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HQ 116625

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April 26, 2006

VES-13-18-RR:BSTC:CCI 116625 IDL

CATEGORY: CARRIER

Chief, Vessel Repair Unit
U.S. Customs and Border Protection
P.O. Box 1389
Kenner, Louisiana 70112

RE: Protest No. 2002-06-100025; Vessel Repair Entry No. NF4-2340617-4; MV PATRIOT; V.5-10; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated March 6, 2006, forwarding for our review the above-referenced protest. Our ruling on this matter is set forth below.

FACTS:

The MV PATRIOT is a U.S.-flagged vessel that incurred foreign repair expenditures. On June 17, 2005, the vessel arrived at the Port of Baltimore, Maryland, where Vessel Entry NF4-2340617-4 was filed. On February 10, 2006, a determination of duty was made in the amount of $55,773.22. No application for relief of duties was filed.

On February 24, 2006, Interocean American Shipping Corporation timely filed Protest No. 2002-06-100025 on behalf of its client, American Roll-On Roll-Off, whose bond was posted to secure the subject entry. The entry included “Main Engine Repairs” that are the subject of this protest.

The protestant alleges that “the associated repairs were emergency repairs needed to restore the ships [sic] seaworthiness and safety... [as a] result of the unforeseen and catastrophic failure of the vessel’s Main Propulsion Diesel Engine Crankshaft bearings.” The protestant has included as evidence a Main Propulsion Diesel Engine manufacturer’s attendance and service report, a classification survey report and machinery damage survey, a copy of the vessel’s

Machinery History tracking system reports, a report from the vessel’s Chief Engineer detailing work progress, and an e-mail message reporting final departure from Southampton, U.K. following completion of repairs.

ISSUE:

Whether the vessel repair costs incurred by the protestant 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...".

Section 1466(d)(1) authorizes a remission of such duties if the owner or master of the vessel was compelled by stress of weather or other casualty to put into such foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. The statute sets forth the following three-part test that must be met in order to qualify for remission under the subsection:

1. The establishment of a casualty occurrence; 2. The establishment of unsafe and unseaworthy conditions; and The inability to reach the port of destination without obtaining foreign repairs.

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)). Duties on repair costs beyond that minimal amount are not subject to remission.

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. 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 a repair to have been necessitated by
normal wear and tear. HQ 106159 (September 8, 1983).

In the instant case, the protestant submitted a report from the foreign shipyard indicating that the vessel’s main bearings were replaced during the period of June 1-June 8, 2005. Specifically, the lower crankshaft main bearings halves were changed on nine units. The condition of the bearings removed varied, as follows: two exhibited “bonding failure;” five contained scoring marks and slight disbanding; one contained only scoring marks; and one of the units replaced was in good condition, with no obvious faults.

The report further states that the “likely cause of the bearing failures on units 5 and 6 is fatigue failure, the engine has well in excess of 100,000 hours and all bearings appear to be the original set fitted. This is identified by the large areas of disbonding. No signs of overheating were evident. The white-metal deposits on the journals were at various points across the width of the journal. This could be due to the quality of the lubricating oil (low viscosity etc). High crankshaft deflections could account for contact on the outer edges of the journals, this was not noted on all journals however in particular, number five.” [emphasis added]

We find that the protestant has failed to demonstrate that the repairs were necessitated by a casualty occurrence. On the contrary, the evidence indicates that the replacement of the two units that failed was necessitated by normal wear and tear, a condition the protestant reveals was found in “many of the other bearings [that] were undergoing various stages of failure.” Further, it is clear that repair of the unit that was in “good condition” would not meet the remission requirements of section 1466(d)(1) that allow only for minimal repairs necessary to “secure the safety and seaworthiness of the vessel.”

Therefore, the vessel repair costs incurred by the protestant are dutiable under 19 U.S.C. § 1466.

HOLDING:

Accordingly, the port should 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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