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HQ 116178

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December 14, 2004

VES-13-18:RR:IT:EC 116178 TLS

CATEGORY: CARRIER

Chief, Vessel Repair Unit
U.S. Customs and Border Protection
423 Canal Street, Room 303
New Orleans, Louisiana 70130

RE: Protest No. 5301-03-100664; Vessel Repair Entry No. C53-0035022-6; LYKES EXPLORER; V-18; 19 U.S.C. § 1466.

Dear Sir:

This is in response to your memorandum of March 15, 2004, forwarding a protest, submitted by Preston Gates Ellis & Rouvelas Meeds LLP on behalf of Marine Transport Corporation (“Marine Transport”), who in turn represent the owners of the M/V LYKES EXPLORER, of a decision of your office to deny relief from vessel repair duties assessed pursuant to 19 U.S.C. § 1466. Our determination is set forth in this ruling. In your memorandum, you specifically note which items are under dispute. Therefore, we are focusing our review only on those items.

FACTS:

The M/V LYKES EXPLORER arrived in Houston, Texas on October 24, 1999 from Bremerhaven, Germany and timely filed a vessel repair entry. While in Germany, the vessel underwent shipyard work. On January 19, 2000, Marine Transport filed an application for relief of the vessel repair duties assessed on the costs covered in the aforementioned entry. On April 14, 2003, your office issued a decision on the application, denying the application for relief in full, citing the untimely filing of the application and the insufficiency of the evidence submitted. The entry was liquidated on May 16, 2003. In response to the denial of the application for relief, the protestant timely filed the subject protest, which was received by your office on August 14, 2003.

ISSUE:

Whether the work in question for which the protestant seeks relief constitutes modifications to the subject vessel or expenses unrelated to vessel repairs and is therefore non-dutiable under 19 U.S.C. § 1466.

LAW AND ANALYSIS:

Title 19, United States Code, section 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, U.S. Customs and Border Protection (CBP) 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 non-dutiable under 19 U.S.C. § 1466.

The United States Court of Appeals for the Federal Circuit has ruled that expenses that would not have been incurred “but for” the dutiable repair work done are themselves dutiable, and, conversely, expenses that would not have been incurred but for the non-dutiable work done are themselves non-dutiable. Texaco Marine Services, Inc. v. United States, 44 F.3d 1539 (Fed. Cir. 1994). The same court recently ruled that CBP’s method of prorating duties based on the ratio of dutiable work versus non-dutiable work in regard to dual-purpose expenses is consistent with the “but for” test and section 1466(a). SL Service, Inc. v. United States, Slip Op. 03-1174 (Fed. Cir. 2004), panel reh’g and reh’g en banc denied, 2004 U.S. App. LEXIS 10322 (April 19, 2004).

Considering each cost for which relief is sought, we first look at Exhibit 1, beginning with Item 172, which is described in the invoice as “provide[d] (1) new 100 mm duplex, 30 micron strainer and install in place of simplex strainer. Make necessary piping modifications to accommodate new strainer. Test and prove satisfactory in operation.” It is further described by the protestant as “replace[d] simplex strainer with new 100 mm duplex, 30 micron strainer making necessary piping modifications to accommodate new strainer. Test and prove satisfactory in operation.” The protestant contends that this work constitutes a modification. Despite the protestant’s claim, neither the description provided in the protest nor the shipyard invoice make it clear whether the article replaced was in good working order at the time. Therefore, we cannot determine if this work constitutes an enhancement or repair. Thus, the work done in this item is dutiable.

With regard to Item 301, the protestant describes the work as “modif[ied] container cell guides in Holds 3A and 4A to allow the stowage of 40’ and two 20’ containers in lieu of 45’ containers; and convert Bays 34 and 38 in Hold 5 from 40’ containers to 20’ containers.” The invoice notes that the existing cell guides in the aft cell of Holds 3 and 4 “shall be retained” and the new cell guides “installed forward of the existing installation.” The work, as described here, does not replace any existing fixtures on the vessel that are not in good working order, but merely alters the already existing structure. The protestant describes in extensive detail the welding and positioning procedures used to install the new cell guides. We find this work to be an enhancement of the existing structure and as such is a non-dutiable modification.

