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HQ 113317





July 29, 1997

VES-13-18-RR:IT:EC 113317 GOB

CATEGORY: CARRIER

Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 107 P.O. Box 2450
San Francisco, CA 94126

RE: 19 U.S.C. 1466; ARCO ANCHORAGE, CF-470; Vessel Repair Entry No. C31- 0005029-4; Application

Dear Madam:

This ruling is in response to your memorandum dated January 10, 1995, which forwarded the application for relief submitted by ARCO Marine, Inc. with respect to the above-referenced vessel repair entry.

FACTS:

The ARCO ANCHORAGE (the "vessel"), a U.S.-flag vessel, arrived at the port of Valdez, Alaska on September 18, 1994. The subject vessel repair entry was timely filed. Certain foreign shipyard work was performed in Korea.

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 "pre-Texaco" entry, i.e., an entry filed before 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).

You have requested us to rule on the following items.

1. Feed water pump recirculating valves (2) (204C). The invoice reflects that this item included the overhaul of the valves: "Total of two (2) 1-1/2" - 600 PSI valves to be overhauled." We find that this "overhaul" is a repair item. Accordingly, this item is dutiable.

2. Boiler mounting inspection (205). The invoice reflects that this item was directly related to, or was a part of, an ABS boiler survey. We find that this item is nondutiable.

3. Removal of spray valves (207(3)). The invoice reflects that this item was performed relative to a "USCG Biennial Inspection." We find that it is nondutiable.

4. Removal of debris related to renewal of port and starboard boiler's bridge walls (211). This item is dutiable as post-repair cleaning. In the Texaco case, supra, the court held that the cost of post-repair cleaning was dutiable under 19 U.S.C. 1466. In Memorandum 113350 dated March 3, 1995, which was published in the Customs Bulletin on April 5, 1995, we advised that we would apply the Texaco decision with respect to post-repair cleaning and protective coverings incurred pursuant to dutiable repairs to vessel repair entries filed prior to December 29, 1994, i.e., "pre-Texaco entries."

5. Materials used in opening up main turbines flexible couplings for ABS Special Survey (301B). This item is nondutiable as a cost incident to a nondutiable inspection.

6. Preparation for ABS Special Surveys (303 and 304). These items are nondutiable as costs incident to a nondutiable survey or inspection.

7. Main air ejector nozzle (314(4)). The invoice reflects that this is a nondutiable inspection item. We find that it is nondutiable.

8. Main steam piping inspection (316). The invoice reflects that this is a nondutiable inspection item. We find that it is nondutiable.

9. Preparation of deck seal for ABS/USCG Inspection (401(D)). The invoice reflects that this item includes the renewal of zinc plates, which is a repair item. Because this repair is not separately itemized, we find that this item is dutiable.

10. Megger test (501). The invoice reflects that this item was performed for an ABS special survey. We find that the cost of the test is nondutiable. We note that the invoice separately itemizes a dutiable repair cost.

11. Alternators and brushless exciters (503). The invoice reflects that this item was performed for an ABS special survey. We find that the cost of this item is nondutiable.

12. Life boat davits (602). The invoice reflects that this item was performed for a "USCG Biennial Inspection." The invoice reflects certain renewals such as the renewal of "lifeboat winch manual and centrifugal bakes at port and stb'd lifeboats davits" and the renewal of 56 "bearings in all sheaves." These renewals are repairs. Because the repairs are not separately itemized, this item is dutiable.

13. Turbine bearings (803 B. 2.). The invoice reflects that this item includes the following: "Renew thrust bearing ... Damaged bearing(s) and carbon seals shall be renewed with ship's spare." We find that this item is a dutiable repair item.

14. Puget Sound towing system (901). The invoice provides: "The stern of the vessel is to be outfitted and strengthened for new towing arrangement for Puget Sound service. The new arrangement is designed to be capable of a million pound towing force...Removed & modified puget sound towing system in steering gear room..." We find that this item is a nondutiable modification.

15. Engine room bilge system modification (902). The invoice reflects that this item is a modification of the vessel. We find that it is nondutiable.

16. Machinery space clean drain OVBD pumping system (903). The invoice reflects that this item is a modification of the vessel. We find that it 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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