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HQ 115188

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February 20, 2001

VES-13-18-RR:IT:EC 115188 GEV

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. C13-0030271-3; Casualty; ASPHALT COMMANDER; V-01; 19 U.S.C. § 1466(d)(1)

Dear Sir:

This is in response to your memorandum dated October 20, 2000, forwarding a petition for review of Headquarters ruling 115015, dated July 10, 2000. Our findings are set forth below.

FACTS:

The ASPHALT COMMANDER is a U.S.-flag vessel owned by Asphalt International of Boca Raton, Florida. The vessel underwent foreign shipyard work during December 1999 and January 2000. Subsequent to the completion of the work the vessel arrived in the United States at the port of Baltimore, Maryland, on February 4, 2000. A vessel repair entry was timely filed. An application for relief dated May 4, 2000, with supporting documentation was received by your office claiming remission due to a casualty.

The matter giving rise to the casualty claim was the discovery that the vessel was leaking lubrication oil, and that the oil contained particles of metal. Subsequent inspection by divers revealed the presence of nylon and polypropylene line inside the rope guard in the area of the aft seal. The oil leak from the stern tube system was continuous and the missing oil had been displaced by water. Divers removed the accumulated line and the vessel sailed from Amuay Bay, Venezuela, to Willemstad, Curacao, Netherlands Antilles, where it was thereafter placed in a drydock. Repairs to the affected areas as well as other shipyard operations took place while the vessel was so drydocked.

Four categories of invoice expenses were declared and entered, with relief claimed on three of them. It was claimed that the expenses detailed in those three invoice items were related to addressing a casualty incurred by the vessel and that the three should not therefore, be subject to duty. The three cost items claimed relate to:

General services and drydocking expenses; Repair expenses related to the stern tube damage; A tailshaft damage survey report.

Pursuant to Customs ruling letter 115188, dated July 20, 2000, communicated to the vessel agent the next day, the application for relief was denied in its entirety. The basis for denial was Customs determination that the applicant failed to submit documentation to satisfy the requirement that Coast Guard authorization to proceed between foreign locations in a damaged condition be obtained.

A petition for review of the application denial was received by your office on September 12, 2000, pursuant to an authorized extension of time. The petitioner reiterates its casualty claim and has submitted additional supporting documentation.

ISSUE:

Whether evidence is presented sufficient to prove that the foreign costs for which the petitioner seeks relief were necessitated by a casualty occurrence thus warranting remission pursuant to 19 U.S.C.

LAW AND ANALYSIS:

Title 19, United States Code, § 1466(a), 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..."

Section 1466(d)(1) provides that the Secretary of the Treasury is authorized to remit or refund such duties imposed under § 1466(a) 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:

The establishment of a casualty occurrence.

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).

Experience demonstrates that damage to underwater parts of vessels is usually not easily detectable or susceptible of definite proof respecting the date and place of occurrence. Therefore, relief under § 1466(d)(1) is granted in the absence of proof that the vessel concerned was grounded, struck bottom or her propeller contacted some floating object capable of causing damage, prior to commencement of her voyage. (see C.I.E. 1202/59) No such pre-voyage damage of this sort is suspected in this case.

The United States Coast Guard (USCG) is the controlling agency that determines questions of a vessel’s fitness to proceed from a foreign port once damage has been noted. The procedure by which the USCG renders such a determination is set forth in §§ 2.01-15 and 31.10-25, USCG Regulations (46 CFR §§ 2.01-15, 31.10-25). The former 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 states that with respect to tank vessels, “No extensive repairs shall be made without the knowledge of the Officer-In-Charge, Marine Inspection.”

Notwithstanding the clear wording of the above USCG Regulations, specifically 46 CFR § 2.10-15 which does not distinguish between foreign or domestic locations, it is the practice of the USCG not to issue a formal permit-to-proceed to a vessel transiting foreign waters because its certificate of inspection would have to be removed resulting in problems in transiting foreign waters. (See Customs ruling 112060) Furthermore, the USCG acknowledges that vessel operators often make casualty reports for U.S.-flag vessels damaged overseas verbally to the proper USCG Marine Inspection Office, followed by the required written report. Since the USCG 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 while overseas proceeds in a state of disrepair between foreign locations prior to its being repaired in a foreign port and subsequently sails to its U.S. port of destination. (See 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 cited rulings, that notwithstanding any practice of verbally reporting foreign casualties to the USCG 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 an authorized 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).

Upon reviewing the record in its entirety, we have determined that documentation probative of the requisite USCG authorization has been submitted. (See Exhibit B, Attachments 1 and 2). This evidence establishes that the American Bureau of Shipping (ABS), a marine
surveyor authorized to act on behalf of the USCG pursuant to the Alternative Compliance Program (ACP), permitted the subject vessel to proceed from Amuay Bay to Curacao for repairs. The petitioner’s request for remission pursuant to 19 U.S.C. § 1466(d)(1) should therefore be granted.

HOLDING:

Evidence is presented sufficient to prove that the foreign costs for which the petitioner seeks relief were necessitated by a casualty occurrence thus warranting remission pursuant to 19 U.S.C.

The petition is therefore granted in its entirety.

Sincerely,

Larry L. Burton

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