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HQ 227199

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October 22, 1996

VES-13-18-RR:IT:EC 227199 GEV

CATEGORY: CARRIER

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

RE: Vessel Repair Entry No. 110-6461853-8; SEA-LAND EXPRESS; V-241/242; Ineffective Repair; T.D. 55193(24); 19 U.S.C. ? 1466

Dear Sir:

This is in response to your memorandum dated August 8, 1996, forwarding an application for relief from duties assessed pursuant to 19 U.S.C. ? 1466 with supporting documentation. You request our review of three items (nos. 12, 14, and 15 on the CF 226) contained within the above-referenced vessel repair entry. Our findings in this matter are set forth below.

FACTS:

The SEA-LAND EXPRESS is a U.S.-flag vessel operated by Sea-Land Service, Inc. ("Sea-Land"). Subsequent to the completion of various foreign shipyard work, the vessel arrived in the United States at Tacoma, Washington, on March 24, 1996. A vessel repair entry and supporting documentation were timely filed.

The applicant's claims for relief are based on allegedly ineffective repair work performed on the #1 main engine turbocharger. Specifically, the applicant states that on March 13, 1996, the #1 main engine turbocharger was overhauled and its casing was replaced with a spare (Item 12, MHI Marine Engineering, LTD. bill no. 95-1063). The aforementioned spare, which was scheduled to be replaced by the original after the latter was repaired, was found to be defective. On March 16, 1996, the defective replacement spare was removed and the repaired original was reinstalled. However, the original was again found to be inoperable and new casing was subsequently purchased and installed (Item 14, MHI Marine Engineering, LTD. bill no. 95-1071). Follow-up work performed on the #1 main engine turbocharger after the purchase of the new casing (Item 15, The Yokohama Engineering Works invoice no. 6f-93), is conceded by Sea-Land to be a dutiable repair.

In support of its claim for relief the applicant has submitted, in addition to the above-referenced invoices, the following documentation: a letter dated March 17, 1996, co-signed by the Master and Chief Engineer of the subject vessel which gives a chronological event portrayal of the events in question; and an inter-office correspondence, dated April 23, 1996, from Sea-Land's agent in Kobe, Japan, to Sea-Land Ship Superintendent D. Burmeister referencing MHI invoice no. 95-1063 as a failed repair.

ISSUE:

Whether the foreign costs covered by Items 12, 14, and 15 for which the applicant seeks relief are dutiable pursuant to 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 foreign cost of equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country 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.

In its administration of 19 U.S.C. ? 1466, Customs has long-held that repairs which are completely ineffective and of no value to the vessel are not dutiable under that statute. (See C.I.E.s 1156/62, 1128/60, and Treasury Decision (T.D.) 55193(24)) Upon reviewing the record with regard to the items under consideration, we find Item 12 to constitute ineffective repairs for which relief should be granted. The work in question covered by Items 14 and 15, although necessitated as a result of the aforementioned ineffective repairs, is not itself ineffective. Accordingly, those costs are dutiable.

HOLDING:

Of the foreign costs covered by Items 12, 14, and 15 for which the applicant seeks relief, only Item 12 constitutes ineffective repairs which are not dutiable under 19 U.S.C. ? 1466. Items 14 and 15 are dutiable under the aforementioned statute.

Sincerely,

Chief

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