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HQ 113374

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March 27, 1995

VES-13-18-CO:R:IT:C 113374 GEV

CATEGORY: CARRIER

Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90731

RE: Vessel Repair Entry No. 110-6461594-8; PRESIDENT GRANT; V-148; Casualty; Fish Line Entanglement; 19 U.S.C. ? 1466

Dear Sir:

This is in response to your memorandum dated March 17, 1994, forwarding an application for relief on the above-referenced vessel repair entry. Our opinion on this matter is set forth below.

FACTS:

The PRESIDENT GRANT is a U.S.-flag vessel owned and operated by American President Lines, Inc. The subject vessel underwent foreign repairs during October of 1994. Subsequent to the completion of the repairs the vessel arrived in the United States at Seattle, Washington, on October 26, 1994. A vessel repair entry was filed on November 2, 1994.

An application for relief was timely filed. The applicant claims that damage to the aft strut bearing oil seal, which resulted in the excessive loss of oil into the sea, as well as other related damage to the vessel, was caused by fishing line entanglement and therefore remission of the cost of the repairs of such damage should be granted pursuant to 19 U.S.C. ? 1466(d)(1). In support of this claim the applicant has submitted invoices, an American Bureau of Shipping (ABS) report, and copies of correspondence with the U.S. Coast Guard and The Salvage Association.

ISSUE:

Whether evidence is presented sufficient to prove that the foreign costs for which the applicant seeks relief were necessitated by a casualty thus warranting remission pursuant to 19 U.S.C. ? 1466(d)(1).

LAW AND ANALYSIS:

Title 19, United States Code, ? 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 ? 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 ? 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.

Turning to the case under consideration, it is clear that plastic fishing lines became entangled in the aft strut bearing oil seal thereby causing an excessive amount of oil leakage as well as other related damage, a fact evidenced by the ABS survey. In this regard it should be  - 3 -
noted that Customs has previously addressed the issue of repairs to stern tube after seals due to fishing line fouling the propeller shaft which caused oil leakage. (ruling 108514 GV, dated November 17, 1986)

In ruling 108514 we noted that the documentation submitted which evidenced the entanglement described appeared to satisfy only the first criterion in establishing a casualty occurrence (i.e., that the apparatus was damaged to a specifically stated extent). However, it was further noted that the damage occurred to underwater parts of the vessel. In C.I.E. 1202/59, we held that damage to underwater parts of vessels is usually not easily detectable or susceptible of definite proof respecting date and place of occurrence. We held that relief under 19 U.S.C. vessel concerned was grounded, struck bottom, or her propeller contacted some floating object capable of causing damage prior to the commencement of the voyage. However, in C.I.E. 1202/59 and in ruling 106240 JM, dated July 20, 1983, which applied C.I.E. 1202/59 in a case of underwater damage, there was some evidence, or at least an inference could reasonably be made based upon the damage which had occurred, that the damage resulted from striking an unknown underwater object rather than from normal wear and tear (see C.I.E. 1243/60, in which a leak in a vessel's hull was held to be due to normal wear and tear and therefore remission of duty was denied). The lack of evidence, or at least an inference based on the damage sustained, was the very reason relief was denied in ruling 106369 PH, dated February 13, 1984, which applied C.I.E. 1202/59 in a similar case where an oil leak occurred in the vessel's stern tube after seal.

In the case under consideration, the record establishes that the damage to the aft strut bearing seal was caused by the vessel striking an underwater object (i.e., plastic fishing lines) which was unknown at the time rather than from normal wear and tear. (See also rulings 109202 LLB, dated April 14, 1988; 109625 GV, dated August 15, 1988; and 110027 LLB/110130 KMF/ 110138 KMF; all of which determined that the entanglement of a mooring line around a vessel's port tailshaft and strut constituted a casualty occurrence)

Accordingly, the record supports not only the establishment of a casualty occurrence as discussed above, but also unsafe and unseaworthy conditions in the vessel's damaged state, and its inability to reach its port of destination without obtaining foreign repairs. Therefore, remission of the duty assessed on the repairs listed on the MHI invoices as well as the Williamson Marine Service, Ltd. invoice is granted pursuant to 19 U.S.C. ? 1466(d)(1).

HOLDING:

Evidence is presented sufficient to prove that the foreign costs for which the applicant seeks relief were necessitated by a casualty thus warranting remission pursuant to 19 U.S.C.

Sincerely,

Arthur P. Schifflin

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