HQ 111976 - Petition for Review on Vessel Repair Entry No. 779-1515363-7; Alleged Casualty; BARGE ZBO-260 - United States International Trade Commision Rulings

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HQ 111976

January 7, 1992

VES-13-18-CO:R:IT:C 111976 MLR

CATEGORY: CARRIER

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

RE: Petition for Review on Vessel Repair Entry No. 779-1515363-7; Alleged Casualty; BARGE ZBO-260

Dear Sir:

This is in response to your memorandum of October 28, 1991, regarding the petition for review of Headquarters Ruling No. 111681 RAH, submitted by Mr. T.W. Kennard, of B.A. McKenzie, on behalf of Washington Marine Service.

FACTS:

The record reflects that BARGE ZBO-260 (hereinafter "BARGE") departed Seattle, Washington, on December 17, 1990, in ballast and under tow by the tug CASCADE destined for Port Moody, British Columbia (B.C.). On arrival at Port Moody, B.C., sea water was found in tank #1 port. The barge was taken to the nearest available repair facility in Vancouver, B.C. for repairs.

The statement by the vessel's master, Rodney G. Gullickson, provides in part:

To the best of my knowledge and belief, when the tug CASCADE put towing lines on the Barge ZBO 260, the barge was in seaworthy condition, with no indication of any hull damage which would allow water to enter the Barge.

The first I became aware of any damage to the Barge was after arrival at Port Moody, at time of inspection of the tanks. Upon discovery of the damage, it was obvious that the vessel could not safely take on its intended cargo.

To be able to secure repairs necessary to permit the vessel to complete the intended voyage, it was necessary to move the vessel to the nearest repair facility at Vancouver, B.C. This was done, and the repairs were accomplished.

To the best of my knowledge and belief, the repairs were required to make the vessel seaworthy and to enable it to complete its intended voyage.

To the best of my knowledge and belief, the damage to the hull of the Barge ZBO 260 was caused by the striking of a submerged object while the barge was on route from Seattle, Washington to Port Moody, B.C. on the above described voyage.

The barge arrived at the Port of Tacoma, Washington, on December 23, 1990; after additional time to submit a complete entry was granted, it was filed on March 22, 1991, along with an application for relief seeking remission for: (1) ABS Survey - repairs, (2) Key Marine Industries, Ltd. - material and labor, and (3) Westward Shipping - attending repairs.

Customs Headquarters Ruling No. 111681 determined that the master's statement was persuasive, but did not conclusively establish the occurrence of a casualty, and that the vessel's logs did not indicate heavy weather. The Westward Shipping Ltd., Invoice was found void, because the repairs were only referred to as "attending repairs". Therefore, the application for relief did not sustain the finding of a casualty as required under 19 U.S.C. 1466(d)(1).

In its petition for review, B.A. McKenzie submits: (1) a letter from Washington Marine Services, stating that the vessel's logs do indicate high winds, and that the barge was undamaged when it left Seattle, Washington; (2) a statement from Westward Shipping Ltd., indicating that only necessary repairs were made to enable the vessel to continue the scheduled voyage, and that the nature of the damage could have caused a pollution incident if towed; (3) a statement from Key Marine Industries Ltd., indicating that it performed only those repairs to make the vessel seaworthy; (4) a letter from M.D.A. Marine Associates (Vancouver) Ltd., indicating that the damage was considered to be consistent with the alleged cause (i.e. striking a floating object), and that the repairs had to be made in Vancouver, B.C.; and (5) a statement from the American Bureau of Shipping, indicating that the repairs were considered necessary prior to departing Vancouver, B.C., for the continued validity of the load line certificate.

ISSUE:

Whether sufficient evidence is presented to sustain the finding that the repairs to the BARGE were necessitated by stress of weather or other casualty, thus making duties thereon remissible pursuant to 19 U.S.C. 1466(d)(1).

LAW AND ANALYSIS:

Title 19, United States Code, section 1466(a), 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 be employed in such trade.

Paragraph (1), subsection (d) of section 1466 provides that duty may be remitted if good and sufficient evidence is furnished establishing that the vessel was compelled by stress of weather or other casualty to put into a foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. Thus, it is necessary that in order to qualify for duty remission, the party seeking relief must show three elements: (1) the occurrence of a casualty; (2) that the repair was necessary for the safety and seaworthiness of the vessel to enable it to reach its port of destination; and, (3) remission is sought for only those repairs necessary to enable the ship to do so. Additional repairs which are not directly related to the foregoing elements are not subject to remission.

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, explosion 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 a casualty causing event, we must consider the repair to have been necessitated by normal wear and tear (ruling letter 105159, September 8, 1983).

