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HQ 115716

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September 9, 2002

VES-13-18-RR:IT:EC 115716 GEV

CATEGORY: CARRIER

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

RE: Vessel Repair Entry No. 906-0308531-8; OVERSEAS NEW YORK; V-0107; Modifications; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated June 17, 2002, which forwarded 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 OVERSEAS NEW YORK is a U.S.-flag vessel operated by Alaska Tanker Company, LLC. Subsequent to the completion of foreign shipyard work, the vessel arrived in Long Beach, California on January 11, 2002. A vessel repair entry was timely filed.

An application for relief with supporting documentation was timely filed. The applicant seeks relief for work covered by the following item nos. listed on the Keppel Shipyard (PTE) Ltd. invoice submitted for our review: 090 (Main Deck Bunker Line Modification), 115 (Cargo Manifold Drip Pan Steps Modification), 121 (Preventive Bracket Modifications, Sideshell Long’s At Frames), 122 (Preventive Bracket Modifications, Sideshell Long’s At Bulkheads), 123 (Preventive Modifications, Strut Inserts), 124 (Preventive Bracket Modifications, Upper And Lower CVK), 125 (Preventive Bracket Modifications, Swash Bulkhead), 126 (Preventive Bracket Modifications, Vertical Stiffener To Tanktop), 127 (Preventive Modifications, Web Frame

Inserts At Tanktop, Tank #6), and 129 (Preventive Modifications, Flatbars At Bulkhead-33 To Sideshell). All of these items are claimed to be non-dutiable modifications. It is these items for which you seek our advice.

ISSUE:

Whether the work in question for which the applicant seeks relief 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(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”

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.

With respect to the items for which our review is sought, we note that upon reviewing the record in its entirety it is readily apparent that each one constitutes a first time installation that is not replacing a current part not in good working order. Furthermore, the work covered by each item is permanently installed, would remain aboard the vessel during an extended lay-up, and provides an improvement or enhancement in the operation and efficiency of the vessel.

Accordingly, all of the above-referenced items constitute nondutiable modifications.

HOLDING:

The work in question for which the applicant seeks relief constitutes modifications to the subject vessel and is therefore nondutiable under 19 U.S.C. § 1466 as discussed in the Law and Analysis portion of this ruling.

Sincerely,

Acting Chief

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