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HQ 227085

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August 13, 1996

VES-13-18-RR:IT:EC 227085 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. 110-6461446-1; 19 U.S.C. 1466; PRESIDENT TYLER, V-137; Petition

Dear Sir:

This is in response to your memorandum dated June 18, 1996, which forwarded the petition submitted by American President Lines, Ltd. ("applicant") with respect to the above-referenced vessel repair entry.

FACTS:

The PRESIDENT TYLER ("the vessel") is a U.S.-flag vessel owned and operated by the petitioner. Certain foreign shipyard work was performed on the vessel in late 1993. The vessel arrived at the port of Seattle, Washington on December 22, 1993. The subject entry was timely filed on December 30, 1993.

In Ruling 113122 dated March 20, 1996, the application for relief with respect to this entry was granted in part and denied in part.

In its petition, the petitioner requests relief with respect to many items which were not the subject of its application. 19 CFR 4.14(d)(2)(i) states, in pertinent part:

(2) Petition for review on a denial of an application for relief-(i) Form. If an applicant is dissatisfied with the decision on its application for relief, the applicant may file a petition for review of that decision. The petition for review need not be in any particular form. The petition for review must identify the
decision on the application for relief and must detail the exceptions taken to that decision...
(Emphasis supplied.)

Pursuant to 19 CFR 4.14(d)(2)(i), a party may not petition for relief with respect to vessel repair items which were not included in the application for relief.

Accordingly, we will rule here only on items included by the petitioner within the petition which were also included within the application for relief, i.e., were denied in Ruling 113122. Those items are as follows:

Item Number Description

1.2-10 owner's spare parts
1.3-2 sea trial
3.3-5 structural removals
5.1-32 wooden box

ISSUE:

Whether the above-stated 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.

Item 1.2-10 - owner's spare parts. In Ruling 113122, we stated as follows with respect to this item:

The invoice states, in part: "Providing storekeeper to inventory and control issue of C-8 class storestock spare for drydock use." This item is dutiable pursuant to 19 U.S.C. 1466. The applicant has not asserted or established a reason for a different determination.

In its petition, the petitioner states:

This is essentially a transportation and documentation item. It is not a repair item. Under pre TEXACO this service has been afforded a non-dutiable treatment.

While the invoice reflects transportation charges, it also reflects non-transportation costs, as stated supra, i.e., "providing storekeeper to inventory and control..." The transportation costs are not segregated from the other costs. The petitioner has not established that the other costs are nondutiable. Accordingly, the entire item is dutiable.

Item 1.3-2 - sea trial. In Ruling 113122, we stated as follows with respect to this item:

The invoice reflects a "sea trial," but it does not reflect the purpose of the trial. In fact the invoice states, in part: "Describe and detail what trials." The applicant states: "At this drydock availability we were required to maintain this twenty-one year old vessel in class under the American Flag Registry to conduct the ABS 5th Special Periodical Survey...No vessel operator is going to accept a new vessel without a prior successful dock and sea trial and, by the same token, we will demand a dock and sea trial after a 5th special survey." There is insufficient evidence to support the allegation of the application that this item is nondutiable. Therefore, we find that it is dutiable. See the excerpt supra from the Customs Court decision in Admiral Oriental Line.

In its petition, he petitioner states:

...we direct your attention to Item #4.1-11 and ABS Rule 1/3.11.3 which is quoted in Item 4.1-11, which states:

An operational test of the turbines may be required by the surveyor. This supports our position for the need for an operational test.

The petitioner has not established that this cost is nondutiable. Therefore, it is dutiable. The petitioner appears to be trying to assert that this cost was related to a survey, but it has not made an adequate causal connection between the item and a nondutiable survey.

Item 3.3-5 - miscellaneous deck structure removals. In Ruling 113122, we stated:

This work appears to have been accomplished in conjunction with dutiable repairs, and the record does not establish a sufficient and clear reason why this sub-item is not related to dutiable work. There is insufficient evidence to support the allegation of the application that this item is nondutiable. Therefore, we find that it is dutiable. See the excerpt supra from the Customs Court decision in Admiral Oriental Line.

In its petition, the petitioner states:

This item was initially a non-dutiable item since this is a permanent removal. It is not associated with any dutiable repair contrary to the assumption of the author of the subject Ruling. It is merely the permanent removal of discontinued deck fittings and should be duty-free.

Upon further review of the pertinent invoice, we concur with the petitioner's assertion that this item is nondutiable. The invoice does not reflect a repair and there is no indication that this item is an item incident to a repair. This item appears to be the mere removal of deck structure.

Item 5.1-32 - wooden box. In Ruling 113122, we stated as follows with respect to item 5.1-32:

Item 5.1-32 - SSTG rotor. The applicant states: "This item includes the manufacture of a special fixture to handle the SSTG turbine motor and pinion shafts to the workshop and return...Upon return of the SSTG rotor and pinion shaft to the vessel, the fixture is scraped. Since the fixture is not incorporated in the vessel, it is not considered to be dutiable." The invoice is not sufficiently clear with respect to the precise nature of the work performed. There is insufficient evidence to support the allegation of the application that this item is nondutiable. Therefore, we find that it is dutiable. See the excerpt supra from the Customs Court decision in Admiral Oriental Line.

In its petition, the petitioner states:

The pinion shaft is a high precision machined integral part of the SSTG set. It was necessary to remove it from the unit in the ship and transport it from the ship to the machine shop and ultimately back to the ship. It is the packaging required for the transportation. Since this is a pre TEXACO entry this element of the transportation should be duty free.

The pertinent invoice item is entitled "SSTG Turbine Rotor." Aside from the first paragraph of the invoice which states "See Item 005," the invoice reflects certain work such as "disconnecting and drawing," "fitting and installing," "making and renewing one pc. steel key to suit new coupling," etc. Based upon the invoice and its description of various work, we are unable to conclude that the entire invoice cost of 12,122, or either of the component costs of 9,262 and 2,860, is merely for transportation. Accordingly, this item is dutiable.

HOLDING:

As detailed supra, the petition is granted with respect to item 3.3-5, and denied with respect to the other items.

Sincerely,

Director,
International Trade Compliance

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