor below.

In the event that the applicant is claiming duty-free treatment under 19 U.S.C. 1466(h)(2), we note that that provision was not in effect at the time of the subject entry and is therefore not applicable.

Accordingly, we find that these parts are dutiable and not remissible.

Hull Cleaning

The application describes the work associated with item 97 as hull cleaning. The invoice for item 97 lists the following work: underwater thickness gaugings, underwater hull cleaning, and super polishing of the propeller.

We find the underwater thickness gaugings, the underwater hull cleaning, and the super polishing of the propeller to be dutiable for the same reason as stated above with respect to items 75 and 76. In the absence of a satisfactory explanation from the applicant to the effect that these sub-items had no relation to any repair, we are unable to conclude that these items are nondutiable. We note additionally that propeller polishing is normally found to be dutiable maintenance.

ABS Special Survey

The pertinent documentation indicates that this survey pertains to repairs, e.g., wasted plating and renewed plating. Accordingly, the survey is dutiable.

U.S. Parts and U.S. Labor

19 U.S.C. 1466(d)(2) provides for the remission or refund of duties:

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.

T.D. 75-257 states in part:

...the cost of materials of United States origin which are purchased by the vessel owner in the United States is not subject to duty under 19 U.S.C. 1466, when installed on the vessel in a foreign country.

In order to receive remission under 19 U.S.C. 1466(d)(2), U.S. manufacture or production must be established, in addition to the establishment that the labor was performed by U.S. residents or members of the regular crew of the vessel. In order to receive duty-free treatment pursuant to T.D. 75-257, U.S. origin must be established. To establish U.S. manufacture, production, or origin, an applicant must submit a statement from the vendor or manufacturer of the merchandise that such merchandise was manufactured or produced in the United States. The applicant has not submitted such documentation. A statement on an invoice that the vendor "supports American made products" is not sufficient. Accordingly, the claim for relief with respect to U.S. parts and U.S. labor is denied.

With respect to the requirement of 19 U.S.C. 1466(d)(2) that the labor be performed by U.S. residents or members of the regular crew of the vessel, we note that the applicant has submitted a letter dated October 14, 1994 stating that numerous service technicians are U.S. residents and were on board the vessel to perform repairs. This statement is not sufficient to establish that all of the repairs, or all of the repairs where the applicant claims U.S. parts were used, were performed by U.S. residents or members of the regular crew of the vessel. In order for the applicant to so establish, it must submit a more definitive statement with respect to the work performed by the individuals such that it is clear that none of the work at issue was performed by non-qualified workers.

Procedural Note

In future vessel repair submissions, the applicant is requested to provide a narrative description and explanation with respect to the work on the entry.

HOLDING:

As detailed above, the application for relief is denied.

Sincerely,

Arthur P. Schifflin
Chief

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