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HQ 115242




April 6, 2001

VES-13-18-RR:IT:EC 115242 GEV

CATEGORY: CARRIER

Chief, Liquidation Branch
U.S. Customs Service
Post Office Box 2450
San Francisco, CA 94126

RE: Vessel Repair Entry No. C30-0106985-6; APL SINGAPORE; V-38; Ineffective Repairs; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated November 22, 2000, forwarding for our review a petition for review of Customs ruling letter 115109, dated September 5, 2000. Our ruling on this matter is set forth below.

FACTS:

The APL SINGAPORE is a U.S.-flagged vessel which underwent certain foreign shipyard work at Jurong Shipyard Limited (JSL) in Singapore. Subsequent to the completion of the work the vessel arrived in the United States at the port of Seattle, Washington, on April 1, 2000. A vessel repair entry was timely filed.

An application for relief from duties assessed on the costs contained within the subject entry was timely filed. Pursuant to Customs ruling letter 115109, dated September 5, 2000, the application for relief was denied with respect to the subject costs.

A petition for review of the aforementioned decision, with supporting documentation, was timely filed. The petitioner reiterates the claim for relief set forth in the above-referenced application, i.e., that certain work pertaining to a seal repair/replacement constitutes an ineffective repair and is therefore nondutiable under the vessel repair statute. In addition, the petitioner disputes Customs classification of the seal

“part” under subheading 7326.90.8586, HTSUS, and maintains that the classification of this article by its broker under subheading 8484.90.0000, HTSUS, as reflected on the CF 7501A, is correct.

ISSUES:

1. Whether the costs for which the petitioner seeks relief are dutiable pursuant to 19 U.S.C. § 1466.

2. Whether the article in question is properly classified by Customs under subheading 7326.90.8586, HTSUS, or should be classified under subheading 8484.90.0000, HTSUS, as the petitioner alleges.

LAW AND ANALYSIS:

Title 19, United States Code, § 1466(a), provides in part for payment of an ad valorem duty of 50 percent of the foreign 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 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.

With respect to the petitioner’s first claim, Customs has long-held that repairs which are completely ineffective and of no value to the vessel are not repairs dutiable under the vessel repair statute. (Emphasis added; see T.D. 55193(24), and C.I.E.s 1128/60 and 1156/62)

The petitioner’s claim is based on work performed on a seal repair/replacement, when the vessel was previously drydocked on February 21-March 3, 1999, for underwater painting and ABS Special Survey No. 1. The record indicates that during the 1999 drydocking the subject vessel underwent stern seal repairs. The petitioner states that approximately one month after the vessel was drydocked, these repairs failed. Shortly after the February/March drydocking on April 12, 1999, a diver’s inspection revealed a stern seal leakage of 21 liters per hour. Underwater repairs proved futile, necessitating the re-docking of the vessel at JSL on March 14-17, 2000.

In support of the petitioner’s first claim, the following documentary evidence has been submitted: (Enclosure A) – a memorandum from the seal manufacturer to the petitioner, dated April 12, 1999; (Enclosure B) – a fax from the seal manufacturer to the petitioner,
dated April 27, 1999; and (Enclosure C) – a service report from the seal manufacturer to the petitioner, dated January 4, 2000.

At the outset we note that the petition contains numerous references to a warranty. Customs position with respect to warranty claims under the vessel repair statute is that they are only recognized if the work done thereunder is performed pursuant to a vessel’s original construction contract and the warranty period is only one year in duration. (see Sea-Land Service, Inc. v. United States, 683 F.Supp. 1404 (1988), discussed in Customs ruling letter 111677, dated July 25, 1991) Consequently, warranty claims are inapplicable in this case.

In regard to the documentary evidence relied upon by the petitioner (Enclosures A, B and C), we disagree that it is sufficient to support their claim for relief. Enclosure A merely acknowledges action taken on the part of the petitioner by stating, in part, “Thank you for your report concerning increased water leakage. The action you are taking to check with divers is obviously the first move and we await your findings.” Enclosure B also is reactionary in that it states, in part, “Regarding your latest update from the vessel, we have to assume now that some damage has occurred to the aft water seal yet to be identified. The following points may assist.” Enclosure B then goes on to list possible corrective action. Enclosure C contains the statement, “Remove this seal and install a lip seal such as MK II because if we don’t it is almost guaranteed that they will change to a Simplex seal.”

The petitioner alleges that collectively, these documents support their claim. Our review of them indicates that they are probative of nothing more than a recognition of a condition of the vessel needing redress. The fact that almost a year passed before the repairs in question were performed bolsters our determination that the repairs for which relief is sought were not “completely ineffective and of no value to the vessel,”

With respect to the petitioner’s second claim, i.e., that Customs classification of the seal “part” under subheading 7326.90.8586, HTSUS, is incorrect and that the classification of this article by its broker under subheading 8484.90.0000, HTSUS, as reflected on the CF 7501A is correct, the record contains no evidence to support this allegation. The petitioner’s mere assertion, without more, does not merit the granting of its request for relief. Consequently, in the
absence of evidence to the contrary, the petitioner’s claim as to the classification of the seal “part” is denied.

This entry should be liquidated and the petitioner should be informed of the right to file a protest of the liquidation under 19 U.S.C. § 1514 and 19 CFR Part 174.

HOLDINGS:

1. The costs for which the petitioner seeks relief are dutiable pursuant to 19 U.S.C. § 1466.

2. The article in question is properly classified by Customs under subheading 7326.90.8586, HTSUS, rather than under subheading 8484.90.0000, HTSUS, as the petitioner alleges.

Sincerely,

Larry L. Burton

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