HQ 112897 - Los Angeles Vessel Repair Entry No. C27-0112430-0, dated July 26, 1993; M/V PRESIDENT TRUMAN; Voyage 054; Maintenance; Cleaning; Bow Thruster; Removal of debris after cleaning; 19 U.S.C. 1466 - United States International Trade Commision Rulings

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HQ 112897

March 14, 1995

VES-13-18/13-07 CO:R:IT:C 112897 BEW

CATEGORY: CARRIER

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

RE: Los Angeles Vessel Repair Entry No. C27-0112430-0, dated July 26, 1993; M/V PRESIDENT TRUMAN; Voyage 054; Maintenance; Cleaning; Bow Thruster; Removal of debris after cleaning; 19 U.S.C. 1466

Dear Sir:

This is in response to a memorandum dated September 21, 1993, requesting a classification of bow thruster cleaning in entry No. C27-0112430-0, relating to the M/V PRESIDENT TRUMAN, Voyage 054. Our review of this matter has been delayed pending the outcome of on-going litigation which has now been resolved

FACTS:

The M/V PRESIDENT TRUMAN arrived at the port of Los Angeles (San Pedro), California, on July 24, 1993, and filed a timely vessel repair entry. The entry indicated that the vessel underwent foreign shipyard work to clean the bow spaces and remove all oily waste material and debris.

ISSUE:

Whether the cleaning of the bow thrusters and removing of oily waste material and debris constitutes a nondutiable cleaning or a dutiable maintenance operation under 19 U.S.C. §1466.

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, provides in pertinent part for payment of duty in the amount 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 engage in such trade.

In analyzing the dutiability of foreign vessel work, the Customs Service has consistently held that cleaning is not dutiable unless it is performed as part of, in preparation for, or in conjunction with dutiable repairs or is an integral part of the overall maintenance of the vessel. (E.g., Headquarters Ruling Letter 110841, dated May 29, 1990 (and cases cited therein)). The Customs Service considers work performed to restore a part to good condition following deterioration or decay to be maintenance operations within the meaning of the term repair as used in the vessel repair statute. (See generally, Headquarters Ruling Letter 106543, dated February 27, 1984; C.I.E. 142/61, dated February 10, 1961.)

The dutiability of maintenance operations has undergone considerable judicial scrutiny. The United States Court of Customs and Patent Appeals, in ruling that the term repair as used in the vessel repair statute includes "maintenance painting," gave seminal recognition to the dutiability of maintenance operations. E. E. Kelly & Co. v. United States, 55 Treas. Dec. 596, T.D. 43322 (C.C.P.A. 1929). The process of chipping, scaling, cleaning, and wire brushing to remove rust and corrosion that results in the restoration of a deteriorated item in preparation for painting has also been held to be dutiable maintenance. States Steamship Co. v. United States, 60 Treas. Dec. 30, T.D. 45001 (Cust. Ct. 1931).

The precise issue presented is whether the cleaning of the bow thruster may be characterized as simple cleaning or as maintenance, not whether cleaning or maintenance operations are dutiable or non-dutiable. We find that cleaning of the bow thruster is a maintenance operation that is subject to duty under 19 U.S.C. §1466.

Pursuant to the "but for" test enunciated by the U.S. Court of Appeals in Texaco Marine Services, Inc. and Refining and Marketing, Inc., v. United States, (Slip Op. 93-1354, decided December 29, 1994), the cost of the removal of debris necessitated by dutiable repairs is dutiable. Accordingly, in view of the aforementioned court decision the cost for the removal of the oily waste material is dutiable.

HOLDING:

The cleaning of the bow thruster is a maintenance operation, the cost of which is subject to duty under 19 U.S.C. §1466.

The removal oily waste material and debris is dutiable as a part of the dutiable repair.

Sincerely,

Arthur P. Schifflin
Chief

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