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HQ 116648

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June 15, 2006

VES-13-18-RR:BSTC:CCI 116648 IDL

CATEGORY: CARRIER

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

RE: 19 U.S.C. § 1466; Vessel Repair Entry C20-0059068-0; Protest No. 2002-06-100024; SS MATSONIA

Dear Sir:

This is in response to your memorandum of April 20, 2006, forwarding for our review the protest filed by counsel on behalf of Matson Navigation Company with respect to Vessel Repair Entry C20-0059068-0. Our ruling on this matter is set forth below.

FACTS:

The SS MATSONIA, a U.S.-flagged vessel owned by the protestant, incurred foreign shipyard costs. On September 17, 2002, the vessel arrived in the United States. A vessel repair entry was timely filed. On July 15, 2005, a determination of duty occurred. On October 13, 2005, the protestant filed Protest No. 2002-06-100024.

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(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.”

The protestant seeks relief with respect to Exhibit 1, Items 828-831, and Exhibits 9, 10, and 11. Exhibit 1, Items 828-831 (Cosco Nantong Shipyard Co. Ltd.), involves the preparation for and application of a tin-free anti-fouling system (repainting of the vessel). The invoice for these items uses the following descriptions for preparatory services rendered:

Close high pressure water washed entire area including propellers and ruddersto remove all fouling and/or SPC hydrolyzed spent layer. Full grit blast areas of active corrosion. [emphasis added]

The evidence indicates that the subject vessel had suffered gross deterioration. It is our position that the work performed amounts to a restoration, and, as such, these items are dutiable.

Exhibits 9, 10, and 11 (E.T.W. Services) involve costs incurred for translation services “in conjunction with the vessel’s dry-docking in Nantong, China.” The protestant contends that the service provider is a U.S. resident, and therefore, those costs should not be dutiable (see HQ 115578, dated April 8, 2002, wherein, we held that labor costs provided by a resident of the U.S. are non-dutiable). In support of its claim, the protestant submitted a copy of a drivers license issued by the State of Hawaii bearing the name of the service provider. The protestant also submitted in support of its claim a “certification” from the service provider who claims to be a partner with E.T.W. Services, Hong Kong, and attests that he is a U.S. resident. We note that we have previously reviewed evidence from the protestant certifying that the service provider in question is an “employee of E.T.W. Services, U.S.A.” [emphasis added], and also the president of E.T.W. Services, Hong Kong (See HQ 116594, dated February 7, 2006). We further note that it is not clear why two of the three invoices, marked Exhibits 9 and 10, contain identical expenses allegedly incurred by that one service provider in conjunction with the subject voyage, and all three invoices are purported to cover translation services for the same period of time.

In addition, the protestant included itemized bills from E.T.W. Services, Hong Kong for various expenses incurred for round-trip travel by the alleged U.S. resident from Hong Kong to Shanghai, and includes ground transportation expenses in Hong Kong between the local airport and the service provider’s “home.” Finally, the bills from E.T.W. Services request payment by wire transfer directly to the bank account of E.T.W. Services in Hong Kong.

We conclude that the weight of the evidence presented suggests that the service provider, who claims to be a partner of the Hong Kong-based company, and who incurred round trip travel expenses entirely outside the U.S., and who referenced ground transportation to and from his “home” in Hong Kong, and who requested payment from a U.S.-based company by wire transfer directly to the Hong Kong bank account of the company in which he is a partner, is not a resident of the United States. The protestant has failed to provide satisfactory evidence that the service provider in question is a resident of the U.S. for the purpose of administering 19 U.S.C. § 1466.

Accordingly, the expenses incurred for translation services covered by Exhibits 9, 10, and 11 are dutiable.

HOLDING:

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