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HQ 114288

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March 20, 1998

VES-13-18-RR:IT:EC 114288 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. 110-7995632-9; SEA-LAND KODIAK, V-346; 19 U.S.C. 1466; Application

Dear Madam:

This is in response to your memorandum of March 12, 1998, which forwarded the application for relief submitted by Sea-Land Service, Inc. ("applicant") with respect to the above-referenced vessel repair entry.

FACTS:

The evidence of record indicates the following. The SEA-LAND KODIAK (the "vessel"), a U.S.-flag vessel, arrived at the port of Tacoma, Washington on December 9, 1997. The subject vessel repair entry was subsequently filed. The vessel underwent certain foreign shipyard work in Canada.

ISSUE:

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

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 trades.

You request our determinations with respect to the items discussed below.

Kawasaki invoice no. 3145033-5 and Victoria Shipyards invoice no. 9733. The applicant states, with respect to these items: "We also seek relief from duty for the [e]mergency work performed pertaining to the Controllable Pitch Propeller casualty and final repairs completion." In support of its claim, the applicant has provided a sheet from the master's log book and a sheet from the deck log book. The master's log for August 11, 1997 reflects that the "chief engineer notified [the] bridge of low pressure to the CPP system." Immediately afterwards, the "main engine tripped due to low CPP pressure" and the "vessel [was] drifting with no propulsion." Subsequently on the same day, the "CPP failed to respond in any mode" and "checks and tests were carried out ... with negative results." The sheet from the deck log book, which is undated, reflects the same situation, in virtually the same language. One of the documents submitted with the application, entitled "Summary of Pertinent Issues," states: "The motor Vessel Sea-Land Kodiak lost the function of the controllable pitch propeller (CPP) on Monday August 11, 1997, while at sea 400 miles off the coast of Vancouver Island, BC. Attempts to engage the emergency pitch setting and locking mechanism were unsuccessful, implying that the problem was in the actual hub of the propeller and not in any control apparatus."

19 U.S.C. 1466(d)(1) provides in part that the Secretary of the Treasury is authorized to remit or refund such duties if the owner or master of the vessel furnishes good and sufficient evidence that the vessel was compelled by stress of weather or other casualty to put into a foreign port and make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. 19 CFR 4.14(c)(3)(i) provides that "port of destination" means such port in the United States and "...only the duty on the cost of the minimal repairs needed for the safety and seaworthiness of the vessel is subject to remission or refund."

19 U.S.C. 1466 and 19 CFR 4.14 essentially set forth a three-part test, each of the elements of which must be established by good and sufficient evidence to qualify for remission:

1. a casualty occurrence;
2. an unsafe and unseaworthy condition;
3. the inability to reach the port of destination without foreign repair

The term "casualty", as it is used in the vessel repair statute (19 U.S.C. 1466) has been interpreted as something which, like stress of weather, comes with unexpected force or violence, such as fire, or spontaneous explosion of such dimensions as to be immediately obvious to ship's personnel, or collision. See Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 28-29, C.D. 362 (1940). In the absence of such a casualty event, we must consider the repair to have been necessitated by normal wear and tear or some other non-casualty situation..

In Dollar Steamship Lines, the court stated in pertinent part:

We are of the opinion that a casualty similar to "stress of weather" should be of necessity a happening that comes with the violence of the turbulent forces of nature.

Black's Law Dictionary (Fifth Edition, 1979) defines casualty as follows:

A serious or fatal accident. A person or thing injured, lost or destroyed. A disastrous occurrence due to sudden, unexpected or unusual cause. Accident; misfortune or mishap; that which comes by chance or without design. A loss from such an event or cause; as by fire, shipwreck, lightning, etc.

After a consideration of the record, we find that the applicant has not established that a casualty occurred. The documentation submitted by the applicant indicates simply that the main engine "tripped" or failed. The mere occurrence of engine failure, by itself, is not a casualty.

Accordingly, the applicant's casualty claim is denied.

ABS Surveys - invoice nos. 5550001815 (drydocking survey), 5550001816 (tailshaft survey), and 5550001817 (damage repair survey). In the document entitled "Summary of Pertinent Issues," the applicant states: "The SL Kodiak was originally scheduled to go to drydock for a credited drydocking and to complete special survey by American Bureau of Shipping in Nov/Dec, 1997. The drydock, continuous survey of machinery, hull survey and tailshaft survey were performed instead at this [e]mergency drydocking in August."

We find that the cost of the damage repair survey (invoice no. 5550001817) is dutiable as a cost of repairs.

We find that the drydocking survey and tailshaft survey are nondutiable.

Victoria Shipyards invoice no. 12-11A(97). This invoice is entitled "Modifications to Cargo Support Structure." In pertinent part, it provides:

Hatch No. 10 Conversion to Cell Guides and Raising of Second Tier Hinge Frames ... The upper and lower hinged frames are now set for 40 ft. Containers. Modifications to the hatch will allow 45 ft. container[s] and combination of 40 ft. And 45 ft. Containers to be stowed. The modifications consist of the following general items: removal of existing hinged frames, modification of a hinged frame tower at one end, installation of above deck cell guides, modification/reinforcing of hatch covers and relocation of outboard pedestals...The second tier hinge frames at ... 8,5,4 and 3 hatches will be raised up by one foot.

In its application of 19 U.S.C. 1466, Customs has held that modifications, alterations, or additions to the hull of a vessel are not subject to duty

We find that the cost of this work is nondutiable because the work represents a modification to the hull of the vessel.

Electrocatalytic, Inc. ("Elcat") invoice no. 5v7401 and Roland Marine Inc. invoice no. 1374/97. With each of these invoices the applicant has submitted a letter (each letter is stated to be an "affidavit," but the letters are not "sworn to" or notarized) from the vendor stating that the vendor dispatched a service representative who is a U.S. resident (in the case of the Roland Marine service representative, a U.S. resident and citizen). The underlying invoices reflect the costs of providing the representative.

We find that the cost of the Elcat representative is nondutiable.

However, we find that the cost of the Roland Marine representative is dutiable because the Roland Marine letter states that the service representative was provided with respect to two vessels other than the vessel involved in this entry, i.e., the letter cites the SEA-LAND TACOMA and the SEA-LAND ANCHORAGE. Accordingly, the Roland Marine letter is not relevant to the subject entry. Accordingly, the cost of the Roland Marine invoice is dutiable.

HOLDING:

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

Sincerely,

Jerry Laderberg
Chief,
Entry Procedures and Carriers

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