VES-13-18-CO:R:P:C 111477 GEV
Deputy Assistant Regional Commissioner
Commercial Operations
c/o Regional Commissioner
New Orleans, Louisiana 70130-2341
RE: Vessel Repair; Entry No. C18-0014538-0; S/S ULTRAMAR V-96B;
Casualty; Seaworthiness
Dear Sir:
This is in response to your memorandum dated January 14,
1991, forwarding a petition for review of ruling 111015 GV. Our
findings are set forth below.
FACTS:
The S/S ULTRAMAR is a U.S.-flag vessel owned by Bankers
Trust Company, and operated by American Maritime Transport, Inc.
(AMT). The subject vessel had foreign shipyard work performed in
Palermo, Sicily, during the period of November 23-December 6,
1989. Subsequent to the completion of the work the vessel
arrived in the United States at Tampa, Florida, on December 23,
1989. A vessel repair entry covering the work in question was
apparently untimely filed on January 2, 1990 (we note that Box
25E on the CF 226 for the entry date is blank, however, the
handwritten date of "1/2/90" appears in Box 18).
An application for relief, dated February 1, 1990, was filed
requesting remission pursuant to 19 U.S.C. 1466(d)(1). The
applicant states that on November 3, 1989, while the S/S ULTRAMAR
was anchored and discharging cargo to a lightering vessel in
Chittagong, Bangladesh, the M/V ADEL, for reasons unknown,
struck the S/S ULTRAMAR with her bow making a deep indentation in
the port side in way of the hold and ballast tanks 1 and 2,
extending approximately 80 feet in length. The applicant states
that, "After examination by the American Bureau of Shipping it
was agreed that permanent repairs would be required before the
vessel could return to oceangoing service. Because there were no
adequate repair facilities in the area, temporary repairs only
were accomplished by the crew in Chittagong. The ABS surveyor
recommended that the vessel proceed in ballast to Malta for the
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required permanent repairs prior to returning to the U.S.
Pursuant to the recommendations of ABS, the vessel sailed to
Palermo, Sicily (near Malta) where the required repairs were
accomplished."
In support of their claim the applicant submitted the
following: the vessel log of November 3, 1989 (Exhibit A(1));
the vessel log of November 4, 1989 (Exhibit A(2)): a fax from the
Master dated November 3, 1989 (Exhibit B); a Note of Protest
(Exhibit C); a U.S. Coast Guard Report of Accident (Exhibit D);
an American Bureau of Shipping (ABS) letter dated November 20,
1989; ABS Report no. CI 1252 (Exhibit F(1)); ABS Report no.
PL6963 (Exhibit F(2)); a picture of the repairs in progress
(Exhibit F(3)); an affidavit of the Master (Exhibit G); a report
from The Salvage Association (Exhibit H); and shipyard invoices.
In ruling 111015 GV, dated July 27, 1990, Customs denied the
application for relief. In denying this request we noted that
in regard to the applicant's claim that the repair facilities in
Chittagong were inadequate for performing permanent repairs and
therefore the vessel had to proceed in ballast to Palermo,
several ports closer to Chittagong capable of performing the
subject repairs (most notably Singapore) were bypassed in favor
of sailing a much greater distance to Palermo. A question
existed as to degrees of seaworthiness. We held that in the
subject case, the voyage of the S/S ULTRAMAR from Chittagong
(where temporary repairs were obtained) across the Indian Ocean,
through the Suez Canal, and then halfway across the
Mediterranean Sea was sufficient to demonstrate the subject
vessel's seaworthiness so as to deny remission under section
1466(d)(1).
In a petition dated September 27, 1990, counsel for AMT
reiterated their claim for remission based on a casualty.
Further in support of this claim the following additional
documentation was submitted: excerpts from G. Gilmore & C.
Black, The Law of Admiralty (2d ed. 1975) (Exhibit 3); 80 C.J.S.
