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HQ 116412

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May 9, 2005

VES-13-18-RR:IT:EC 116412 IDL

CATEGORY: CARRIER

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

RE: Protest No. 2002-04-100940; Vessel Repair Entry No. MX9-0170009-7; M/V SEALAND PRIDE; V. 404

Dear Sir:

This is in response to your memorandum, dated February 22, 2005, forwarding for our review the above-referenced protest of vessel repair duties assessed pursuant to 19 U.S.C. § 1466. Our ruling on this matter is set forth below.

FACTS:

The M/V SEALAND PRIDE is a U.S.-flagged vessel formerly operated by U.S. Ship Management, Inc. (“USSM”; “protestant”), of Charlotte, North Carolina. On February 23, 2004, the vessel arrived in the United States at Charleston, South Carolina. USSM filed with the port Vessel Repair Entry No. MX9-0170009-7.

In a letter to U.S. Customs and Border Protection (CBP), dated May 20, 2004, USSM stated that during the voyage in question, a technician from ABB, Inc. (“ABB”), of Hamburg, Germany, rode the vessel for four days “for the purpose of diagnosing possible repairs needed to the booster motor control panel. However, no repairs were completed. ABB has confirmed that no charges have been identified, and no invoice issued;” and that any necessary repairs would be made at a later date. USSM estimated the value of the services to be $1,200. USSM submitted no documentary evidence to the Vessel Repair Unit in support of its claims.

On July 9, 2004, the vessel repair entry duty determination was made, with duties assessed at $3,000. On July 15, 2004, USSM filed Protest No. 2002-04-100940, protesting the assessment of duty in the absence of an invoice. The protestant stated that “no repairs were accomplished and no invoice was ever issued the subject vessel is in Germany in dry-dock where all repairs and prior diagnostic activity is being addressed and will be properly reported and represented in the subsequent application for relief upon the vessel’s return.”

Since the date of filing of this protest, Maersk Line, Ltd. (“Maersk”), of Norfolk, Virginia, has taken over operational control of the subject vessel from USSM. Pursuant to our request for information, on May 3, 2005, Maersk provided this office (Office of Regulations and Rulings) with documentation from ABB, which is discussed in the analysis that follows.

ISSUE:

Whether the costs incurred by the protestant for which our review is sought 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.”

Inspections performed to ascertain whether repairs are either necessary or adequately accomplished are dutiable. HQ 110698 (April 12, 1990). The protestant claims that the assessment of duties for the services ABB provided during Voyage No. 404 are premature, since no actual costs had yet accrued as of the date of filing of this protest. However, it is not clear that actual costs had not accrued.

Our examination of the evidence reveals that most of the documentation that Maersk provided contains information and lists charges relating to a voyage or voyages subsequent to Voyage No. 404. One document, labeled “ABB” and “Stundennachweis,” and dated February 11, 2004, does appear to be an official ABB business record pertaining to services ABB provided during Voyage No. 404. That document suggests that the ABB technician or technicians who rode the vessel for four days rode for the purpose of diagnosing and performing necessary repairs, and not merely as an inspection “for the purpose of diagnosing possible repairs,” as the protestant has alleged. The document indicates that an ABB technician or technicians provided a total of ninety hours of services aboard the vessel during the period in question. The document also contains the following notes:

“Installation/commissioning/setup for new panel; Booster Alarm and Operating SystemOn board from February 7 until February 11, 2004Trip from Hamburg to Rotterdam, February 6, 2004Trip from Bremerhaven to Hamburg, February 11, 2004.”

In addition, an ABB invoice, dated January 21, 2005, which contains charges relating to “Installation & Commissioning Booster Motor Panel,” lists the unit price for one hour of labor service at “$135.00 (R.T.)” and “$202.50 (O.T.)” (presumably, “regular time” and “overtime,” respectively).

It is our position that the words “Installation/commissioning/setup for new panel,” taken in conjunction with the numerous hours and expense of services ABB provided during Voyage No. 404 is probative evidence that ABB either performed or attempted to perform actual repairs aboard the vessel. According to the invoice, ABB ultimately provided a total of 141 service hours to the vessel, but the invoice fails to account transparently, or separately, for the ninety hours of service that ABB provided during Voyage No. 404. Furthermore, the remainder of the documents submitted also fails to account for services ABB provided during Voyage No. 404, and fails to clearly demonstrate that additional charges (i.e., separate from those listed in ABB’s invoice) did not accrue for the services rendered during that voyage.

Parenthetically, we note that the protestant estimated the value of the services that ABB provided during Voyage No. 404 at $1,200. However, if, in fact, ABB provided ninety hours of service, as their invoice indicates, at the labor rates discussed above, the value of such services far exceed the protestant’s estimated value of $1,200.

We conclude that the protestant has neglected to provide documentary evidence supporting its position. As such, we hold that the inspection and/or repair services that ABB performed during Voyage No. 404 constituted a dutiable vessel repair cost under 19 U.S.C. § 1466.

HOLDING:

The costs incurred by the protestant for which our review is sought are dutiable under 19 U.S.C. § 1466.

Accordingly, the protest should be DENIED.

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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