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HQ H004987

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January 8, 2007

VES-3-18-RR:BSTC:CCI H004987 GOB

CATEGORY: CARRIER

Supervisory Entry Officer c/o Vessel Repair Unit
U.S. Customs and Border Protection
1515 Poydras Street, Suite 1700
New Orleans, LA 70112

RE: 19 U.S.C. §1466; Vessel Repair Entry C20-0056744-9; Protest 2002-06-101291; MOKIHANA, V-97

Dear Madam:

This is in response to your memorandum of December 27, 2006, forwarding for our review the protest filed on behalf of Matson Navigation Company (“protestant”) with respect to Vessel Repair Entry C20-0056744-9. Our ruling follows.

FACTS:

The MOKIHANA (the “vessel”), a U.S.-flag vessel, incurred foreign shipyard costs. The vessel arrived in the port of Los Angeles on November 28, 2005. 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:

Initially, we note that the information in the file indicates that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests. 19 U.S.C. § 1514(c)(3).

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.

The protestant seeks relief for a “Bill for Cleaning Service,” dated November 15, 2005, and submitted by Labour Service Company (Qingdao Shun). In pertinent part, the invoice provides:

Provided labours with tools for a general cleaning in the engine room as directed and removed all dirty oily rags and debris from the ship after the completion of the cleaning.

The protestant states:

Labour Service Company has provided a letter and a revised invoice which indicate that the work performed was for general cleaning including sweeping, wiping, and mopping. . . .
In this case there were no related repairs done and the costs for the cleaning were for work which would have been necessary, regardless of whether repairs had followed. [Emphasis in original.]

The documentation of record indicates that repairs were performed in the engine room. Marine Engineering Service (Minato Kogyo Co. Ltd.) invoice dated November 11, 2005, for work performed on the same date, clearly indicates work on the main engine, including, but not limited to, the replacement of a piston and the installation of a cylinder head. The Yokohama Engineering Works, Ltd. (Yokohama Kosakusho) invoice dated November 19, 2005, for work performed on the same date, also appears to show substantial work in the engine room, i.e., the repair of No. 2 generator.

Cleaning incident to repairs is dutiable under 19 U.S.C. § 1466. In Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 44 F.3d 1539 (Fed. Cir. 1994), aff’g 815 F.Supp. 1484 (Ct. Int'l Trade 1993), the court stated in pertinent part as follows with respect to the reach of 19 U.S.C. § 1466:

Texaco urges us to reject the Court of International Trade’s “but for” approach and to interpret “expenses of repairs” so as to exclude those expenses (e.g., expenses for clean-up and protective covering work) not incurred for work directly involved in the actual making of repairs. Such a reading has no basis in the plain language of the statute, however. Aside from the inapplicable statutory exceptions, the language “expenses of repairs” is broad and unqualified. As such, we interpret “expenses of repairs” as covering all expenses (not specifically exempted in the statute) which, but for dutiable repair work, would not have been incurred. (Emphases supplied.)

Where cleaning is performed in a certain part of a vessel, and where substantial repairs have been performed in that same area of a vessel, it is our long-held view that a presumption is created that such cleaning is incident to the repairs, and is therefore dutiable under 19 U.S.C. § 1466. That presumption has not been rebutted in this case. Accordingly, we find the subject cleaning cost to be dutiable.

HOLDING:

The costs for which the protestant seeks relief are dutiable under 19 U.S.C. § 1466 as discussed in the Law and Analysis section of this ruling.

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 final duty determination 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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