In Item 302, the protestant describes the work as “remov[ing] the existing side port door and frame assembly, located between frames # 279 – 282, starboard on the 2nd Deck and install new side shell plating and stiffening in way thereof.” While the invoice describes the work done in great detail, nothing in the protestant’s submission or the shipyard invoice indicates whether or not the removed door and frame were in good working order when they were replaced. Therefore, we cannot determine if this work constitutes an enhancement or repair. Thus, the work done in this case is dutiable.

Under Item 303, the invoice describes the work as “modif[ied] ship by removing and disposing of antennas and modifying rails.” The protestant further describes the work as “remov[ing] and dispos[ing] of three 500 khz antennas; modify railing in area thereof.” We have held that the removal of an existing, operational system for the purpose of improving the efficient performance of the vessel is not dutiable provided that the work was not performed in conjunction with dutiable repairs. Customs Ruling HQ 112357 (October 8, 1992). The work described here is a modification because it alters the structure of the vessel in a way that enhances the efficiency of the vessel, and was not done in conjunction with any repairs. The removed antennas were not replaced with anything and the railing was modified to account for their removal. Therefore, the work done in this case is non-dutiable.

With regard to Item 405, the work is described in the invoice as “modif[ied] ship by removing old lash boxes to be removed completely. Hand rails and back cages to be removed and to be renewed in way of raise ladder.” The protestant further describes the work as “remov[ing] lashing boxes and hand railing from upper deck container cell guides; handrails and back cages removed and relocated in place of raise ladder.” The protestant further explains that this work was done to “delete a capability that is no longer used on the vessel.” The description of the work indicates that existing parts of the structure (handrails and back cages) were removed and relocated to another location on the vessel along with the permanent removal of other articles (the lashing boxes and hand railing). Nothing was replaced in this instance. We have previously held that the relocation of articles from one location on a vessel to another location can constitute a modification. Customs Ruling HQ 112553 (February 16, 1993). Also, the work must not have been done in conjunction with repairs. The work in this case meets the requisite criteria and as such is a modification. Therefore, the work is non-dutiable.

As for Item 410, the work is described on the invoice as “modif[ied] holds by removing and scrapping of 10 pcs. vent ducts end bends including supports.” The protestant further describes the work as “modif[ied] holds by removing and scrapping 10 pieces of vent duct end bends including supports.” The protestant further describes this work as “delet[ing] the capability of the vessel to carry refrigeration units below deck.” The protestant also states that the article was not replaced with a comparable article. The work described here is a modification because it alters the structure of the vessel in a way that enhances the efficiency of the vessel, and was not done in conjunction with any repairs. The removed vent duct end bends and supports were not replaced with anything. Therefore, the work done in this Item is non-dutiable.

With regard to Item 413, the invoice describes the work as “screwable access hatch to be modified to permanently closed. Old hatch removed. New insert plate with brackets and stiffeners installed.” The protestant further describes the work here as “replac[ing] a door with a solid panel.” The description of the work indicates that existing operational parts of the structure were permanently removed, while no operational equipment or structure was put in its place. The work in this Item meets the requisite criteria for a modification and is therefore non-dutiable.

In Item 416, the work is described in detail in the invoice. The invoice description represents the work in part as “modif[ied] No. 6 Stbd. wing tank by adding following new steel.” The protestant further describes the work in detail as “modify[ing] No. 6 starboard wing tank by adding 700 x 1070 x 13 mm steel plate to cargo hold; 670 x 1070 x 13 mm to ER bulkhead; one bracket installed to E.R. bulkhead 1550 x 670 x 15 mm and one flat bar 150 x 12 x 800 mm; three angle stiffners at E.R. bulkhead veed out and welded; and, four web frames with new plates.” The protestant also states that this work was done “to correct a deficiency in the vessels [sic] design and [enhance] its operation,” is not a replacement, and provides additional structure to the vessel. The work in this Item meets the requisite criteria for a modification and is therefore non-dutiable.

