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HQ 116198





May 14, 2004

VES-13-18-RR:IT:EC 116198 IDL

CATEGORY: CARRIER

Chief, Vessel Repair Unit
U.S. Customs and Border Protection
423 Canal Street
New Orleans, LA 70130

RE: Protest No. 2002-04-100249; Vessel Repair Entry No. C20-0063242-5; M/V SEALIFT ADVANTAGE; V-32; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated March 25, 2004, forwarding for our review the above-referenced protest. Our ruling on this matter is set forth below.

FACTS:

The M/V SEALIFT ADVANTAGE (“SEALIFT”) is a U.S.-flag vessel operated by Sealift, Inc., of Oyster Bay, NY. During the voyage in question, this vessel incurred foreign repair expenditures. On August 15, 2003, a CF-226 Record of Vessel/Aircraft Foreign Repair or Equipment Purchase, Entry No. C20-0063242-5, was filed with the Port of New Orleans, and duties were ascertained at $4,866.56.

On October 28, 2003, an application for relief of duties was filed with the port. On February 13, 2004, the port denied the application due to insufficient evidence to support the claim for relief. A cash deposit for estimated duties in the amount of $4,866.56 was paid.

On February 27, 2004, a protest was filed against the port’s denial of the application. According to the protestant, minimal emergency repairs, deemed necessary for the seaworthiness and safety of the vessel, were made on the electric starting air compressor engine of the SEALIFT; no Coast Guard report of Marine Casualty or permission to proceed was filed or required under Coast Guard regulations, because it was not critical to the safety of the ship.

The protestant included a Vessel Schedule, a Maintenance & Repair Report, and certified statements from the Master and Chief Engineer of the vessel. The schedule indicates that the vessel departed the United States on the voyage in question on June 9, 2003. The report indicates that bearings within the #1 Start Air Compressor Motor were replaced by a crew member on June 15, 2003. The affiants certify that the repairs were necessary to ensure the safety and seaworthiness of the vessel in reaching its United States port of destination.

ISSUE:

Whether the vessel repair costs incurred by the protestant are dutiable under 19 U.S.C. § 1466?

LAW AND ANALYSIS:

Title 19, United States Code, § 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...".

Section 1466(d)(1) authorizes a remission of such duties if the owner or master of the vessel was compelled by stress of weather or other casualty to put into such foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. The statute sets forth the following three-part test that must be met in order to qualify for remission under the subsection:

1. The establishment of a casualty occurrence; 2. The establishment of unsafe and unseaworthy conditions; and The inability to reach the port of destination without obtaining foreign repairs.

In addition, if the above requirements are satisfied by evidence, the remission is restricted to the cost of the minimal repairs necessary to "...secure the safety and seaworthiness of the vessel to enable her to reach her port of destination." (19 U.S.C. § 1466(d)(1)). Duties on repair costs beyond that minimal amount are not subject to remission.

The term "casualty" as it is used in the statute, has been interpreted as something which, like stress of weather, comes with unexpected force or violence, such as fire, spontaneous explosion of such dimensions as to be immediately obvious to ship's personnel, or collision (Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 28-29, C.D. 362 (1940)). In this sense, a "casualty" arises from an identifiable event of some sort. In the absence of evidence of such casualty event, we must consider a repair to have been necessitated by normal wear and tear. HQ 106159 (September 8, 1983).

Under 19 CFR 4.14(h)(2)(i), “’casualty’does include the failure of a part to function if it is proven that the specific part was repaired, serviced, or replaced in the United States immediately before the start of the voyage in question, and then failed within six months of that date”. (Emphasis added).

In the case under consideration, the protestant has neither alleged that the engine failure was caused by an identifiable extrinsic force, nor provided conclusive evidence to that effect. The protestant simply states that the cost of the repair was not dutiable, since “casualty repair was performed”. However, in the absence of a showing that it was caused by some outside force, a breakdown or failure of machinery may not be regarded as a casualty under section 1466(d)(1). HQ 226534 (February 12, 1996). Further, in contravention of the provisions of 19 CFR 4.14(h)(2)(i), the evidence suggests that the repair of the motor on June 15, 2003, six days after the vessel set sail from the United States, occurred subsequent to the start of the voyage in question, and outside the United States.

In any event, the protestant has also failed to establish that unsafe conditions existed, thereby preventing the vessel from reaching its port of destination without obtaining the foreign repairs. The protestant appears to offer contradictory statements concerning the safety of the vessel, claiming that “the repair of the starting engine [was] the minimum repair necessary for thesafety of the vessel”, while adding that “No Coast Guard report of Marine Casualtywas filedbecause it was not critical to the safety of the ship”.

Therefore, the vessel repair costs incurred by the protestant are dutiable under 19 U.S.C. § 1466.

HOLDING:

Accordingly, the port should DENY the protest. In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Glen E. Vereb
Chief,

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