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HQ W116628

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October 23, 2006

VES-13-18-RR:BSTC:CCI 116628 CK

CATEGORY: CARRIER

Patricia Burke, Supervisory Entry Officer U.S. Customs and Border Protection
P.O. Box 1389
Kenner, LA 70063

RE: M/V MAHIMAHI; Protest and AFR Number 2002-03-100404; Vessel Repair Entry Number C20-0059027-6; 19 U.S.C. 1466(a)

Dear Ms. Burke:

Under cover of a memorandum (VES-13-02-G:NO:VR LBM), dated March 9, 2006, the former chief of the Vessel Repair Unit (VRU) forwarded for our review the above-numbered protest filed by Matson Navigation Company, Inc. Our ruling follows.

FACTS:

On June 10, 2002 the M/V MAHIMAHI arrived in San Pedro, CA. A timely Application for Relief was filed which was granted in part and denied in part. A duty determination was posted on February 21, 2003. The subject protest was filed May 21, 2003.

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.

Counsel for the protestant filed a supplemental submission, dated April 8, 2005, with the VRU, pursuant to section 1554 of the “Miscellaneous Trade and Technical Corrections Act of 2004.” Section 1554 of the Miscellaneous Trade and Technical Corrections Act of 2004, signed by the President on December 3, 2004, amended the vessel repair statute by adding the following exemption to section 1466(a) found in 19 U.S.C. § 1466(h):

(4) the cost of equipment, repair parts, and materials that are installed on a vessel documented under the laws of the United States and engaged in the foreign or coasting trade, if the installation is done by members of the regular crew of such vessel while the vessel is on the high seas.

Declaration and entry shall not be required with respect to the installation, equipment, parts, and materials.

This legislation further provides for a retroactive effective date for that equipment, repair parts, and materials installed on or after April 25, 2001.

Subsequently, Section 1631 of the “Pension Protection Act of 2006”, signed by the President on August 17, 2006, further amended section 1466(h)(4) by exempting from duty such costs if the installation is done by members of the regular crew while the vessel is “in foreign waters, or in a foreign port, and does not involve foreign shipyard repairs by foreign labor.”

As noted above, the subject protest was received by the VRU on May 21, 2003, and counsel for the protestant filed a supplemental submission dated April 8, 2005.

The T.R. Numbers at issue, 196, 197, 336, 341-348, involve installation of spare repair parts to the vessel by members of the regular crew of the vessel while the vessel was in a foreign port, and such items are exempt from duties under section 1466(h)(4). Accordingly, we find that these items are non-dutiable.

Additionally, protestant seeks relief on Item number 2 in the original entry. That invoice has to do with cleaning, and cleaning supplies. We have previously held that cleaning unrelated to any dutiable repair does not constitute a dutiable maintenance operation. See, HQ 115603, dated May 16, 2002, HQ 116501, dated August 11, 2005, and HQ 116604, dated May 16, 2006. Based on the cleaning description on the shipyard invoice the cleaning was not part of a dutiable repair or maintenance operation and thus is nondutiable.

HOLDING:

Following a thorough review of the evidence as well as well as an analysis of the law and applicable precedents, we have determined that the protest should be granted.

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

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