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HQ 113706





October 3, 1996

VES-13-18-RR:IT:EC 113706 GEV

CATEGORY: CARRIER

Chief, Residual Liquidation and Protest Branch U.S. Customs Service
6 World Trade Center
New York, New York 10048-0945

RE: Vessel Repair Entry No. C46-0016937-8; M/V NOSAC RANGER; V-130; Damaged Propeller; Casualty; 19 U.S.C. ?

Dear Sir:

This is in response to your memorandum dated December 14, 1995, forwarding a petition for review covering the above-referenced vessel repair entry. Our ruling on this matter is set forth below.

FACTS:

The M/V NOSAC RANGER is a U.S.-flag vessel owned by Car Carrier, Inc. of Dover, Delaware. It sailed Baltimore on March 28, 1995, bound for Le Havre, France. On March 29, 1995, while en route to France the vessel encountered heavy weather which persisted until April 2, 1995, when the vessel began to experience excessive vibration. The main engine was immediately stopped and the vessel's hull and machinery were inspected. Unable to determine the cause of the problem, the vessel resumed her voyage albeit at only a reduced speed due to the excessive vibration.

Upon arrival in Le Havre on April 8, 1995, a professional diver (Hydrex) was contacted to perform an underwater survey with the vessel's classification society, Det Norske Veritas (DNV), also in attendance. The inspection revealed that one of the propeller blades was fractured thus resulting in the aforementioned excessive vibration. The DNV surveyor issued a Condition of Class at Le Havre requiring that the propeller be repaired prior to the vessel leaving European waters. The U.S. Coast Guard (USCG) was also advised of this incident on April 3, 1995, and concurred with the DNV.

The subject vessel had a used spare propeller in Rotterdam at Wilton-Fijenoord Shipyard which had been left behind following a drydocking in July of 1993. Lips BV of Drunen, The Netherlands, was contracted to pick up this spare propeller from Wilton-Fijenoord Shipyard, and to recondition it for USCG and DNV approval so it could be taken back into service. Lips BV then arranged to transport the spare propeller to Lloyd Werft Shipyard in Bremerhaven, Germany, where it was determined the vessel could drydock.

The vessel did drydock at Lloyd Werft Shipyard from April 13-16, 1995, during which time the spare propeller was fitted. Both the USCG and DNV were in attendance. Subsequent to the completion of the work, the vessel arrived in the United States at Newark, New Jersey, on May 3, 1995. A vessel repair entry was timely filed.

An application for relief, dated July 31, 1995, was timely filed requesting remission due to a casualty. Included with the application in support of the casualty claim was the following documentation: invoices from Hydrex, DNV, Lips BV, and Lloyd Werft; copies of the vessel's deck log and telex correspondence for the period of March 28 - April 3, 1995; a copy of the DNV Condition of Class; a statement by the Master and Chief Engineer; copies of USCG and DNV reports; and a copy of USCG form CG-2692 (Report of Marine Accident, Injury or Death). By letter dated November 9, 1995, the New York Vessel Repair Liquidation Unit (NY VRLU) denied remission pursuant to a casualty based on insufficient evidence. The basis of this denial was that although the evidence supported a finding that one of the propeller blades incurred damage during the period of heavy weather, no documentation was submitted showing that the USCG had authorized the vessel to proceed from one foreign port to another in a state of disrepair.

A petition of the decision of the NY VRLU was received by that office on November 29, 1995. In reiterating the claim for remission pursuant to a casualty, the petitioner submitted a memorandum dated November 22, 1995, from the Chief, Inspections Department, Marine Inspection Office, USCG, regarding this matter.

ISSUE:

Whether evidence is presented sufficient to prove that foreign costs incurred pursuant to the repairs on the subject vessel's propeller were necessitated by a casualty occurrence 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 ?

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 clearly supports the claim that the subject vessel suffered a marine casualty. However, the extent of that casualty (i.e., parts 2 and 3 of the three-part test set forth above) is the critical issue upon which this case turns.

In regard to parts 2 and 3 of the above test, the 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 ?? 2.10-15, 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 Officer-In-Charge, Marine Inspection (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 locations, it is the practice of the USCG not to issue a formal permit-to-proceed to a vessel transiting foreign waters because its
certificate of inspection would have to be removed resulting in problems in transiting foreign waters. (See Customs ruling 112060) Furthermore, the USCG acknowledges that vessel operators often make casualty reports for U.S.-flag vessels damaged overseas verbally to the proper USCG Marine Inspection Office, followed by the required written report. Since the USCG cannot always send a marine inspector to a damaged vessel overseas they oftentimes consider the classification society report and the report of the vessel's master to determine the required temporary repairs and voyage restrictions. Id.

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 foreign locations (i.e., Le Havre and Bremerhaven) 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; 112229, dated June 11, 1992, and 113501, dated October 24, 1995). 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 foreign locations in a damaged condition. The mere submission of a CG-2692, without accompanying documentation from the appropriate USCG OCMI 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. ? 1466(d)(1).

In regard to the memorandum from the Chief, Inspections Department, Marine Inspection Office, USCG, submitted by the petitioner, we note that it provides, in pertinent part, as follows:

"I understand that the damage was discovered while en route Le Havre,
France. Adequate repair facilities were not readily available, but an underwater survey was done. Normally our office would dispatch an inspector to examine the vessel under such circumstances. Then the
Officer in Charge of Marine Inspection would issue a permit to proceed if, in his opinion, the voyage could be conducted safely. However, because the initial survey of the damage was overseen by a surveyor from the vessel's class society we did not find it necessary to send an inspector to Le Havre or issue a permit to proceed."

"The vessel proceeded to Bremerhaven, Germany to effect repairs.
There it was attended by inspectors from our office. Based on the initial class society report, and the report from our inspectors it is my opinion that the repairs were necessary to keep the vessel in a seaworthy condition. The actions taken to remedy the damage in a timely manner were prudent." (Emphasis added)

Upon reviewing the above memorandum as well as the entire record, we are of the opinion that the petitioner has submitted documentation sufficient to satisfy the statutorily imposed three-part test for remission.

HOLDING:

Evidence is presented sufficient to prove that the foreign costs incurred pursuant to the repairs of the subject vessel's propeller were necessitated by a casualty occurrence thus warranting remission pursuant to 19 U.S.C. ? 1466(d)(1).

Accordingly, the petition is granted.

Sincerely,

Chief

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