Section 4.14(d)(1)(iii)(A-G), Customs Regulations [19 CFR 4.14(d)(1)(iii)(A-G)], sets forth the evidence which shall be included for relief from duties under 19 U.S.C. 1466(d). That evidence includes all itemized invoices, relevant parts of the vessel's logs, a certification by the master of the facts relating to the relief sought, including details of the claimed stress of weather or other casualty, and a certification by the master that the repairs were necessary for the safety and seaworthiness of the vessel.

Owing to factors peculiar to the operation of LASH barges, special standards of evidence are provided in the Customs Regulations when casualty claims are made concerning such vessels under section 1466(d)(1). Section 4.14(d)(1)(iii)(G), Customs Regulations, provides that in lieu of the evidence required by paragraphs (B), (D), (E), and (F), evidence may be submitted showing that: (1) the barge was inspected immediately prior to departure from the United States, (2) it was then found to be in seaworthy condition, (3) the damage was discovered during the course of the foreign voyage, and (4) the repairs performed were necessary for the safety and seaworthiness of the barge to enable it to reach its U.S. port of destination.

Although the vessel involved in the present matter is not a LASH barge, the standards of proof applicable to those barges may be applied. The regulations specifically applicable to LASH barges were promulgated because the barges are unmanned and it is not always possible to precisely document the cause of damage. The BARGE was also unmanned while in tow. Thus, evidence that the barge was seaworthy upon U.S. departure, encountered heavy weather while in tow, and was found to be damaged upon arrival in a foreign port is sufficient to show a bona fide casualty.

Customs determined that it would establish no specific rules as to what evidence satisfies the statutory requirements of "good and sufficient evidence of a casualty" in the case of a LASH barge. T.D. 82-227. It noted, however, that proper inspection of the vessel is required prior to loading in the United States and also at the point at which damages is discovered overseas. Id. It suggested that proper inspection records, kept in the ordinary course of business by a vessel owner or operator, would meet the evidentiary requirements. Id. Documents executed after the fact and/or by persons with no first-hand knowledge of the actual condition of barges immediately prior to foreign departure are of no probative value, and are insufficient for the purpose for which they are submitted.

Because the master's statement was prepared subsequent to the repairs performed, it is not sufficient to attest to the seaworthiness of the barge prior to its departure from the United States. However, relief may still be granted if the evidentiary requirements of 19 CFR 4.14(d)(1)(iii)(A-E) are satisfied.

In light of C.I.E. 1202/59, Customs Headquarters Ruling No. 111681 did find the master's statement persuasive that the vessel suffered hull damage during the voyage in question. In C.I.E. 1202/59, we held that damage to underwater parts of vessels is usually not dutiable or susceptible of definite proof respecting the date and place of occurrence. We also held that relief under 19 U.S.C. 1466(d)(1) is warranted in the absence of evidence showing "that the vessel concerned was grounded, struck bottom, or her propeller contacted some floating object capable of causing damage, prior to commencement of the voyage." Therefore, the master's statement satisfies paragraphs (D) and (E) of 19 CFR 4.14(d)(1)(iii). Further, after reexamining the record, the vessel's logs do support the master's statement that the vessel encountered heavy weather, thus satisfying paragraph

The Westward Shipping Ltd., Invoice submitted with the application for relief did not adequately segregate the cost of those items for which relief is sought [as required by 19 CFR 4.14(d)(1)(iii)(A)] because it lacked any description of the work performed on the vessel. The invoice merely contained a recapitulation of the cost of various items performed including "attending repairs." However, the information submitted with the petition for review is adequate for us to determine that the "attending repairs" performed by Westward Shipping Ltd. were exclusively for the hull damage in question, and that the minimal work necessary to secure the safety and seaworthiness of the vessel was performed. Furthermore, the additional statements by Washington Marine Services, Inc., Key Marine Industries Ltd., M.D.A. Marine Associates (Vancouver) Ltd., and the American Bureau of Shipping, Vancouver, B.C., Surveyor, provide good and sufficient evidence to prove the occurrence of a casualty, that the repair was necessary for the safety and seaworthiness to enable the ship to reach its port of destination; and, that remission is sought for only those repairs necessary to enable the ship to do so.

While we would prefer that any affidavits or barge condition surveys concerning the seaworthiness of the vessel are prepared on the date of the U.S. departure, we will accept the claim of a casualty occurrence because of the nature of the damage and the supporting evidence from independent surveyors.

HOLDING:

The evidence presented is sufficient to sustain the finding of a casualty, thus making the duties on the foreign repair costs remissible under 19 U.S.C. 1466(d)(1).

Sincerely,

B.James Fritz

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