Under Item 417, the invoice describes the work as “cracks to be veed out and rewelded up to be next frame on hatch cover guides and hatch coamings of all holds. New insert plates to be installed.” The protestant also describes the work as “cracks veed out and rewelded up to next frame on hatch cover guides and coamings of all holds; new insert plates installed.” It is not readily apparent from the protestant’s submission whether this work was done in conjunction with repairs or not. Other than protestant’s assertions that the work done here was a modification, nothing in the invoice or the protestant’s description clearly distinguishes this work from the type that is typically regarded as repair work. Therefore, work done in this Item is dutiable.

With regard to Item 440, the work is described on the invoice as “modification by providing new 55 pcs. lashing rod stowage channels and 74 pcs. turnbuckle stowage channels.” The protestant also describes the work as “modification by providing 55 new lashing rod stowage channels and 74 turnbuckle stowage channels.” As described, the work in this case constituted new installations in order to increase the vessel’s functions. The articles described are of the type that become permanent fixtures on a vessel when installed. We find no evidence that this work was done in conjunction with repairs. Therefore, the work done in this Item constitutes a non-dutiable modification.

In Item 447, the invoice describes the work as “modif[ied] economizer by removing of defective and unused tube bundle pipes, transportation from board and disposal.” The protestant also describes the work as “economizer modified by removing defective and unused tube bindle pipes; defective and unused tube bindle pipes transported for disposal.” (Emphasis added.) As noted in the protestant’s own description (which is also reflected in the shipyard invoice), the articles at issue here were not in good working order at the time of removal. Therefore, the work done in this Item is not a modification of the vessel and is a dutiable repair.

Under Item 466, the invoice describes the work as “modif[ied] ship by adding new platform with two pipe stanchions to be fabricated and installed from decks house to outside railing as per sketch.” The protestant also describes the work as “addition of new platform with two pipe stanchions fabricated and installed from deckhouse to outside railing.” The protestant claims that the installation of this article “allow[s] [the] vessel to receive shore brow and [is] not a replacement.” The article described is of the type that becomes a permanent fixture when installed. We find no evidence that this work was done in conjunction with repairs. The installed article allows the vessel to perform a function that enhances its operation. We find that the work in this Item constitutes a modification and is therefore non-dutiable.

As for Item 480, the work is described in detail in the invoice as “modif[ied] engine room by providing a new electric chain hoist – type Yale electro chain hoist, model GH 10 – 8 with a chain length of 12 meters and cable length of 4.5 meters, lifting capacity 1000 kg with a running gear reel – to be supplied and to be installed. Therefore a beam ands (sic) brackets to be fabricated and welded in place. An electrical connection to be provided in way of the new chain hoist. Chain hoist to be function and load tested.” The protestant also describes the work as “modification of engine room by providing and installing Yale Electro Chain Hoist, Model GH 10-8 and fabricating and welding in place beam and brackets with an electrical connection. Chain hoist and load tested.” The article described is of the type that becomes a permanent fixture when installed. We find no evidence that this work was done in conjunction with repairs. The installed article allows the vessel to perform a function that enhances its operation. We find that the work in this Item constitutes a modification and is therefore non-dutiable.

In reviewing Item 482, the invoice describes the work as “there is a small mast on the focsle deck just stbd. of the bow. This mast is not used for anything and purpose is unknown. This mast occasionally interferes with docking and undocking. Crop off the mast at the base and grind check smooth.” The protestant also describes the work as “crop[ping] off mast at base and grind check smooth.” The invoice notes that “there is a small mast on the focsle deck just stbd. of the bow. This mast is not used for anything and purpose is unknown. This mast occasionally interferes with docking and undocking. Crop off mast at the base and grind check smooth.” From the description the invoice provides, it is clear to us that the work does not constitute a repair. The work merely involves the removal of an item that at times inhibited the operation of the vessel. Therefore, the work done here is non-dutiable.

With regard to Items 0037 through 208, as specifically organized under Exhibit 2 of the protestant’s submission, where periodic surveys are undertaken to meet the specific requirements of, for example, a classification society or insurance carrier, the cost of the surveys is not dutiable even when dutiable repairs are effected as a result thereof. C.S.D. 79-277 (March 21, 1979). See also Customs Ruling HQ 112378 (November 30, 1992). Equally applicable to these items are our rulings stating that absent a segregation of the costs of dutiable work from the costs of non-dutiable work, the entire cost of an Item at issue is dutiable. See, e.g., C.S.D. 79-277, supra; and Customs Ruling HQ 111620 (March 15, 1995).

