HQ 115051 - Vessel Repair Entry No. C04-0033934-4; SEA-LAND ATLANTIC/Voy 551; Casualty; Seaworthiness; Collision; 19 U.S.C. § 1466(d)(1) - United States International Trade Commision Rulings

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HQ 115051

JUNE 9, 2000

VES-13-18 RR:IT:EC 115051 RSD

CATEGORY: CARRIER

United States Customs Service
Vessel Repair Liquidation Unit, Room 761
6 World Trade Center
New York, New York, 10048

RE: Vessel Repair Entry No. C04-0033934-4; SEA-LAND ATLANTIC/Voy 551; Casualty; Seaworthiness; Collision; 19 U.S.C. § 1466(d)(1)

Dear Sir or Madam:

This is in response to your memorandum dated May 19, 2000, forwarding a Petition for Review seeking relief from duties assessed pursuant to the vessel repair statute, 19 U.S.C. § 1466, with respect to the above-referenced vessel repair entry.

FACTS:

The SEA-LAND ATLANTIC is a U.S.-flag vessel operated by Sea-Land Services, Inc. The vessel underwent foreign shipyard work in December of 1999.Subsequent to the completion of the work the vessel arrived in the United States at the port of Boston, Massachusetts, on January 6, 2000, after completion of voyage 551. A vessel repair entry was timely filed.

Your office received an application for relief dated March 30, 2000, claiming remission due to a casualty. In a letter dated April 21, 2000, relief was denied in full. On May 11, 2000, your office received a petition for review, dated May 4, 2000, in which the vessel owner submitted additional documentation to support their claim for relief. The petitioner claims that during the early morning hours of December 26, 1999, prior to taking a Harwich pilot for entrance into the Felixstowe harbor, while trying to heave home her anchor, the MV SEA-LAND ATLANTIC was involved in a collision with another vessel, the GUDRUN MAERSK.

As a result of the collision, damage was found on the port side from hatch #11 up to forward end of #8 hatch. Two fire stations and the attaching steel were completely torn away. The main fire line to these boxes was also ripped away from the deck. Due to this damage, the main fire line on the port side could not be run until repairs were made. In addition, one ballast tank vent was completely separated from the deck. This left a 10-inch hole in the deck, which was considered to be a fire and safety hazard, which needed to be repaired. There was also a void space vent broken off in the same manner.

The container stanchions, outboard safety rails, grated safety lashing platforms and catwalk ladders leading up to crosswalks between aforementioned hatches were torn away from the deck, bent over and in some cases so crushed that they were laying against the hatch combings, which made passage up the port side impossible. This was considered a grave safety hazard and made the possibility of fighting a fire untenable. In addition, the outboard safety railing along the ship’s side was ripped, torn away, or bent over for a length of approximately 60 meters on the port side, which left nothing to keep personnel or material from falling overboard.

The services of the American Bureau of Shipping were engaged to survey the damage that resulted from collision. After the initial repairs to the vessel were completed, a “Certificate of Fitness to Proceed” was required. An inspection was made and permission was given to proceed toward Rotterdam in the Netherlands, so that qualified vendors could make the further necessary repairs on the vessel. On December 27, 1999, the ATLANTIC sailed to Rotterdam, where “Lonen Repair, BV” made the remaining necessary repairs specified in the surveys. This included the removal of all bent broken and torn container stanchions, safety railings, and other damaged deck appurtenances on the port side in the area of the collision. In addition, two fire stations, the main fire line to these stations, the ballast and void space vents and their deck opening safety railing stanchions on the outboard side of damaged area and three steel wires running through the safety railing stanchions were adapted and installed to complete the outboard seaworthiness and safety of the vessel.

The services of American Bureau of Shipping were again engaged to observe and approve all repairs that were undertaken to bring the vessel to a seaworthy and safe condition for her intended voyage to the port of destination in the United States.

All of the repairs were included on the Record of Vessel Foreign Repair or Equipment Purchase form No. 226. This form was submitted upon arrival at the first U.S. port, Boston, Massachusetts, on the January 6, 2000.

ISSUE:

Whether evidence is presented 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).

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 § 4.14(c)(3)(i))

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. 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 § 2.10-15 which does not distinguish between foreign or domestic 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. § 1466(d)(1).

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. In addition, the record contains a memo from Coast Guard officer Lt. Glenn Martineau to David Callahan, also of the U.S. Coast Guard, which indicates that the U.S. Coast Guard and the Bureau of Shipping required the S/L ATLANTIC to conduct repairs to make it seaworthy again. Lt. Martineau further explains that the repairs were completed while the vessel was in Rotterdam in the Netherlands on December 27-28, 1999. 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 is 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). Accordingly the petition is granted.

Sincerely,

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