Shipping 36 (Exhibit 4); 70 Am. Jur. 2d 26 (Exhibit 5); an
Opinion of the Attorney General dated January 29, 1923 (Exhibit
6); T.D. 39443 (Exhibit 7); a letter from the Assistant Vice
President, ABS (Exhibit 8); and an affidavit from the Vice
President of AMT (Exhibit 9). In response to a request for
additional information from the New Orleans VRLU, counsel also
submitted a letter from the Vice President, American Maritime
Transport, Inc.
It should be noted that after Customs receipt of the
petition and supporting documentation, and at the request of the
petitioner, a meeting was held at Customs Headquarters on June
25, 1991, with the petitioner (i.e., the President of AMT who was
the Vice President of Operations of AMT during the time of the
repairs in question), petitioner's counsel, a witness for the
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petitioner (i.e., the vessel's Chief Engineer during the time in
question), the Chief, Carrier Rulings Branch, and an attorney
with the Carrier Rulings Branch.
ISSUE:
Whether evidence is presented sufficient to prove that the
foreign repairs performed on the vessel for which relief is
sought, were necessary for its safety and seaworthiness thus
warranting remission pursuant to 19 U.S.C. 1466(d)(1).
LAW AND ANALYSIS:
Title 19, United States Code, section 1466, provides in part
for payment of an ad valorem duty of 50 percent of the cost of
foreign repairs to vessels documented under the laws of the
United States to engage in the foreign or coastwise trade, or
vessels intended to engage in such trade. Section 1466(d)(1)
provides that the Secretary of the Treasury is authorized to
remit or refund such duties if the owner or master of the vessel
was compelled by stress of weather or other casualty to put into
such foreign port to make repairs to secure the safety and
seaworthiness of the vessel to enable her to reach her port of
destination.
It is noted that section 4.14(c)(3)(i), Customs Regulations
(19 CFR 4.14(c)(3)(i)), provides that "port of destination" means
such port in the United States. This point is not in dispute,
however, it is an embellishment upon section 1466(d)(1) which
sets forth the following three-part test which must be met in
order to qualify for remission:
1. The establishment of a casualty occurrence.
2. The establishment of unsafe and unseaworthy conditions.
3. The inability to reach the port of destination without
obtaining foreign repairs.
In addition, if the above requirements are satisfied by
evidence, the remission is restricted to the cost of the minimal
repairs necessary to enable the vessel to reach her port of
destination. Repair costs beyond that minimal amount are not
subject to remission. In the case under consideration, the
evidence supports the claim that the subject vessel suffered a
marine casualty. The extent of that casualty is, however, the
critical issue upon which this case turns.
The petitioner maintains that the collision damage incurred
by the subject vessel at Chittagong, Bangladesh, rendered it
unseaworthy for crossing the Atlantic Ocean, however, after
temporary repairs by the crew in Chittagong (it is contended that
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the facilities in Chittagong were inadequate for performing
permanent repairs), it was considered seaworthy to proceed in
ballast across the Indian Ocean, through the Suez Canal, and
halfway across the Mediterranean Sea where permanent repairs were
performed in Palermo, Sicily.
Upon reviewing the record in its entirety, specifically the
legal authorities cited, we are in accord with the position that
seaworthiness is a relative term dependent upon a variety of
factors including the condition of the vessel, the proposed
voyage, seasonal changes, etc. We note, however, that to support
their argument that the subject vessel was seaworthy for its
Chittagong-Palermo voyage but not for a trans-Atlantic crossing,
the petitioner relies heavily on the ABS documentation cited
above. While this documentation appears indicative of the
opinion of ABS on this matter, we note that the record
nonetheless does not contain a "Certificate of Fitness to
Proceed" referenced on both p. 1 of the ABS Vice President's
letter (Exhibit 8) and p. 11 of the petition.