With regard to Item 0037, the work is described on the invoice as “remove[d] and replace[d] docking plugs from all ballast tanks for ABS/USCG inspection.” (Emphasis in original.) The protestant also describes the work as “remov[ing] and replac[ing] 27 docking plugs from all ballast tanks for ABS/USCG inspection,” matching word for word the notation for this Item on the invoice. The protestant claims that this work was done “for a classification society and USCG required survey.” The description indicates that the work done in this instance would, without regard to any inspection, be considered dutiable repairs. Therefore, the cost for this Item is dutiable.

In Item 102, the work is described on the invoice as “immediately after dry docking, while the hull is still wet, high pressure (200 – 560 kg/cm2) fresh water wash entire underwater hull from keel to deep load line, including bow thruster tunnel, bow thruster, rudder and stern frame, removing all marine growth, loose paint and scale. Thoroughly clean sea chests and strainer plates.” The protestant also describes the work as “the cleaning of the hull to remove any marine growth, loose paint and scale in preparation for ABS inspection of the hull. The description indicates that the work done in this instance would, without regard to any inspection, be considered maintenance cleaning. Therefore, the cost for this Item is dutiable.

As for Item 103, the invoice describes the work as “high pressure (200 – 560 kg/cm2) fresh water wash topsides area, from deep load line to upper deck line, to remove all salts and loose paint. For ABS & USCG hull inspection.” (Emphasis in original.) The protestant also describes the work as “high pressure fresh water wash of topside area from deep load line to upper deck line to remove all salts and loose paint in preparation of ABS/USCG inspection.” The description indicates that the work done in this instance would, without regard to any inspection, be considered maintenance cleaning. Therefore, the cost for this Item is dutiable.

With regard to Item 108, the invoice describes the work as “sea chests pipes in sea chests, bow thruster tunnel, discharge pipes, etc. to be thoroughly cleaned by scraping and painted according to order of vessel’s staff.” The protestant also describes the work as “hand cleaning of sea chest pipes in sea chests, bow thruster tunnel, discharge pipes, etc., by scraping and painting. The description indicates that the work done in this instance would, without regard to any inspection, be considered maintenance cleaning. Therefore, the cost for this Item is dutiable.

Under Item 151, the work is described in extensive detail in the invoice. The protestant summarizes the invoice description of the work as “removal and cleaning of chains for survey and inspection.” The description indicates that the work done in this instance would, without regard to any inspection, be considered maintenance cleaning. Therefore, the cost for this Item is dutiable.

In Item 153, the work is described in extensive detail in the invoice. The protestant summarizes the invoice description of the work as “open specified tanks, cofferdams, void spaces, and void tanks, provide safety certificate, and close up same.” The protestant also cites to a customs ruling to support the claim that “cost of opening, cleaning, and closing of ballast tanks for purpose of inspection was not dutiable.” The cited ruling in fact states that “opening and closing water tanks is a non-dutiable operation. Customs Ruling HQ 227171 (December 9, 1997), citing Customs Ruling HQ 112378 (November 30, 1992). The work done here is consistent with the work done in the cited cases that was ultimately found non-dutiable. Thus, the cost for the work done in this case is non-dutiable.

Under Item 161A, the work is described in extensive detail in the invoice. The protestant summarizes the invoice description of the work as “disconnect[ed] and remove[d] specified valves for inspection; disassemble and clean, provide new gaskets; renew studs and nuts on reinstallation; verify operation of remotely actuated valves.” The description indicates that the work done in this instance would, without regard to any inspection, not be considered dutiable repairs. Therefore, the cost for this Item is non-dutiable.

As for Item 163-1, the work is described in extensive detail in the invoice. The protestant summarizes the invoice description of the work as “open upper and lower access doors, disconnect and remove piping and control wiring from burner assembly, close up with new gaskets, press seal and bolting; open top and bottom water side manholes for internal inspection, and close up; access and remove specified boiler valves, repack with new non asbestos material and gaskets.” The description indicates that the work done in this instance would, without regard to any inspection, not be considered dutiable repairs. Therefore, the cost for this Item is non-dutiable.

