United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2000 HQ Rulings > HQ 114896 - HQ 115069 > HQ 115010

Previous Ruling Next Ruling
HQ 115010





April 11, 2000

VES-13-18-RR:IT:EC 115010 GEV

CATEGORY: CARRIER

Sharon Steele Doyle, Esq.
Givens and Associates, PLLC
950 Echo Lane, Suite 360
Houston, Texas 77024-2788

RE: Proposed Vessel Modification; 19 U.S.C. § 1466

Dear Ms. Doyle:

This is in response to your letter dated April 6, 2000, on behalf of your client, Sheridan Transportation Company, the operators of the subject vessels, the ITB NEW YORK and the ITB JACKSONVILLE. Pursuant to 19 CFR § 177.2(d), you request that we give immediate consideration as to whether the work proposed by your client to be done in a foreign shipyard on the subject vessels will constitute nondutiable modifications under the vessel repair statute. Our position in this matter is set forth below.

FACTS:

The vessels in question are both U.S.-flag integrated tug/barges. The vessels are currently in service as conventional products carriers, which are capable of carrying cargoes such as petroleum products ranging to Grade A Reid Pressure up to 25 PSIA and lower flammable or combustible cargoes. The barges are segregated into thirteen cargo tanks that can carry a capacity of 360,000 barrels of petroleum products. The proposed work is not resultant from a state of disrepair nor is it work in the nature of maintenance or preventive maintenance. Rather, it would convert the vessels into carriers capable of carrying a different class of cargoes such as alcohol, ethanol, or methanol and thus allow a new field of operations for the vessels.

As part of the changeover, so the vessels are capable of carrying a different class of cargoes, the conversion will require the complete removal of the International Intergard TAA coating system. To accomplish this, all the vessels’ cargo tanks must be completely sandblasted, cleaned out and then thoroughly covered with a special epoxy lining system (i.e., Ameron Devchem 253 Coating System or its equivalent), which is resistant to cargoes such as alcohol, ethanol, or methanol. This installation of a new lining system is necessary for the vessels to begin a new area of operations in the carriage of cargoes such as alcohol, ethanol, or methanol, and absolutely required to protect the steel structure of the vessel tanks from attack by the alcohol, ethanol, or methanol.

In support of your claim, you submit the following: a statement from the Senior Ship Superintendent, Sheridan Transportation Company (Exhibit 1); a letter from an official of Ameron International (Exhibit 2); International Paint Marine Coatings Cargo Resistance Guide (Exhibit 3); Ameron International Tank Lining Chemical Resistance Table (Exhibit 4); and Headquarters ruling letters 109936 (Exhibit 5), 111170 (Exhibit 6), 113366 (Exhibit 7), and 114109 (Exhibit 8).

ISSUE:

Whether the proposed work constitutes modifications to the subject vessels and is therefore nondutiable under 19 U.S.C. § 1466.

LAW AND ANALYSIS:

Title 19, United States Code, § 1466 (19 U.S.C. § 1466), provides in pertinent part for the payment of an ad valorem duty of 50 percent of the 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 upon a vessel documented under the laws of the United States”

In its application of the vessel repair statute, Customs has held that modifications, alterations, or additions to the hull and fittings of a vessel are not subject to vessel repair duties. The identification of work constituting modifications vis-à-vis work constituting repairs has evolved from judicial and administrative precedent. (See Otte v. United States, 7 Ct. Cust. Appls. 166, T.D. 36489 (1916); United States v. Admiral Oriental Line et al., 18 C.C.P.A. 137, T.D. 44359 (1930); and Customs Bulletin and Decisions, Vol. 31, Number 40, published October 1, 1997.) The factors discussed within the
aforementioned authority are not by themselves necessarily determinative, nor are they the only factors which may be relevant in a given case. However, in a given case, these factors may be illustrative, illuminating, or relevant with respect to the issue of whether certain work may be a modification of a vessel which is nondutiable under 19 U.S.C. § 1466.

Upon reviewing the proposed work as described in your letter in conjunction with the supporting documentation you submitted (see Exhibits 1, 2, 3 and 4), in light of the above-referenced authority, it is readily apparent that the work constitutes nondutiable modifications to the subject vessels. Furthermore, as you cited in your letter, Customs has previously ruled similar work to be a nondutiable modification (see Exhibits 5, 6 and 7).

HOLDING:

The proposed work constitutes modifications to the subject vessels and is therefore nondutiable under 19 U.S.C. § 1466.

It is noted, however, that this ruling is merely advisory in nature and does not eliminate the requirement to declare work done abroad at the subject vessel’s first United States port of arrival, nor does it eliminate the requirement of filing the entry showing this work (see §§ 4.14(b)(1)(2), Customs Regulations (19 CFR §§ 4.14(b)(1)(2)). Furthermore, any final ruling on this matter is contingent on Customs review of the evidence submitted pursuant to § 4.14(d)(1), Customs Regulations (19 CFR § 4.14(d)(1)).

Sincerely,

Acting Chief

Previous Ruling Next Ruling