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HQ 114892

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December 15, 1999
VES-13-18-RR:IT:EC 114892 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; PRESIDENT KENNEDY, V-113; Vessel Repair Entry No. C27- 0171041-3; Petition

Dear Madam:

This ruling is in response to your memorandum of November 22, 1999, which forwarded the petition submitted by American Ship Management, LLC (“petitioner”) with respect to the above-referenced vessel repair entry.

FACTS:

The PRESIDENT KENNEDY (the “vessel”), a U.S.-flag vessel of which the petitioner is the vessel operating agent, arrived at the port of Seattle on June 26, 1999. The subject vessel repair entry was subsequently filed. The vessel underwent certain foreign shipyard work in Asia.

By letter of September 26, 1999, your office administered the application for relief with respect to the subject entry.

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, and equipment purchased in a foreign country for, 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.

With respect to items two (lead acid batteries) and seven (machinery survey) on the CF 226, the petitioner claims that relief is appropriate based upon 19 U.S.C. 1466(d)(1).

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.

In the matter at issue, the U.S. Coast Guard report (CG 2692) provides:

Vessel main electrical power generators shutdown on June 8th at 1053. Generator shutdown was due to loss of 24 volt general use battery power and failure of battery charging system. Loss of battery power secured the generator control system. Ship’s main engine shut down with failure of main generators.

In Ruling 114288 dated March 20, 1998, we held that a casualty did not occur where the main engine “tripped” or failed. The mere occurrence of engine failure, or mechanical failure, by itself, is not a casualty.

We find that the matter at issue here is similar to the facts in Ruling 114288 in that engine failure is not a casualty. Accordingly, relief under 19 U.S.C. 1466(d)(1) is denied.

The petitioner also claims that item #5 on the CF 226, cargo hold cleaning, is not dutiable because it was performed by members of the regular crew of the vessel. However, the petitioner has provided no documentation in support of this claim. The service purchase order provides, in pertinent part: “Cargo Hold ... bilge well requires cleaning to allow repairs to broken bilge level sensor support pipe.” The same document indicates that the contractor will supply the cleaning personnel, supervisor, and cleaning materials. Accordingly, we find that this item is dutiable as cleaning incident to repairs.

HOLDING:

As detailed above, the petition is denied.

Sincerely,

Jerry Laderberg
Chief,

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