In Item 164, the work is described in extensive detail in the invoice. The protestant summarizes the invoice description of the work as “remove[d] doors and replace[d] [them] with approved sealant; close with new gaskets, press seal and bolting; open specified valves, repack with new non asbestos material.” The description indicates that the work done in this instance would, without regard to any inspection, not be considered dutiable repairs. Therefore, the cost for this Item is non-dutiable.

With regard to Item 165, the notation for this item on the invoice reads “only inspection of gear, therefore cover off/on.” The protestant also describes the work as “inspection of gear only.” The work done here is consistent with the work we have previously found to be non-dutiable. HQ 227171, supra. Thus, the cost for the work done in this case is non-dutiable.

With regard to Item 166, the work is described in extensive detail in the invoice. The protestant summarizes the invoice description of the work as “remove[d]/disconnect[ed] water boxes for cleaning using high pressure fresh water and [blew] out all tubes with HP water. Scrape[d] and wire brush[ed] tub sheets/heads and allow[ed] for coating of 50 square feet of steel areas. Fill[ed] condenser with water and pressure test[ed] proving satisfactory and tight under pressure. Condenser UV test to check for leaks using black (UV) light.” The protestant further states that this work was done “for inspection by a classification society and USCG for a required survey.” We have previously ruled that the costs of cleaning are not dutiable if not done in conjunction with dutiable repairs. C.S.D. 79-277, supra. We have also ruled that relief from duty assessed on vessel repair work is not warranted if the nature of the work is routine maintenance. Customs Ruling HQ 226737 (March 12, 1996). In this particular case, the work involved is typical of work done for the general maintenance of the vessel and preparation for coating. (See States Steamship Co. v. United States, 60 Treas. Dec. 30, T.D. 45001). Therefore, the cost for the work done here is dutiable.

With regard to Item 168, the work is described in extensive detail in the invoice. The protestant summarizes the invoice description of the work as “inspection of two elevators to include, but not limited to cables, sheaves, traction machine, sliding door, controls, etc., of each elevator. Test and adjust car overload cutouts and alarms to correct weight setting. Provide report of inspections and recommendations for repairs. Provide certificate.” The description, and notes from the invoice, indicate that the work done here was not done in conjunction with any repairs. Therefore, the cost of the work done under this Item is non-dutiable.

With regard to Item 173, the work is described in extensive detail in the invoice. The protestant summarizes the invoice description of the work as “inspection of pintle clearances removing and replacing of two cover plates and sound top and bottom rudder pintles to prove tight. Take clearances at four positions and record. Repair hinge of rudder access door to be overhauled replacing three screws.” (Emphasis added.) The work done here therefore constitutes a repair and is consequently dutiable.

With regard to Item 174, the invoice describes the work as “erect[ed] necessary tower staging, port and starboard sides of tailshaft, crop[ped] off and grind[ed] chain weld and remove[d] rope guard. Remove[d]/replace[d] gage plugs, measure and record[ed] tail shaft weardown with vessel furnished micrometer. Reinstall[ed] rope guard, and remove[d] tower staging, when directed.” The protestant also describes the work as “erect tower staging, port and starboard sides tail shaft, crop off and grind chain weld and remove rope guard. Remove and replace gage plugs, measure and record tail shaft wear down with vessel furnished micrometer. Reinstall rope guard and remove tower staging.” We have previously ruled that inspection and measurement of tailshaft wear is not dutiable if there is no repair done in conjunction with it. Customs Ruling HQ 112241 (October 25, 1995). There is no indication that repair work was done in this case. Therefore, the cost for this work is non-dutiable.

With regard to Item 175, the work is described in lengthy detail in the invoice. The protestant summarizes the invoice description of the work as “inspection, maintenance and staging of propeller.” The invoice provides a lengthy description of the work process. The protestant claims that this work was done “for inspection and testing by a classification society and USCG for a required survey.” The invoice also notes under the heading “Repairs” on page 45 the “renewal of rope guard, re-using old cutters. Propeller cap repair with GKF.” (Emphasis added.) The repair work is separately notated from the remainder of the work done in this case. Therefore, the costs for the non-dutiable work and the dutiable work done under this Item should be assessed accordingly.

