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HQ 115872





February 10, 2003

VES-13-18:RR:IT:EC 115872 LLO

CATEGORY: CARRIER

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

RE: Vessel Repair Protest; ENERGY 5501; Vessel Repair Entry No. C49-0042804-5; Casualty; Wear and Tear; 19 U.S.C. §1466; 19 C.F.R. §4.14

Dear Sir:

We received your memo dated November 6, 2002 requesting that we review a protest for relief from duties. Our ruling on the matter follows.

FACTS:

During the discharge of liquid petroleum products on May 1, 2000 from the tank barge ENERGY 5501 at the Hess Cul-de Sac at St. Lucia, Virgin Islands, a “sheen” and droplets of oil believed to be caused by escaping No. 2 oil was observed along the starboard side of the barge. A diver’s inspection revealed a small leak in an existing longitudinal weld in way of the No. 4 starboard cargo tank. Allegedly there were no adequate facilities in St. Lucia and the only repair facility capable of drydocking the barge in Puerto Rico had ceased operations in 1999. The vessel was drydocked in Curacao, the closest drydock capable of handling the barge. Five stress fractures on the bottom plate of the No. 4 starboard compartment were found. It is believed that the stress failure in the welded seams was caused by the improper discharge of the barge by the tankerman, whereby the No. 1 and No. 6 cargo tanks were completely discharged first, leaving cargo tanks Nos. 2,3,4, and 5 full. This caused the barge to ”sag” approximately four inches, causing the stress failure. After completion of repairs by welding 8.2 feet of the bottom plate, the barge was returned to service.

ISSUE:

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

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, 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.

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 put 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(h)(2)(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.

The alleged casualty occurrence claim made by the protestant is that the tankerman improperly discharged the barge. A diver’s inspection revealed a small leak in an existing longitudinal weld. The protestant claims that the vessel was then drydocked in Curacao because it was the closest drydock capable of handling the barge.

The protestant seeks remission of duties for the alleged emergency repairs to the ENERGY 5501. In support of the request for remission, the protestant has furnished the following documentation:

-a copy of invoice D20142 of N.V. Curacao Dok Maatschappij dated 5/8/00 -a copy of the independent survey by Bramer Caribbean dated 5/13/00 -a copy of ABS Class Survey report CR 20653 regarding the inspection of the barge on 5/5/00-5/8-00 -a copy of HV Marine Operators Incident Investigative Report for Marine Accident dated 5/5/00 and -a copy of the entry upon arrival of the tank barge upon her first return to the U.S. territorial waters in Puerto Rico

Additionally, some copies of photographs of the damage to the vessel were provided. As stated earlier, the protestant attributes the damage in question to the negligence of the tankerman. Pursuant to C.S.D. 82-42, it is Customs position that absent owner direction or inducement, negligence causing vessel damage is considered to be a casualty within the meaning of 19 U.S.C. 1466(d)(1). However, the evidence submitted in this case does not corroborate a claim of negligence.

Additionally, the U.S. Coast Guard (USCG) is the controlling agency that determines questions of a vessel’s fitness to proceed. The procedure by which the USCG renders such a determination is set forth in 2.01-15 and 31.10-25, USCG Regulations (46 C.F.R. 2.10-15, 31.10-25). The former states that a vessel may not proceed from one port to another for repairs unless prior authorization is obtained from the USCG Officer-In Charge-Marine Inspection (OCMI) either through the issuance of a USCG “Permit to Proceed to Another Port for Repairs” (CG-948) or a CG-835 which would specify the restrictions on, and duration of, any voyage undertaken prior to obtaining permanent repairs. The latter states that with respect to tank vessels, “No extensive repairs to the hull or machinery which affect the safety of a vessel shall be made without the knowledge of the Officer-in-Charge, Marine Inspection.” No evidence of the ENERGY 5501 obtaining permission to proceed has been submitted.

Customs has previously addressed the sufficiency of evidence in casualty claims such as this where a vessel that has been damaged abroad proceeds in a state of disrepair between foreign locations prior to being repaired in a foreign port and subsequently sails to its U.S. port of destination. (See Customs Rulings 112060, dated June 11, 1992, and 113501, dated October 24, 1995). It is Customs position, as stated in the aforementioned rulings, that remission pursuant to 19 U.S.C. §1466(d)(1) will not be granted in the absence of documentary evidence that the casualty occurrence was timely reported to the USCG, and that agency, directly or through the medium of a marine surveyor, permitted the vessel to proceed between foreign locations in a damaged condition.

The protest that has been submitted by the operator agents, does not contain sufficient documentary evidence that the USCG granted the vessel permission to proceed to a foreign port to receive repairs as a result of damages it incurred. None of the documentary evidence presented sufficiently demonstrates that the USCG provided the ENERGY 5501 with permission to proceed.

In view of the insufficiency of the evidence provided, the protest seeking remission of the duties paid for foreign repairs to the bottom plate of the vessel is denied in full.

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 protestant’s claim is therefore denied.

Sincerely,

Glen E. Vereb
Acting Chief

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