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HQ W116604

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May 16, 2006

VES-13-18-RR:IT:EC W116604 CK

CATEGORY: CARRIER

Chief, Vessel Repair Unit
U.S. Customs and Border Protection
P.O. Box 1389
Kenner, Louisiana 70063

RE: MV MERLIN; Protest and AFR Number 2002-05-100859; Vessel Repair Entry Number C20-0058642-3; 19 U.S.C. 1466(a)

Dear Sir:

This is in response to your memorandum of January 23, 2006, forwarding for our review the above-numbered protest filed by Garvey, Schubert, Barer on behalf of Sealift, Inc. Our ruling follows.

FACTS:

On September 28, 2002 the MV MERLIN arrived in Norfolk, VA. On September 29, 2002 a timely vessel repair entry was filed. An application for relief was filed on February 14, 2003 and a revision to the application for relief was filed on April 25, 2005. A duty determination was made on June 24, 2005. A timely protest was filed on September 8, 2005.

ISSUE:

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

LAW AND ANALYSIS:

Title 19, United States Code, §1466(a) (19 U.S.C. §1466(a)) states in pertinent part:

The equipments, or any part thereof ... 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 to engage in the foreign or coasting trade, or a vessel intended to be employed in such trade, shall, on the first arrival of such vessel in any port of the United States, be liable to entry and the payment of an ad valorem duty of 50 per centum on the cost thereof in such foreign country.

Item 37 is the first item in dispute, and consists of work performed by LISNAVE Estaleiros Navais, S.A. detailed on Invoice 1. Item 37 is entitled “Sea Suction and Overboard Discharge Valves,” and required the contractor to open, clean, and repair all valves discs, seats, studs, nuts, gaskets, and sea chest strainer places. Protestant seeks relief stating the charges are dual purpose expenses and the charges should be prorated. The New Orleans Vessel Repair Unit (VRU) denied relief stating the charges were not broken down between dutiable and nondutiable costs and thus are all dutiable. We agree with the VRU that pursuant to HQ 114188, dated April 23, 1998 and C.I.E.s 565/55, 1325/58, and C.D. 1836, CBP will not grant relief where there is insufficient breakdown between dutiable and nondutiable costs. No relief should be granted on this item.

Item 53 also detailed on Invoice 1 is at issue. Item 53 states “Sea Suction Trunk Cleaning” and includes extra 60 m² high pressure washed, scraped and coated. Protestant seeks relief stating the charges are dual purpose expenses and the charges should be prorated. Relief was denied, and all costs were held dutiable because of an insufficient breakdown between dutiable (scraping and coating- repairs) and nondutiable costs (cleaning). We agree that pursuant to HQ 114188, dated April 23, 1998 and C.I.E.s 565/55, 1325/58, and C.D. 1836, CBP will not grant relief where there is insufficient breakdown between dutiable and nondutiable costs. No relief should be granted on this item.

Item 119 is also at issue. This item involves the cleaning, checking and tightening of the main and emergency switchboards. There is no evidence that this cleaning and tightening was done in conjunction with a dutiable repair or constituted maintenance, thus we find this item nondutiable. Relief should be granted on this item.

Invoice 10 is for work done overhauling the main engines in Portugal. The invoice is from Lindholmen Engineering Co. of Jacksonville, Florida. The invoice details work, airfare, taxis, and parts. Protestant seeks relief stating the labor is U.S. resident labor. However, relief was denied as no evidence was presented showing U.S. residency of the engineer. We note, that while the invoice is from a U.S. company and includes airfare, protestant admits it has no proof as to the U.S. residency of the engineer. No relief should be granted on this item.

Invoice 15 is from the American Bureau of Shipping (ABS). One line item is for a “special attendance fee. Protestant seeks relief that this “overtime” fee is not dutiable as it was incurred due to nondutiable inspections. We find that this charge like the administrative charges and traveling time on that invoice should be prorated. Relief should be granted on a prorated basis.

HOLDING:

The relief protestant sought from the duties owed under 19 U.S.C. 1466(a) should be denied in part, and granted in part in accordance with the Law and Analysis section of this ruling.

You are instructed to grant in part and deny in part the protest with respect to the above-discussed items.

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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