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HQ 114494

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October 20, 1998

VES-13-18-RR:IT:EC 114494 LLB

CATEGORY: CARRIER

Chief, Residual Liquidation and Protest Branch U.S. Customs Service
6 World Trade Center
New York, New York 10048-0945

RE: Vessel Repair Entry No. 514-3005695-5; MV NEWARK BAY; V-522; Casualty; Seaworthiness; Collision; 19
U.S.C. ? 1466(d)(1)

Dear Sir:

This is in response to your memorandum dated November 18, 1998, forwarding an Application for Relief from duties assessed pursuant to the vessel repair statute, 19 U.S.C. 1466. Our findings are set forth below.

FACTS:

The NEWARK BAY is a U.S.-flag vessel operated by Sea-Land Service, Inc. The vessel underwent foreign shipyard work in January of 1998. Subsequent to the completion of the work the vessel arrived in the United States at the port of Elizabeth, New Jersey, on January 29, 1998. A vessel repair entry was timely filed.

An application for relief dated April 28, 1998, was received by your office claiming remission due to a casualty. The claim is made that while attempting to berth with the assistance of tow vessels at the port of Felixstowe, England, on January 4, 1998, the vessel was forced into another berthed vessel by sustained winds of 50 knots, gusting to 60 knots. Damage was sustained to the port bow of the vessel which required immediate attention. The vessel underwent temporary repairs at Felixstowe and was surveyed by the American Bureau of Shipping. In addition, a Report of Marine Accident, Injury, or Death (Coast Guard Form 2692) was filed with that agency. Thereafter, the vessel was taken to shipyard facilities in Rotterdam, Holland, in order to receive permanent repairs.
ISSUE:

Whether evidence is presented sufficient to prove that foreign costs for which the applicant seeks relief were necessitated by a casualty occurrence thus warranting remission pursuant to 19 U.S.C. ? 1466(d)(1).

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 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. (Customs ruling letter 106159, dated September 8, 1983; see also C.S.D. 79-32 wherein Customs held that a breakdown or failure of machinery may not be regarded as a casualty within the meaning of ? 1466(d)(1) in that absence of evidence that is was caused by some extrinsic force)

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 the case under consideration, the evidence supports the claim that the subject vessel suffered a marine casualty.

The United States Coast Guard renders determinations as set forth in ?? 2.01-15 and 31.10-25, USCG Regulations (46 CFR ?? 2.10-15, 31.10-25), as to whether a vessel which has suffered a casualty may proceed from one port to another prior to full repairs having been effected. The former regulation states that a vessel may not proceed from one port to another for repairs unless prior authorization is obtained from the USCG Officer-In-Charge, Marine Inspection (OCMI) either through the issuance of a USCG "Permit to Proceed to Another Port for Repairs" (CG-948) or a CG-835 which would specify the restrictions on, and duration of, any voyage undertaken prior to obtaining permanent repairs. The latter regulation states that with respect to tank vessels, "No extensive repairs to the hull or machinery which affect the safety of a vessel shall be made without the knowledge of the Officer-In-Charge, Marine Inspection."

Notwithstanding the clear wording of the Coast Guard Regulations, specifically 46 CFR locations, it is the practice of that agency not to issue a formal permit-to-proceed to a vessel transiting foreign waters because in such cases its certificate of inspection would have to be removed resulting in problems in transiting foreign waters (Customs ruling 112060). Furthermore, the Coast Guard acknowledges that vessel operators often make casualty reports for U.S.-flag vessels damaged overseas verbally to the proper Marine Inspection Office, followed by the required written report. Since the Coast Guard cannot always send a marine inspector to a damaged vessel overseas they oftentimes consider the classification society report and the report of the vessel's master to determine the required temporary repairs and voyage restrictions. Id.

Customs has previously addressed the sufficiency of evidence in casualty claims such as this where a vessel that has been damaged foreign proceeds in a state of disrepair or partial repair between foreign locations (e.g., Naples and Haifa) prior to its being fully repaired in a foreign port and subsequently sailing to its U.S. port of destination (Customs Rulings 112060, dated May 21, 1992; 112061, dated June 10, 1992; 112063, dated June 8, 1992; 112229, dated June 11, 1992, and 113501, dated October 24, 1995). It is Customs position, as stated in the aforementioned rulings, that notwithstanding any practice of verbally reporting foreign casualties to the Coast Guard and that agency's subsequent verbal instructions, remission pursuant to 19 U.S.C. 1466(d)(1) will not be granted in the absence of documentary evidence that the casualty occurrence was timely reported to the USCG and that agency, directly or through the medium of a marine surveyor, permitted the vessel to proceed between foreign locations in a damaged condition. The mere submission of a CG-2692 (Report of Marine Accident, Injury or Death), without accompanying documentation from the appropriate USCG OCMI authorizing the vessel to proceed in a damaged condition and specifying what, if any, restrictions apply, will not suffice for granting remission pursuant to 19 U.S.C. ?

In regard to the casualty claim under consideration, we note that The American Bureau of Shipping did survey the vessel in England and, further, did issue a separate "Certificate of Fitness to Proceed", thus satisfying the requirements of the United States Coast Guard in such circumstances. We further find that the invoiced expenses dedicated to addressing the casualty-related operations are segregated and separately presented. Accordingly, we find that the claim for remission should be allowed and the Application for Relief granted.

HOLDING:

Evidence is presented which is sufficient to prove that the foreign costs for which the applicant seeks relief were necessitated by a casualty occurrence, thus warranting remission pursuant to 19 U.S.C. ? 1466(d)(1).

Sincerely,

Jerry Laderberg
Chief
Entry Procedures and Carriers

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