United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1997 HQ Rulings > HQ 227035 - HQ 544684 > HQ 227035

Previous Ruling Next Ruling
HQ 227035





September 25, 1996

VES-13-18-RR:IT:EC 227035 GEV

CATEGORY: CARRIER

Chief, Liquidation Branch
U.S. Customs Service
Post Office Box 2450
San Francisco, California 94126

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

Dear Sir:

This is in response to your memorandum dated May 21, 1996, forwarding an application for relief from duties assessed pursuant to 19 U.S.C. ? 1466 with supporting documentation. Our findings on this matter are set forth below.

FACTS:

The SEA-LAND VOYAGER departed Tacoma, Washington, on May 8, 1995, bound for Yokohama, Japan. On June 9, 1995, at 0654 hours, while in pilotage waters en route to the port of Yokohama, the SEA-LAND VOYAGER was involved in a collision with a Greek-registered freighter, the KASTOR P. 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 its 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 were made in Yokohama to restore watertight integrity in order to tow the vessel from Yokohama to Hyundai Shipyard in Ulsan, Korea, where permanent repairs were effected. During the tow operation to Ulsan on August 26, 1995, the ocean tug DE YI collided with the SEA-LAND VOYAGER causing additional damage.

Subsequent to the completion of the repair work in question, the vessel arrived in the United States at Tacoma, Washington, on December 3, 1995. A vessel repair entry was timely filed. Pursuant to an authorized extension of time, an application for relief with supporting documentation was also timely filed. The applicant is seeking remission pursuant to 19 U.S.C. to both of the above-described collisions (Volumes I-VI of the application). The applicant is also seeking relief for various other repairs stated to be unrelated to the aforementioned collisions (Volume VII of the application).

The documentation submitted in support of the applicant's claims has been organized within the application as follows:

VOLUME I

Section B - Customs advisory rulings 113529, dated August 23, 1995, and
113557, dated September 12, 1995, regarding this case with the following supporting documentation: a copy of Coast Guard Form (CG) 945 "Permit to Proceed to Another Port for Repairs"; copies of recommendations from The Salvage Association; a copy of an
American Bureau of Shipping (ABS) survey certificate; a copy of the ABS "Certificate to Proceed Under Tow"; a copy of an insurance survey certificate from The Salvage Association; 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); a copy of ABS Report No. YO27809; 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.

Section C - a copy of ABS Report No. YO27811-A; a copy of ABS Provisional
Load Line Certificate No. YO27811-B-X; a copy of ABS Certificate
No. YO27811-A-X; a copy of ABS Report No. YO27809; a copy of a USCG memorandum dated January 25, 1996; a copy of a Sea-Land letter dated July 12, 1995, to Rear Admiral James C. Card, Chief,
Office of Marine Safety, USCG; and Rear Admiral Card's response to the aforementioned letter, dated August 24, 1995.

Section D - Seawise Maritime Services (Pte) Ltd. Salvage Report No. MS 95/092

Section E - Posa Marine Services, LTD. Damage Survey dated August 4, 1995

Section F - Posa Marine Services, LTD. Tow Operation Damage Survey dated
September 7, 1995

VOLUME II

Section A - Casualty Invoice Worksheet, Footnotes, Explanation Ledger

Section B - Casualty Invoices (Items 1-60)

VOLUME III

Casualty Invoices (Items 61-130)

VOLUME IV

Casualty Invoices (Items 131-190)

VOLUME V

Casualty Invoices (Items 191-240)

VOLUME VI

Casualty Invoices (Items 241-268)

VOLUME VII

Section A - Non-Casualty Invoice Worksheet, Footnotes, Explanation Ledger

Section B - Non-Casualty Items 1-19

ISSUES:

1. Whether evidence is presented sufficient to prove that the foreign repairs performed on the subject vessel which are covered by Volumes I through VI of the application warrant remission pursuant to 19 U.S.C. ? 1466(d)(1).

2. Whether the remainder of the foreign costs for which the applicant seeks relief (i.e., those designated as non-casualty items covered by Volume VII of the application) are dutiable under 19 U.S.C. ? 1466.

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 aforementioned 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 regard to the subject entry, upon reviewing Volumes I through VI of the application, we are in accord with the position of the Vessel Repair Liquidation Unit that this documentary evidence is sufficient to warrant remission for each of the items contained therein pursuant to 19 U.S.C. ? 1466(d)(1).

With respect to those non-casualty related foreign repair costs covered in Volume VII of the application for which the applicant seeks relief, upon reviewing the record we are of the opinion that only the following are non-dutiable: Item Nos. 2 (Enviropace Ltd); 8 (ABS Yokohama); 15 (only the $10,216 cost of a Fire Alarm & Fire Fighting System Inspection for the USCG); 17 (only the costs of the consumables listed on the invoice as nos. 012 (dishwashing soap liquid), 013 (bathroom soap), 014 (liquid cleaner), 015 (floor cleaner), 016 (window cleaner), 017 (washing machine soap), 022 (paper napkins), 023 (toilet paper), 024 (aluminum foil), 025 (plastic wrap), 028 (black pepper), 029 (table salt), 030 (cooking oil), 031 (white sugar), 032 (mineral water), 033 (soap for dishwasher) and 034 (insect killer)); and 19 (ABS Yokohama). The remainder of the costs contained within Volume VII constitute dutiable repairs and/or
expenses of repairs the latter of which are dutiable pursuant to Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 815 F.Supp. 1484 (1993).

HOLDINGS:

1. Evidence is presented sufficient to prove that the foreign repairs performed on the subject vessel which are covered by Volumes I through VI of the application warrant remission pursuant to 19 U.S.C. ? 1466(d)(1).

2. The remainder of the foreign costs for which the applicant seeks relief (i.e., those designated as non-casualty items covered by Volume VII of the application) are dutiable under 19 U.S.C. ? 1466 with the exception of the following: Item Nos. 2 (Enviropace Ltd); 8 (ABS Yokohama); 15 (only the $10,216 cost of a Fire Alarm & Fire Fighting System Inspection for the USCG); 17 (only the costs of the consumables listed on the invoice as nos. 012 (dishwashing soap liquid), 013 (bathroom soap), 014 (liquid cleaner), 015 (floor cleaner), 016 (window cleaner), 017 (washing machine soap), 022 (paper napkins), 023 (toilet paper), 024 (aluminum foil), 025 (plastic wrap), 028 (black pepper), 029 (table salt), 030 (cooking oil), 031 (white sugar), 032 (mineral water), 033 (soap for dishwasher) and 034 (insect killer)); and 19 (ABS Yokohama). The remainder of the costs contained within Volume VII constitute dutiable repairs and/or expenses of repairs the latter of which are dutiable pursuant to Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 815 F.Supp. 1484 (1993).

Sincerely,

Chief

Previous Ruling Next Ruling