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HQ 116559

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November 1, 2005

VES-3-18-RR:IT:EC 116559 GOB

CATEGORY: CARRIER

Chief, Vessel Repair Unit
U.S. Customs and Border Protection
Louis Armstrong International Airport
900 Airline Highway
Room W-103-400
Kenner, LA 70062

RE: 19 U.S.C. 1466; Vessel Repair Entry C20-0063433-0; Protest 2002-05-100803; M/V ASCENSION

Dear Sir:

This is in response to your memorandum of October 13, 2005, forwarding for our review the protest filed on behalf of Sagamore Shipping Inc. (“protestant”) with respect to Vessel Repair Entry C20-0063433-0. Our ruling follows.

FACTS:

The M/V ASCENSION (the “vessel”) is a U.S.-flag vessel owned and/or operated by the protestant. It incurred foreign shipyard costs in Germany. The vessel arrived in the port of Wilmington, North Carolina on January 7, 2005. A vessel repair entry was timely filed. Your office denied the application for relief by letter of June 10, 2005.

ISSUE:

Whether the costs for which the protestant seeks relief are eligible for remission or refund under 19 U.S.C. § 1466(d)(1) and/or (h)(3).

LAW AND ANALYSIS:

Title 19, United States Code, section 1466(a) (19 U.S.C. 1466(a)) 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.

Title 19, United States Code, section 1466(h)(3) provides as follows:

The duty imposed by subsection (a) of this section shall not apply to- ...
(3) the cost of spare parts necessarily installed before the first entry into the United States, but only if duty is paid under appropriate commodity classifications of the Harmonized Tariff Schedules of the United States upon first entry into the United States of each such spare part purchased in, or imported from, a foreign country.

The protestant states in pertinent part as follows:

In this case, it is clear that a casualty did occur. The casualty was accompanied by both an explosion and fire. It is also clear that the casualty was an external force. If the casualty had been caused by a breakdown of the Turbo Charger, the damage would have been to the internal parts of the Turbo Charger, and specifically to the bearings of the turbo charger. That did not happen. The bearings were inspected following the casualty and they were still in excellent condition. Thus the turbo charger itself did not fail, which would have caused the bearings to be wiped before the rotor broke loose and damaged the casing of the turbo charger from the inside. However after an inspection, it was clear that the damage to the casing was from an external source, most likely a fire and explosion caused by post detonation of fuel in the internal exhaust manifold. This external force broke the casing, which would cause the rotor to stop immediately and thus would not further damage the bearings.

The documentation in the case file includes the following:

A letter of December 12, 2004 from Sealift Inc. (which has the same address as that of the protestant, Sagamore Shipping Inc.) to U.S. Coast Guard Activities Europe, in which Sealift Inc. states, in pertinent part:

Although it is too early to know the exact cause and extent of the turbo language, the chief engineer suspects that the turbo charger casing failed in way of the cooling water passages within the casing, causing the main engine to loose [sic] her jacket water.

A letter of April 28, 2005 from Sealift Inc. to your office, in which Sealift Inc. states, in pertinent part:

It became apparent that the main engine had suffered a casualty, which broke apart the turbo charger (Major cracks and pieces missing from the exhaust side to the intake side of the turbo charger) which most likely occurred from an internal exhaust manifold fire/explosion/post detonation of fuel. It is surmised that there was excess fuel/lube oil in the manifold which detonated, causing the turbo charger internal casing to break apart, and totally destroying the turbo charger.

U.S. Coast Guard Report of Marine Accident, Injury or Death (CG 2692), signed by the master of the vessel, which indicates the cause of the occurrence to be "machinery / equip. failure." This form also provides: "turbo-charger failure and main engine shutdown . . . machinery failure." A document entitled Master's Statement of Facts, signed by the Master, which provides, in pertinent part:

At 1622GMT on 12 December 2004, vessel was proceeding at full sea speed, when the turbocharger on the main engine failed. The engineers quickly shutdown the main engine and the vessel was adrift in position Lat: 50-49N Long 013-25.5E. The engineers conducted a complete inspection of the main engine and isolated the damaged turbocharger from the main engine so that we could resume our passage to Kiel, Germany for repairs.

A document entitled Chief Engineer's Statement of Facts, signed by the Chief Engineer, which provides, in pertinent part:

On Sun. at approx. 1730 hr. Dec. 12 2004, main engine turbocharger failed. At the time of the incident Engine crew excluding 3rd. asst. engineer was in the dining room. Turbocharger surged lightly, but continued to operate normally. After approx. five min. there was a very loud mechanical noise accompanied [by] barking through air filter. Upon entering control room third asst. was notifying Bridge of stopping engine. Engine was brought to stop for damage assessment. It was obvious that Turbocharger was damaged as water was flowing out of oil passage flow sight glass. At this time I notified Port Engineer of the failure. Further investigation showed water in ex. manifold. All 6 scavenge space inspection plates were removed. No water or foreign materials were found. All piston crowns inspected, all found normal.

The vessel log for December 12, 2004 provides in pertinent part as follows:

1422 shut down M/E to repair gasket on exhaust gas boiler steam line. Vsl adrift. NCC lights displayed. 1600 repairs continues [sic], lookouts posted, good vis . . . 1630 repairs completed . . . M.E. back on line, vsl no longer N.U.C. . . . 1722 Turbo-charger failure, M.E. shut down, vsl adrift . . .

After a careful consideration of this matter, we find that the protestant has not met the statutory standard of furnishing 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. The protestant has not met its burden in establishing the occurrence of a casualty, the first part of the three-part test stated above. Because, the protestant has not satisfied the first requirement of the three part test, we make no finding with respect to the second and third requirements.

Concerning the protestant's claim for treatment under 19 U.S.C. 1466(h)(3) with respect to the items listed on pages two through four of the MAN B&W Diesel invoice no. 1075 / 75087, we find that all of the claimed items are eligible for such treatment with the exception of the final two items - molykote paste and gaskets, manufactured.

HOLDING:

The protestant's claim under 19 U.S.C. 1466(d)(1) is denied.

The protestant's claim for treatment of items under 19 U.S.C. 1466(h)(3) is granted to the extent described above.

You are instructed to grant the protest in part and deny the protest in part.

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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