With regard to Item 182, the invoice describes the work as “prior to the start of any work to the main engine and while ship is afloat, crankshaft deflection readings are to be taken and recorded. At completion of all engine work deflections are to be taken again, prior to vessel departing shipyard. Present copies of both reports to Owner’s representative.” The protestant also describes the work as “crankshaft deflection readings are taken and recorded before and after engine work is completed.” The protestant claims that this work was done for an inspection. Nothing in the record suggests that any repairs were done in conjunction with this Item. Therefore, the cost for this work is non-dutiable.

With regard to Item 184, the work is described on the invoice as “remove[d] and inspect[ed] main engine crosshead bearing, as directed by Chief Engineer. Record[ed] clearances and when directed reassemble[d] bearing.” The protestant also describes the work as “remove[d] and inspect[ed] main engine crosshead bearing, reassemble[d] and record[ed] clearances.” The protestant claims that this work was done for an inspection. Nothing in the record suggests that any repairs were done in conjunction with this Item. Therefore, the cost for this work is non-dutiable.

With regard to Item 189, the invoice described the work as “check[ed] chain drive tensioner for proper operation. Check of couplings, bolts, etc. therefore boxes and plates off/on. Big bearing cover off/on. Check of all bolts and bering clearances of chain drive.” The protestant also describes the work as “check[ed] chain drive tensioner for proper operation; check of couplings and bots (sic), etc.; and, check[ed] all bolts and bearing clearances of chain drive.” The protestant claims that this work was done for an inspection. Nothing in the record suggests that any repairs were done in conjunction with this Item. Therefore, the cost for this work is non-dutiable.

With regard to Item 194, the work is described on the invoice as “clean[ed] and inspect[ed] thirty six (36) non return scavenging space valves. Replace[d] broken reeds with vessel supplied spares as directed.” The protestant also describes the work as “clean[ed] and inspect[ed] thirty-six (36) non return scavenging space valves and replace[d] broken reeds with vessel supplied spares.” The work done here is typical of repair work in that some parts were removed and replaced with similar parts. (See also Customs Ruling HQ 112651 (May 25, 1993) with respect to the dutiability of cleaning air scavenger spaces.) Therefore, the costs for this work are dutiable.

With regard to Item 196, the work is described in detail in the invoice. The protestant summarizes the invoice description of the work as “open[ed] and clean[ed] scavenging air space, underside of piston space, crankcase and close[d] up after inspection. Provide receipt of all oil, sludge and oily wastes removed.” The protestant claims that this work was done “for inspection by a classification society or USCG.” CBP has consistently held that cleaning is not dutiable unless it is performed as part of, in preparation for, or in conjunction with dutiable repairs or is an integral part of the overall maintenance of the vessel. (See also Customs Ruling HQ 112651 (May 25, 1993) with respect to the dutiability of cleaning air scavenger spaces); and Customs Ruling HQ 110841 (May 29, 1990). We find no evidence here that this work was done in conjunction with repairs or as maintenance to the vessel. Therefore, the costs for this work are non-dutiable.

With regard to Item 199, the invoice describes the work as “remove[d] (9) reversing cylinders from engine and dray to shop for repairs. Disassemble[d] for cleaning and inspection. Measure[d] all components for manufacture tolerances. Repair[ed] or renew[ed] necessary parts to make as original. Assemble[d] cylinders using all new O-rings and seals. Return[ed] to vessel and install[ed] in place as original. Test[ed] and prove[d] satisfactory in operation.” The protestant also describes the work as “remove[d] nine reversing cylinders from engine and dray to shop for repairs and disassemble[d] for cleaning and inspection and measure[d] all components for manufacture tolerances. Repair[ed]/renew[ed] necessary parts to make as original. Assemble[d] cylinders using new O-rings and seals and return[ed] to vessel and install[ed]. Test[ed] and prove[d] satisfactory in operation.” The protestant claims that this work was done “for ABS and USCG required survey.” The work done here is typical of routine maintenance necessary for the safe and proper operation of the vessel. As such, the work constitutes a repair and is therefore dutiable.

