HQ 115819 - Petition for Review; M/V AMERICAN MERLIN; V-01; Entry No. C-20-0012976-0; Casualty; 19 U.S.C. 1466; 19 C.F.R. 4.14; Wear and Tear - United States International Trade Commision Rulings

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HQ 115819

December 31, 2002

VES-13-18:RR:IT:EC 115819 LLO

CATEGORY: CARRIER

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

RE: Petition for Review; M/V AMERICAN MERLIN; V-01; Entry No. C-20-0012976-0; Casualty; 19 U.S.C. 1466; 19 C.F.R. 4.14; Wear and Tear

Dear Sir:

We received your memorandum dated September 30, 2002, requesting a review of a petition for the M/V AMERICAN MERLIN, voyage 01 regarding the dutiability of various expenses including those incurred in connection with an alleged casualty that occurred abroad. Our ruling on this matter is set forth below.

FACTS:

The M/V AMERICAN MERLIN, a U.S.-flag vessel operated by Osprey Ship Management, Inc. of Bethesda, Maryland arrived at the port of Lake Charles, Louisiana on December 24, 2000.

An application was timely filed and denied in full by the New Orleans Vessel Repair Unit on April 24, 2002. A petition for review was submitted on June 18, 2002, after a 30-day extension was approved. According to the vessel repair entry and other documents in the file, the vessel underwent work in Curacao and South Africa. This particular petition is requesting relief regarding the dutiabilty of expenses incurred in connection with an alleged casualty occurrence.

ISSUES:

1. Whether the repair expenses incurred abroad were necessitated by a casualty occurrence and therefore subject to remission pursuant to 19 U.S.C. §1466.

Whether those other costs for which the petitioner seeks relief are dutiable under 19 U.S.C. §1466.

LAW AND ANALYSIS:

Title 19, United States Code, section1466, provides in part for payment of an ad valorem duty of 50% of the foreign cost of equipment, 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 to vessels documented under the laws of the U.S. to engage in the foreign or coastwise trade or vessels intended to engage in such trade.

The vessel repair statute provides for the remission of duties in those instances where good and sufficient evidence is furnished to show that foreign repairs were compelled by “stress of weather or other casualty,” and were 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). The term “casualty” as it is used in the statute, has been interpreted as something that, like stress of weather, comes with unexpected force or violence, such as fire, explosion or collision. Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 23, 28-29, C.D. 362(1940). In the absence of evidence of such casualty causing event, we must consider the repair to have been necessitated by normal wear and tear. C.S.D. 89-95, 23 Cust. B. & Dec. No. 43, 4,5, (1989).

The alleged casualty occurrence claim made by the petitioner is that a weather induced collision with a pier at a foreign port created a gash in the hull necessitating foreign repairs in order to make the vessel seaworthy and to enable it to reach its ultimate destination. The petitioner, Osprey, has submitted further documentation in the petition for review regarding the alleged casualty covering the hull damage shown in item A, Dock Allision [sic]. Item A contains 10 exhibits which include the following: exhibit 1, which consists of copies of the log book documenting the accident; exhibit 2, which consists of a written description of the accident by the ship’s Master, and another witness, John McParland; exhibit 3 includes a statement of a witness to the accident; exhibit 4 was a USCG Report of Marine Accident, Injury or Death outlining the accident; exhibit 5 consists of a preliminary report by Maritime Consultancy, Ltd.; exhibit 6 consists of various photographs of the damage to the vessel taken from different angles; exhibit 7 consists of a copy of a fax from the Maritime Authority of Jamaica of a detention order for the vessel; exhibit 8 consists of a USCG permit to proceed to the port of Trinidad for repairs; exhibit 9 consists of a cargo ship safety construction certificate and a provisional international load line certificate issued by the ABS; and exhibit 10 consists of two invoices of the repairs performed and the costs associated with the repairs.

Additionally, Item B, entitled Emergency Repairs, consists of 3 exhibits. Exhibit 1 is a copy of the ship’s log for October 21, 22, 25, 26 and November 1, 2000. Exhibit 2 consists of a series of correspondence in the form of e-mails primarily authored by Mr. Phillip Saltzman regarding problems with the fuel pumps, plans for repairs and replacement of parts. Additionally, a handwritten letter and typed memo regarding the fuel pumps are contained in exhibit 2. The last exhibit in the Emergency Repairs section consists of an itemized bill outlining the hourly fee for work done, air fare, per diem and parking charges incurred by the repairmen, along with some service reports outlining the work needed, and the work performed. Of the last three exhibits submitted with the petition for review, the first exhibit consists of an invoice for services performed by ABS. The second exhibit is a Certificate of Inspection issued by the USCG dated 18 December 2000. Exhibit 3 contains several ABS summary reports and outstanding recommendations regarding the subject vessel.

Specifically, the duty paid for the repairs to the generator and the fuel pumps should be remitted since invoices indicate that both had undergone repairs in the U.S. the month prior to the voyage, showing that the failure of the parts was not wear and tear. In accordance with 19 C.F.R. §4.14(h)(2)(i), a “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 U.S. immediately before the start of the voyage in question and then failed within six months of that date. The invoices provided can be found in exhibit 10 for the generator under “Dock Allision” portion of the supplemental materials. Exhibit 3 behind the “Emergency Repairs” portion is a copy of the invoice dated one month before the voyage demonstrating repair work on the fuel pumps.

Since the drydocking and general services costs were segregated in the supplemental materials provided as an attachment to the CF 226, all such costs incurred during the period of mandatory inspection and/or modifications are non-dutiable expenses.

Since further documentation demonstrating the damage caused by the casualty occurrence to the hull, and substantiating the emergency repairs has been provided, the portion of the petition regarding both is granted. The Regulatory and Class Inspections in the last part of the petition involved non-dutiable charges for the mandatory inspections and dutiable charges for repairs. The general services associated with the ABS inspection items are non-dutiable and the balance of the invoice is dutiable.

HOLDINGS:

The repair expenses incurred abroad were necessitated by a casualty occurrence and are therefore subject to remission pursuant to 19 U.S.C. §1466(d)(1). The other costs for which the petitioner seeks relief are dutiable in part as described in the Law and Analysis portion of this ruling.

Sincerely,

Georgina Grier
Acting Chief

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