Again, the term "seaworthy" is admittedly relative. Whether
a boat is seaworthy to traverse a pond, or a merchant vessel to
voyage the northern Atlantic Ocean in mid-winter, are questions
which involve disparate considerations. But as a practical
matter questions of seaworthiness must often fall within limited
factual circumstances which preclude such far-reaching
speculations. We consider whether a particular ship with a
particular mission is seaworthy in terms of accomplishing that
mission and as to which recognized authorities exist that will
aid us in making that determination. Our focus in issuing
rulings must be toward narrowing questions rather than presenting
or accepting the central issues in such a way as to preclude
definable considerations.
To pursue the foregoing thought and try to decide the
subject petition within the framework of definable criteria, it
is appropriate to apply whatever formal, precedential guidelines
that exist. This of course would include any applicable
procedures. In this case, one existent procedure is squarely on
point.
Pursuant to 2.01-15, U.S. Coast Guard (USCG) Regulations
(46 CFR 2.01-15) a vessel may not proceed from one port to
another for repairs unless prior authorization is obtained from
the USCG Officer in Charge, Marine Inspection (OCMI) either
through the issuance of a USCG "Permit to Proceed to Another Port
for Repairs" (CG-948) or a CG-835 which would specify the
restrictions on, and duration of, any voyage undertaken prior to
obtaining permanent repairs. (see also 46 CFR 31.10-25 regarding
tank vessels which provides, inter alia, that "No extensive
repairs to the hull or machinery which affect the safety of a
vessel shall be made without the knowledge of the Officer in
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Charge, Marine Inspection.") Other than the USCG Report of
Accident, the record contains no USCG documentation of any kind.
During the aforementioned June 25, 1991, meeting at Customs
Headquarters, the President of AMT stated that he telephonically
contacted the USCG about the incident, informed them of the ABS
survey, and requested a USCG inspection prior to the vessel's
departure from Chittagong. He further stated that the USCG
telephonically informed him that it could not get a USCG
inspector to the vessel for five days but would accept the ABS
survey as a substitute for its own inspection. We reiterate that
the record contains no writing to substantiate these claims.
Furthermore, upon contacting the USCG Marine Inspection Offices
in New York and Honolulu (both of which oversee foreign repairs
to U.S. vessels) we have been informed that the USCG was not
contacted by the petitioner regarding this matter until after
permanent repairs were performed on the subject vessel in
Palermo. Notwithstanding this apparent violation of the
aforementioned USCG regulations, it is apparent that the USCG
made no determination whatsoever as to the subject vessel's
safety and seaworthiness before it proceeded from Chittagong to
Palermo.
If counsel contends that the assertions of the ABS and a
statement from an official of the firm that operates the vessel,
are of equally probative value with an official USCG
determination as to the vessel's fitness, we disagree, not only
because federal regulations provide for evidence that permits an
expeditious resolution of the question of seaworthiness but
because mere assertions of interested parties have been
substituted for that disinterested finding. The petitioner has
not met a burden of proof that is provided for by federal
regulations. The controlling agency that determines questions of
fitness to proceed is the USCG which is not empowered to assign
this responsibility to a private organization (i.e., the ABS,
which is a surveying society the primary purpose of which is to
determine whether, for insurance purposes, a vessel will remain
in class). The USCG regulations, which have the force and effect
of law, require a vessel operator to prove certain facts to the
federal government; that was not done.
Accordingly, in the absence of any determination of the USCG
regarding the subject vessel's safety and seaworthiness, and
absent the evidence that would be adduced by the required USCG
determination on the issue of seaworthiness, the petitioner has
failed to substantiate its claim for remission under 1466(d)(1).
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HOLDING:
The evidence presented is not sufficient to prove that the
foreign repairs performed on the subject vessel for which relief
is sought were necessary for its safety and seaworthiness
therefore remission pursuant to 19 U.S.C. 1466(d)(1) is denied.
Accordingly, the petition is denied.
Sincerely,
Stuart P. Seidel
Director, International Trade
Compliance Division