With regard to Item 201, the invoice describes the work as “with fuel pumps removed, remove[d] (9) roller guides from same piston engine and dray to shop for inspection. Disassemble[d] cleaning and inspection. Measure[d] all components for manufacture tolerances. Check[ed] roller guide webs for cracks. Repair[ed] or renew[ed] necessary parts to make as original. Assemble[d] roller guides using all new O-rings, seals and setscrews. Return[ed] to vessel and install[ed] in place as original. Test[ed] and prove[d] satisfactory in operation.” The protestant also describes the work as “remove[d] nine roller guides from piston engine and dray to shop for inspection and disassemble[d] for cleaning and inspection. Measure[d] all components for manufacture tolerances and check[ed] roller guide webs for cracks making repairs or renewing necessary parts to make as original. Assemble[d] roller guides using all new O-rings, seals and setscrews and return[ed] to vessel and install[ed] in place as original.” The protestant claims that this work was done “for ABS and USCG required survey.” The work done here is typical of routine maintenance necessary for the safe and proper operation of the vessel. As such, the work constitutes a repair and is therefore dutiable.

With regard to Item 208, the work is described in extensive detail in the invoice. The protestant summarizes the invoice description of the work as “disconnect[ed] cables, open[ed] out connection boxes, controllers and distribution panels to take and record “meggar” readings of circuits, motors and panels for ABS Special survey credit for equipment.” The protestant claims that this work was done “for a survey by classification society.” Nothing in the record suggests that any repairs were done in conjunction with this Item. Therefore, the cost for this work is non-dutiable.

With regard to Items 0014 through 0026, as specifically organized under Exhibit 3 of the protestant’s submission, we have consistently ruled that relief from duties assessed for repairs will not be granted unless dutiable costs and non-dutiable costs are appropriately segregated. See, e.g., Customs Ruling HQ 115539 (January 24, 2001). This is remains true notwithstanding the fact that we might otherwise determine that certain costs may be prorated between dutiable and non-dutiable costs.

With regard to Item 0014, the work is described on the invoice as “one (1) @ 65 mm dia. hose with stop valve to hose connection on deck, as directed. Port Engineer to record water meter readings at commencement and completion.” The protestant also describes the work as, “provide[d] hose with stop valve to hose connection on deck; recordation of water meter readings at commencement and completion of connection.” The protestant further states that this cost was done “in conjunction with non-dutiable work on vessel such as inspection and permanent modification in addition to repairs.” We have consistently ruled that the provision of water should be prorated as drydock and general services costs. See, e.g., Customs Ruling HQ 113992 (July 2, 1997). Thus, the cost of this Item may be prorated between dutiable and non-dutiable costs.

With regard to Item 0033, the work is described in some detail in the invoice. The protestant summarizes the invoice description of the work as, “testing of all spaces such as the cargo holds, ballast tanks, voids, cofferdams, double bottoms, engine room, boiler flat, shaft alley, bilges, rudder and designated items detailed for repair. In accordance with regulation and after completion of testing, a Gas Free Certificate was presented to the Master, Chief Engineer, Port Engineer and was posted at the gangway.” We have previously ruled that the services provided for gas free certification should be prorated between dutiable and non-dutiable costs. Customs Ruling HQ 110742 (July 9, 1990). Therefore, the costs for the work done under this Item may be prorated.

With regard to Item 0002, the work is described in detail in the invoice. The protestant summarizes the invoice description of the work as, “drydocking of vessel for hull cleaning and inspection.” We have consistently held that drydocking costs should be prorated between dutiable and non-dutiable costs, in accordance with Texaco Marine Services, Inc. v. United States, supra. Therefore, the costs for the work done under this Item may be prorated.

With regard to Item 0026, the invoice describes the work as “set up required hoses, etc. to refill clean ballast water to designated tanks.” The protestant also describes the work as, “set up hoses to refill clean ballast water to designated tanks.” We agree with the protestant that this is general service work that may be prorated between dutiable and non-dutiable costs.

HOLDING:

Following a thorough analysis of the facts as well as of the law and applicable precedents, we have determined that the protest for relief with respect to the items considered above should be denied and granted in part as specified in the Law and Analysis portion of this ruling.

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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