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HQ 115485

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October 31, 2001

VES-18-RR:IT:EC 115485 LLO

CATEGORY: CARRIER

Chief, Vessel Repair Unit
New Orleans, Louisiana 70130

RE: Vessel Repair; Vessel Petition; Duty Remission; Casualty; MV Newark Bay V-645; Entry No. C16-0013421-2; 19 U.S.C. §1466; 19 C.F.R.§ 4.14

Dear Sir:

We received your memorandum dated August 31, 2001 requesting we review a petition for review relating to the M/V NEWARK BAY V-645, regarding the dutiability of an asserted casualty occurrence, which took place in foreign waters, and required repairs to take place in a foreign port. Our ruling on this matter is set forth below.

FACTS:

The NEWARK BAY V-645, a U.S. flag vessel operated by United States Ship Management, arrived at the port of Charleston, South Carolina on March 3, 2000.

An application for relief was timely filed on May 3, 2000. According to the vessel repair entry and other documents in the file, the vessel underwent work in the United Kingdom.

The operator agents, United States Ship Management, USSM, submitted an application for relief identifying certain items as non-dutiable. This application for relief is requesting relief regarding the dutiability of an asserted casualty claim due to unexpected damage to the turbocharger and bearing chamber.

ISSUE:

Whether the evidence presented regarding foreign repairs to the subject vessel is sufficient to warrant remission pursuant to 19 U.S.C. §1466(d)(1).

LAW AND ANALYSIS:

Title 19, United States Code, §1466, provides in part for payment of an ad valorem duty of 50 percent of the cost of foreign repairs 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 regulations governing the submission of evidence and the determination of dutiability of foreign shipyard operations under 19 U.S.C. §1466 are found in 19 C.F.R. §4.14. Subsection (d)(1) of 19 C.F.R. §4.14 provides that while an application for relief need not be submitted in any particular format, it must make a claim for relief under either paragraph (circumstances allowing remission of duty otherwise due), or both.

Title 19 U.S.C. §1466 (d)(1) provides that the Secretary of the Treasury is authorized to remit or refund duties if the owner or master of the vessel was compelled by stress of weather or other casualty to pull into a foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. It is Customs position that “port of destination,” means a port in the United States. (See 19 C.F.R. §4.14(c)(3)(i))

The statute sets forth the following three-part test that must be met in order to qualify for remission under the subsection:

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

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. 23, 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 the repair to have been necessitated by normal wear and tear (23 Cust. B. & Dec. No. 43, 4,5)(1989)).

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)). Repair costs beyond that minimal amount are not subject to remission.

In this case, a determination as to whether or not a casualty occurred, according to Customs definition must be made. As stated earlier, three factors, fire, collision and explosion are persuasive circumstances that in some cases, make a strong argument that a casualty occurred. Outside of these three types of occurrences, if it is determined that the incident came with unexpected force or violence of a magnitude equivalent to fire, collision or explosion, then an argument can be made that a casualty occurred.

In this instance, there is no indication from the petitioner that the vessel encountered any of the three factors that typically constitute a casualty occurrence, which are fire, collision or explosion. There is no indication that the damages that necessitated the repairs that took place at the foreign port were after effects of an unexpected accident. A written description of the circumstances involved submitted by the petitioner only indicates that:

“The turbo charger was vibrating violently and was secured to prevent destructive failure. The inspection revealed that the bearing had failed due to significant imbalance of the high speed rotor due to fouling from foreign matter.”

Since the description does not demonstrate that a fire, collision, or explosion or similar occurrence of equal or greater unexpected force or violence caused the damages that necessitated repairs abroad, a casualty occurrence can not be said to have occurred. We must consider the problem to have been the result of either wear and tear or improper maintenance.

The petitioner is also requesting consideration under 19 U.S.C. §1466(h)(3), for foreign purchased parts necessarily installed, with duty assessed at the lower tariff schedule rates. This was not an element in the application for relief. A Customs Form 7501-A was submitted with the petition along with a vendor invoice that was not submitted with the application and/or the full and complete entry. This request is untimely. A vessel may not petition that which is not included in the application for relief.

HOLDING:

The evidence presented regarding foreign repairs to the subject vessel is insufficient to warrant remission pursuant to 19 U.S.C. §1466(d)(1). The petitioner’s claim is therefore denied.

Sincerely,

Larry L. Burton
Chief

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