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HQ 115700

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August 19, 2002

VES-13-18-RR:IT:EC 115700 GEV

CATEGORY: CARRIER

Chief, Vessel Repair Unit
U.S. Customs Service
423 Canal Street
New Orleans, Louisiana 70130

RE: Vessel Repair Entry No. C20-0060853-2; PRESIDENT JACKSON; Equipment; Modification; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated June 4, 2002, forwarding an application for relief from vessel repair duties assessed pursuant to 19 U.S.C. § 1466. Our ruling on this matter is set forth below.

FACTS:

The PRESIDENT JACKSON is a U.S.-flag vessel which incurred foreign shipyard costs. Subsequent to the completion of the work in question, the vessel arrived at Los Angeles, California, on January 5, 2002. A vessel repair entry was timely filed.

An application for relief with supporting documentation was timely filed. The applicant seeks relief for several costs, including those covering lamps and halogen bulbs (Invoice 3) alleged to be consumables, as well as the cost of work alleged to constitute a non-dutiable modification (Invoice 1). It is these claims for which you seek our advice.

ISSUES:

Whether lamps and light bulbs covered by Invoice 3 are dutiable under 19 U.S.C. § 1466.

Whether the work covered by Invoice 1 constitutes a modification to the subject vessel and is therefore nondutiable under 19 U.S.C. § 1466.

LAW AND ANALYSIS:

Title 19, United States Code, § 1466(a) (19 U.S.C. § 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”

With respect to the articles under consideration covered by Invoice 3, Customs has long-held lamps to be dutiable equipment under the above-cited statute. (Treasury Decisions (T.D.s) 32956, dated November 12, 1912; and 34150, dated February 5, 1914) Customs has held light bulbs to be dutiable equipment as well. (T.D. 33386, dated May 6, 1913) Our position regarding these items remains unchanged. They are dutiable equipment under 19 U.S.C. § 1466.

In regard to the applicant’s claim that the work covered by Invoice 1 constitutes a nondutiable modification, we note that 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.

The applicant describes the work covered by Invoice 1 as a modification to the refrigerated container mounting brackets/lashing bar holders that increases the vessel’s cargo capacity for refrigerated containers on deck. 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 repair, is typically held to be a nondutiable modification. The work, which is described on Invoice 1 as the relocation of lashing rod holders, is consistent with the applicant’s claim. Invoice 1 is therefore a nondutiable modification.

HOLDINGS:

The lamps and light bulbs covered by Invoice 3 are dutiable under 19 U.S.C. § 1466.

The work covered by Invoice 1 constitutes a modification to the subject vessel and is therefore nondutiable under 19 U.S.C. § 1466.

Sincerely,

Jeremy Baskin
Acting Chief

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