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HQ W116707

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March 15, 2007

VES-13-18-RR:BSTC:CCI W116707 CK

CATEGORY: CARRIER

Supervisory Customs Entry Officer
U.S. Customs and Border Protection
1515 Poydras Street, 17th Floor
New Orleans, Louisiana 70112

RE: 19 U.S.C. § 1466; Vessel Repair Entry C20-0063226-8; Protest No. 2002- 06-100116; SEALIFT ADVANTAGE

Dear Madam:

This is in response to your memorandum of August 9, 2006, forwarding for our review the protest filed by counsel on behalf of Fortune Maritime, Inc., with respect to Vessel Repair Entry C20-0063226-8. Our ruling on this matter is set forth below.

FACTS:

The SEALIFT ADVANTAGE, a U.S.-flagged vessel owned by the protestant, incurred foreign shipyard costs. On May 28, 2003, the vessel arrived in the United States. A vessel repair entry was timely filed. On April 14, 2006, a determination of duty occurred in the amount of $214,302.81. On June 30, 2006, the protestant filed Protest No. 2002-06-100116.

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) and 19 CFR 174.12(e).

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 or repairs made in a foreign country upon a vessel documented under the laws of the United States.”

The protestant seeks relief with respect to Invoice 1, Item 6 (Government Chemist); Invoice 2, Item 6 (Chain Lockers); Footnote 8, CF7501A; and Invoice 7 (Barwil Agencies).

With regard to Invoice 1, Item 6 (Government Chemist), the protestant contends that the work involved costs incurred for a “gas free certificate,” and should be prorated. Our review of the evidence, however, indicates that this item involved the inspection and the issuance of a “certificate for hot work.” The invoice states that the chemist visited the ship 4 times. The New Orleans Vessel Repair Unit (“VRU”) was able to isolate each inspection event. Each “hot work inspection” was in furtherance of an item that protestant conceded was dutiable. As the costs of the “hot work inspections” were incurred as part of dutiable expenses, the “hot work inspections” costs set out in Invoice 1, Item 6 are also dutiable.

Invoice 2, Item 6 (Chain Lockers) involves cleaning. The protestant claims that the cleaning was not done in preparation for repairs or as a consequence of repairs. Instead, protestant cites to HQ 114047, dated January 27, 1998. In HQ 114047 we held that a Chain Locker P/S Survey performed pursuant to a nondutiable ABS/USCG inspection without any repairs was a nondutiable item. In this case, Invoice 2 items 6 and 7, indicate that dutiable cleaning and repairs were performed on the chain lockers. However, Invoice 5 details a nondutiable American Bureau of Shipping (“ABS”) survey, which includes a chain locker inspection. Thus, the cost at issue, Invoice 2, Item 6 should be prorated between the dutiable repairs and nondutiable survey.

Footnote 8 of the application refers simply to the CF 7501A with respect to seeking relief pursuant to 19 U.S.C. 1466(h)(2) and (h)(3). Protestant now narrows the claim to relief from duties pursuant to (h)(3) and again refers to the CF 7501A. However, that is the extent of the claim. There is no linkage of the items listed on the CF 7501A to any specific invoices, and it is impossible to determine what exactly the line items on the CF 7501A refer to and whether such items are entitled to relief, i.e., whether a specific item listed on the CF 7501A is a “part” entitled to relief rather than “equipment.” Consequently, the items listed on the CF 7501A remain dutiable.

Invoice 7 (Barwil Agencies) involves a copy of the “Final Disbursement Account.” The account details crew transport expenses and other general expenses. Protestant seeks relief from these costs claiming they are not attributable to dutiable repairs. However, in HQ 116435, dated June 6, 2005 we stated that in accordance with Texaco Marine Services v. United States, 44 F.3d 1358 (Fed. Cir. 1994) and SL Service, Inc. v. United States, 357 F.3d (Fed. Cir. 2004), cert den., 125 S. Ct. 809 (December 13, 2004) and prevailing administrative precedent, expenses occurring in connection with dutiable work and the travel/transportation of the regular crew of a vessel are dutiable as general expenses. General expenses can be prorated pursuant to the aforementioned legal authority. Thus, the VRU correctly prorated the above expenses.

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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