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 > 2002 HQ Rulings > HQ 114758 - HQ 115629 > HQ 115581

Previous Ruling Next Ruling
HQ 115581




February 1, 2002

VES-13-18-RR:IT:EC 115581 GEV

CATEGORY: CARRIER

Charles Routh, Esq.
Garvey, Schubert & Barer
Eighteenth Floor
Second & Seneca Building
1191 Second Avenue
Seattle, Washington 98101-2939

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

Dear Mr. Routh:

This is in response to your letter dated January 25, 2002, requesting a ruling on behalf of your client, Totem Ocean Trailer Express, Inc. (“TOTE”), as to whether certain foreign shipyard work proposed to be done to their vessel, the GREAT LAND, will constitute nondutiable modifications under the vessel repair statute. Our position in this matter is set forth below.

FACTS:

The GREAT LAND is a U.S.-flagged vessel that was built at Sun Shipbuilding in Chester, PA in the middle 1970s as a Roll-On/Roll-Off (RO/RO) vessel to carry trailers predominantly in the coastwise trade. The proposed work is intended to convert it to a combination Lift-On/Lift-Off (LO/LO), RO/RO vessel which could carry both containers and trailers thus allowing greater options in the utilization of the vessel. It is anticipated that this vessel will continue to be used in the coastwise trade, with the conversion work enabling it to be used in the Alaskan trade.

The major part of the work in question is the removal of the Spar Deck and associated structures and the installation of the LO/LO container support structure on the main deck. The installation shall consist of structural, electrical and safety system additions and alterations on and under the Main Deck. The structural work is described in the drawings listed in the Contract Design Specifications and related drawings, enclosed with your letter as Exhibit A, and primarily consists of adding above deck longitudinals, transverse beams, removable handrails in way of ramp openings, transverse walkways between all rows of containers and reinforcement of certain below deck girders and pillars.

The size of the vessel, the power plant and auxiliary plants will not be changed. The switchboards and primary electrical distribution systems are only to be altered to the extent described in the attached specifications.

ISSUE:

Whether the proposed work constitutes modifications to the subject vessel 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 and in the documentation contained in Exhibit A enclosed therewith, it is readily apparent that the work constitutes nondutiable modifications to the subject vessel. The conversion or reconfiguration of a vessel to enable more efficient use or greater options in such use, in the absence of repairs or a state of disrepair, is typically held to be a nondutiable modification

HOLDING:

The proposed work constitutes modifications to the subject vessel 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 a declaration and entry showing this work (see §§ 4.14(d) and (e), Customs Regulations (19 CFR §§ 4.14(d) and (e)). Furthermore, any final ruling on this matter is contingent on Customs review of the evidence submitted pursuant to § 4.14(i)(1) and (2), Customs Regulations (19 CFR § 4.14(i)(1) and (2)).

Sincerely,

Larry L. Burton
Chief
Entry Procedures and Carriers Branch

Previous Ruling Next Ruling