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HQ 113529

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August 23, 1995
VES-13-18-R:IT:C 113529 GEV

CATEGORY: CARRIER

Myles J. Ambrose, Esq.
Evelyn M. Suarez, Esq.
Ross & Hardies
888 Sixteenth Street, N.W.
Washington, D.C. 20006-4103

RE: Vessel Repair; M.V. Sea-Land Voyager; V-231/232; Collision; Casualty; 19 U.S.C. ? 1466(d)(1)

Dear Mr. Ambrose and Ms. Suarez:

This is in response to your letter dated August 10, 1995, requesting an expedited ruling on behalf of Sea-Land Service, Inc. ("Sea-Land") regarding remission of vessel repair duties pursuant to 19 U.S.C. ? 1466(d)(1) with respect to a collision involving the above-referenced vessel.

FACTS:

On June 9, 1995, at 0654 hours, a collision occurred involving the SEA-LAND VOYAGER and a Greek-registered freighter, the KASTOR P, in the port of Yokohama, Japan. As a result of the damage incurred pursuant to the collision, the SEA-LAND VOYAGER was towed to a quay at Mitsubishi Heavy Industries, Ltd., Yokohama Dockyard and Machinery Works, Yokohama, Japan.

On June 13, 1995, after having examined the vessel, a surveyor from the American Bureau of Shipping ("ABS") reported on the damage sustained to the vessel's starboard side and on necessary temporary repairs, including the installation of a box shaped patch, to make the vessel fit to shift from Mitsubishi to the Sea-Land Honmoku terminal to discharge cargo. This temporary patch was necessary to discharge cargo, to allow pumping out of the flooded engine room, and to reveal the extent of the damage. Further temporary repairs will be made in Yokohama to restore watertight integrity in order to tow the vessel from Yokohama, Japan to Ulsan, Korea, where permanent repairs will be effected.

In support of a claim for remission, the following documentation has been submitted: a copy of the vessel's log, a copy of a U.S. Coast Guard (USCG) Report of Marine Accident, Injury, or Death (CG-2692) with an attached statement of the master, a copy of a USCG Report of Required Chemical Drug and Alcohol Testing Following a Serious Marine Incident (CG-2692B) (all presented as Exhibit A); a copy of ABS Report No. YO27809 (Exhibit B); and a copy of a letter dated August 7, 1995, from the ABS Pacific Director of Engineering to the Sea-Land Manager of Technical Service (Exhibit C).

ISSUE:

Whether evidence is presented sufficient to prove that certain foreign repairs performed on the vessel for which relief is sought were necessary for its safety and seaworthiness 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. It is Customs position that "port of destination" means a port in the United States. (see 19 CFR ? 4.14(c)(3)(i))

The statute sets forth the following three-part test which must be met in order to qualify for remission under the subsection:

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.

The term "casualty" as it is used in the statute, has been interpreted as something which, like stress of weather, comes with unexpected force or violence, such as fire, spontaneous explosion of such dimensions as to be immediately obvious to ship's personnel, or collision (Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 28-29, C.D. 362 (1940)). In this sense, a "casualty" arises from an identifiable event of some sort. In the absence of evidence of such casualty event, we must consider the repair to have been necessitated by normal wear and tear (ruling letter 106159, dated September 8, 1983).

In addition, if the above requirements are satisfied by evidence, the remission is restricted to the cost of the minimal repairs necessary to "...secure the safety and seaworthiness of the vessel to enable her to reach her port of destination." (19 U.S.C. ? 1466(d)(1)). Repair costs beyond that minimal amount are not subject to remission. In the case under consideration, the evidence supports the claim that the subject vessel suffered a marine casualty (i.e., a collision with another vessel). However, the extent of that casualty (i.e., parts 2 and 3 of the three-part test set forth above) is the critical issue under consideration.

The U.S. Coast Guard (USCG) is the controlling agency that determines questions of a vessel's fitness to proceed. The procedure by which the USCG renders such a determination is set forth in ?? 2.01-15 and 31.10-25, USCG Regulations (46 CFR ?? 2.01-15, 31.10-25). The former states that a vessel may not proceed from one port to another for repairs unless prior authorization is obtained from the USCG OCMI either through the issuance of a USCG "Permit to Proceed to Another Port for Repairs" (CG-948) or a CG-835 which would specify the restrictions on, and duration of, any voyage undertaken prior to obtaining permanent repairs. The latter states that with respect to tank vessels, "No extensive repairs to the hull or machinery which affect the safety of a vessel shall be made without the knowledge of the Officer-In-Charge, Marine Inspection."

Notwithstanding the clear wording of the above USCG Regulations, specifically 46 CFR York, N.Y., in a letter dated November 7, 1991, has informed us that "A formal Permit to Proceed is not normally issued to a vessel transiting foreign waters because the Certificate of Inspection (COI) would have to be removed from the vessel which would cause problems in transiting foreign waters."

In addition, we have subsequently learned from the Chief, Merchant Vessel Inspection and Documentation Division, USCG Headquarters, in a letter dated April 14, 1992, that "Vessel operators often make casualty reports for U.S. flag vessels damaged overseas verbally to the proper Coast Guard Marine Inspection Office, followed by the required written report. The Coast Guard cannot always send a marine inspector to a damaged vessel overseas on short notice. In such cases, the Coast Guard may consider the classification society report and the report of the vessel's master to determine the required temporary repairs and voyage restrictions."

Customs has previously addressed the sufficiency of evidence in casualty claims such as this where a vessel that has been damaged foreign proceeds in a state of disrepair between two foreign locations prior to its being repaired in a foreign port, and subsequently sails to its U.S. port of destination. (See Customs Rulings 112060, dated May 21, 1992; 112061, dated June 10, 1992; 112063, dated June 8, 1992; and 112229, dated June 11, 1992)). It is Customs position as stated in the aforementioned rulings that notwithstanding any practice of verbally reporting foreign casualties to the USCG and that agency's subsequent verbal instructions, remission pursuant to 19 U.S.C. 1466(d)(1) will not be granted in the absence of documentary evidence that the casualty occurrence was timely reported to the USCG and that agency, directly or through the
medium of a marine surveyor, permitted the vessel to proceed between two foreign locations in a damaged condition. The mere submission of a USCG Report of Marine Accident, Injury or Death (CG-2692), without accompanying documentation from the appropriate USCG OCMI (New York or Honolulu) authorizing the vessel to proceed in a damaged condition and specifying what, if any, restrictions apply, will not suffice for granting remission pursuant to 19 U.S.C.

Accordingly, although the documentary evidence submitted thus far is acceptable to Customs (see 19 CFR ? 4.14(d)(1)(iii)) and supports, in part, a claim for remission, in view of the fact that the record contains no correspondence from the USCG accompanying the CG-2692 and CG- 2692B as discussed above, the statutorily mandated three-part test for remission has not been met. Consequently, the evidence presented is insufficient to warrant remission pursuant to 19 U.S.C. ? 1466(d)(1).

HOLDINGS:

Evidence is presented insufficient to prove that certain foreign repairs performed on the subject vessel for which relief is sought were necessary for its safety and seaworthiness therefore remission pursuant to 19 U.S.C. ? 1466(d)(1) is denied.

It is noted, however, that this ruling is merely advisory in nature and does not eliminate the requirement to declare work done abroad at the subject vessel's first United States port of arrival, nor does it eliminate the requirement of filing the entry showing this work (see ruling on this matter is contingent on Customs review of the evidence submitted pursuant to

Sincerely,

Arthur P. Schifflin

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