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HQ 115414




July 25, 2001

VES-13-18-RR:IT:EC 115414 GEV

CATEGORY: CARRIER

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

RE: Vessel Repair Entry No. C27-0190123-6; Cleaning; Maintenance; PRESIDENT POLK; V-130; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated June 21, 2001, which forwards for our consideration a petition for review of your office’s decision on an application for relief from duty assessed pursuant to 19 U.S.C. § 1466. Our finding is set forth below.

FACTS:

The PRESIDENT POLK is a U.S.-flag vessel that incurred foreign shipyard costs in February of 2001. Subsequent to the completion of the work the vessel arrived in the United States at Los Angeles, California, on February 24, 2001. A vessel repair entry was timely filed as was an application for relief with supporting documentation.

By letter dated May 9, 2001, your office rendered its decision on the application for relief and informed the applicant of the right to file a petition for review of this decision.

A petition for review was timely filed and forwarded to this office for review. At issue is Item 4 of the entry (Hong-Tah Marine Service & Engineering Co., Ltd. Invoice no. EM82491612) covering cleaning of the no. 5 aft. port and starboard side fuel oil wing tanks which your office deemed to be maintenance and therefore dutiable. The petitioner contends that the cleaning covered by Item 4 is general in nature and unrelated to any repair or maintenance activity. In support
of this claim the petitioner has submitted a letter from Hong-Tah Marine Service & Engineering Co., Ltd. (Enclosure A).

ISSUE:

Whether Item 4 of the subject vessel repair entry is dutiable under 19 U.S.C. § 1466.

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.

The U.S. Customs Service has consistently held that the cost of cleaning is not dutiable unless it is performed as part of, in preparation for, or in conjunction with dutiable repairs or is an integral part of the overall maintenance of the vessel. (See Headquarters ruling letter 110841, dated May 29, 1990 (and cases cited therein); see also Texaco Marine Services, Inc. v. United States, 44 F. 3d 1539 (1994)). With respect to maintenance operations, Customs considers work performed to restore a part to good condition following deterioration or decay to be maintenance operations within the meaning of the term “repair” as used in the vessel repair statute. (See Headquarters ruling letter 106543, dated February 27, 1984; C.I.E. 142/61, dated February 10, 1961).

The dutiability of maintenance operations has undergone considerable judicial scrutiny. The United States Court of Customs and Patent Appeals, in ruling that the term “repair” as used in the vessel repair statute includes “maintenance painting,” gave seminal recognition to the dutiability of maintenance operations. E.E. Kelly & Co. v. United States, 55 Treas. Dec. 596, T.D. 43322 (CCPA 1929). The process of chipping, scaling, cleaning, and wire brushing to remove rust and corrosion that results in the restoration of a deteriorated item in preparation for painting has also been held to be dutiable maintenance. States Steamship Co. v. United States, 60 Treas. Dec. 30, T.D. 45001 (Cust. Ct. 1931).

The United States Customs Court examined whether the scraping and cleaning of Rose Boxes constituted dutiable repairs. Northern Steamship Company v. United States, 54 Cust. Ct. 92, C.D. 1735 (1965). Rose Boxes are parts fitted at the ends of the bilge suction to prevent the suction pipes from being obstructed by debris. In arriving at its decision, the court focused on whether the cleaning operation was simply the removal of dirt and foreign matter from the boxes or whether it resulted in the restoration of the part to good condition after deterioration or decay. Id. at 98. The court determined that the cleaning did not result in the restoration of the boxes to good condition following deterioration and consequently held that the work was not subject to vessel repair duties. Id. at 99. Further in this regard, the Customs Service has ruled that the regular cleaning of filters in most instances does not result in liability for duty. (See Headquarters ruling letter 107323, dated May 21, 1985)

With respect to the fuel tank cleaning covered by Item 4, our review of the record indicates that the cleaning referenced therein is unrelated to any dutiable repairs. Furthermore, it is not done for the purpose of restoring the tanks to good condition following deterioration. Item 4 is therefore not dutiable maintenance but rather is nondutiable cleaning. Consequently, Item 4 is nondutiable pursuant to the holding of the court in Texaco, Id.

HOLDING:

Item 4 of the subject vessel repair entry is not dutiable under 19 U.S.C. § 1466.

Sincerely,

Larry L. Burton

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