HQ 116417 - 19 U.S.C. 1466; Vessel Repair Entry C20-0063408-2; Protest 2002-05-100116; SEABULK ENERGY, V-404 - United States International Trade Commision Rulings

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HQ 116417

March 25, 2005

VES-3-18-RR:IT:EC 116417 GOB

CATEGORY: CARRIER

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

RE: 19 U.S.C. 1466; Vessel Repair Entry C20-0063408-2; Protest 2002-05-100116; SEABULK ENERGY, V-404

Dear Sir:

This is in response to your memorandum of February 28, 2005, forwarding for our review the protest filed by Seabulk International, Inc. (“protestant”) with respect to Vessel Repair Entry C20-0063408-2. Our ruling follows.

FACTS:

The SEABULK ENERGY (the “vessel”) is a U.S.-flag vessel. It incurred foreign shipyard costs in Malta. The vessel arrived in Galveston, Texas on June 29, 2004. A vessel repair entry was timely filed.

ISSUE:

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

LAW AND ANALYSIS:

Title 19, United States Code, section 1466 (19 U.S.C. § 1466) provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to be employed in such trade.

Title 19, United States Code, section 1466(d)(1) (19 U.S.C. § 1466(d)(1)) provides in part that the Secretary is authorized to remit or refund such duties if the owner or master of the vessel furnishes good and sufficient evidence that the vessel was compelled by stress of weather or other casualty to put into a foreign port and make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. Section 4.14(h)(2)(i), Customs and Border Protection (“CBP”) Regulations (19 CFR § 4.14(h)(2)(i)) provides that "port of destination" means such port in the United States.

Section 1466(d)(1) and 19 CFR § 4.14(h)(2)(i) essentially set forth a three-part test, each of the elements of which must be established by good and sufficient evidence to qualify for remission:

1. a casualty occurrence;
2. an unsafe and unseaworthy condition; and 3. the inability to reach the port of destination in the U.S. without foreign repair.

19 CFR § 4.14(h)(2)(i) provides in pertinent part as follows:

. . . For the purposes of this paragraph, a “casualty” does not include any purchase or repair made necessary by ordinary wear and tear, but does include the failure of a part to function if it is proven that the specific part was repaired, serviced, or replaced in the United States immediately before the start of the voyage in question, and then failed within six months of that date.

Protestant’s Claims

The protestant states in pertinent part as follows:

On 5/31/04, prior to commencing the voyage during the June 13-17th 2004 period, a failure of part(s) was discovered, but no repairs could be made until the vessel could fully discharge its load.

On 6/10/04, the vessel had fully discharged its load, and emergency repairs were made. During the attempt to perform emergency repairs, it was ultimately discovered that the bolts for a wear ring support were missing, which work was previously done at the Atlantic Marine, Inc. (Frank Mohn) shipyard.

Based upon our repair records and the ultimate discovery of the failure of the part in June 2004, there is no question that the failure occurred within six (6) months of the prior work repairs done by Atlantic Marine, Inc. (Frank Mohn) shipyard, which failure required emergency repairs to be made to ensure the safety and seaworthiness of our vessel and to aid it in returning to the United States. It is also clear that a causation exists between the workmanship performed on the SEABULK ENERGY in January 2004, and the problem which arose in May 2004, requiring emergency repairs . . .

Our Analysis and Determination

An unsigned Frank Mohn Nederland B.V. Service Report of June 25, 2004, with respect to the period of June 13-17, 2004, provides in pertinent part:

We were asked, in cooperation with Frank Mohn Houston, to attend the vessel at Malta and carry out repair during the voyage to Gibraltar. Reported was a hydraulic oil leakage on COP#. Suspected was the welding seam on the return oil pipe under the STC valve.

A service purchase order (# 0007485) issued on June 11, 2004 for the subject vessel, with “Framo (Frank Mohn)” of La Porte, Texas listed as the contractor, provides in pertinent part:

Repair to cargo pump 4P . . . Rotterdam office to send 2 repair men to Malta in order to repair crack in pipe stack on CP 4P[.]

The protestant has provided a service purchase order (# 0170328) issued on December 21, 2003 with respect to the subject vessel. This report does not describe actual repairs which were performed.

The evidentiary standard of 19 U.S.C. § 1466(d)(1) and 19 CFR § 4.14(h)(2)(i) is “good and sufficient evidence.” We find that the protestant has clearly not provided good and sufficient evidence to substantiate its claim for remission pursuant to 19 U.S.C. § 1466(d)(1) and 19 CFR § 4.14(h)(2)(i). The protestant has not established, by adequate and satisfactory documentary evidence, the repairs which were performed prior to the subject voyage. That would be one of the first steps in the number of steps required for remission pursuant to 19 U.S.C. § 1466(d)(1) and 19 CFR § 4.14(h)(2)(i). If the protestant had successfully completed this step, it would then need to establish that the repairs accomplished prior to the voyage were the same repairs as those required during its voyage. If it had established these facts, the protestant would have established the occurrence of a “casualty,” pursuant to 19 CFR § 4.14(h)(2)(i), excerpted above. The protestant would then be required to satisfy the second and third requirements of the three-part test, described above. (It has not established that these second and third requirements were satisfied.)

We note additionally that your office advises that the vessel had four port clearances for foreign ports between January 9, 2004 and May 20, 2004. This fact casts grave doubt on any claim that the referenced domestic repairs were performed “immediately before the start of the voyage in question.” See 19 CFR § 4.14(h)(2)(i), excerpted above. The only voyage which would potentially qualify for the requested relief would be the first voyage after the repairs were performed in the United States. The CF 226 reflects that the subject voyage commenced in June 2004.

HOLDING:

The protestant has not established its eligibility for remission pursuant to 19 U.S.C. § 1466(d)(1). Therefore, the subject costs are dutiable pursuant to 19 U.S.C. § 1466.

You are instructed to deny the protest.

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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