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HQ 113919




May 5, 1997

VES-13-18-RR:IT:EC 113919 GOB

CATEGORY: CARRIER

Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 415 P.O. Box 2450
San Francisco, CA 94126

RE: Vessel Repair Entry No. 110-7992211-5; 19 U.S.C. 1466; SEA-LAND TACOMA, V-318; Application

Dear Madam:

This is in response to your memorandum dated April 18, 1997, which forwarded the petition submitted by Sea-Land Service, Inc. (the "applicant") with respect to the above-referenced vessel repair entry.

FACTS:

The SEA-LAND TACOMA (the "vessel"), a U.S.-flag vessel owned and operated by the applicant, arrived at the port of Tacoma, Washington on December 6, 1996. The subject vessel repair entry was subsequently filed. The vessel underwent certain foreign shipyard work in Canada in November and December of 1996.

You ask for our determination with respect to the following items: Kawasaki Heavy Industries' invoice - four items pertaining to Mr. Miyauchi; administrative expense on King Bros. Limited invoice; labor, materials, and equipment rental for underwater survey markings and hull video for inspection by ABS (#0630; 3.1-14 on Vancouver Shipyards (Esquimalt) Ltd. invoice); and labor, materials, and equipment rental for hull welding inspection (#0870 on Vancouver Shipyards (Esquimalt) Ltd. invoice).

ISSUE:

Whether the subject items are dutiable pursuant to 19 U.S.C. 1466.

LAW AND ANALYSIS:

19 U.S.C. 1466 provides for the payment of duty at a rate 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 be employed in such trade.

The subject entry is a "post-Texaco" entry, i.e., an entry filed after the appellate decision in Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 44 F.3d 1539 (CAFC 1994), aff'g 815 F.Supp. 1484 (CIT 1993). Accordingly, the Texaco decision applies to this entry.

Kawasaki Heavy Industries' Invoice - four items pertaining to Mr. Miyauchi - The Kawasaki invoice reflects certain costs with respect to the work performed by Mr. Miyauchi. A memorandum dated March 19, 1997 from J. Breglia, port engineer of the applicant's Fleet Repair Group to N. Gruchalla of the applicant's Ocean Transport Service Group states:

Please be advised that theKawasaki [sic] Engineer - Mr. Miyauchi was used exclusively for the Controllable Pitch Propeller Inspection. This inspection was required in order to get credit for Special Survey Tailshaft...

Mr. Breglia further states that the expenses of the second engineer, Mr. Tsuji, are dutiable based on the work he supervised and performed.

We find that the items pertaining to Mr. Miyauchi are nondutiable because they are items incident to a nondutiable inspection or survey.

Administrative Expense on King Bros. Limited Invoice - We find that this item should be prorated along with the other drydock costs and general services costs.

Underwater Survey Markings and Hull Video for Inspection - The invoice (#0630; 3.1-14 on Vancouver Shipyards (Esquimalt) Ltd. invoice) reflects that this work was performed preparatory to or incident to a nondutiable ABS inspection. Accordingly, we find that this work, including material and equipment rental, is nondutiable.

Hull Welding Inspection - The invoice (#0870 on Vancouver Shipyards (Esquimalt) Ltd. invoice) reflects that this work was performed incident to a nondutiable inspection. Accordingly, we find that this work, including material and equipment rental, is nondutiable.

HOLDING:

As detailed above, the application is granted in part and denied in part.

Sincerely,

Jerry Laderberg
Acting Chief,

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