VES-13-18-CO:R:P:C 112060 GEV
Deputy Assistant Regional Commissioner
Commercial Operations
c/o Regional Commissioner
New Orleans, Louisiana 70130-2341
RE: Protest No. 1801-91-000068; Vessel Repair; Entry No. C18-
0014538-0; S/S ULTRAMAR V-96B; Casualty; Seaworthiness
Dear Sir:
This is in response to your memorandum dated December 16,
1991, forwarding a supplemental petition for review of ruling
111477 GEV. We note that a protest on this matter (containing
the same claims as in the supplemental petition) was subsequently
filed and forwarded to our office for review. Our ruling on this
matter is 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). It was
stated 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 application
stated 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
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repairs only were accomplished by the crew in Chittagong. The
ABS surveyor recommended that the vessel proceed in ballast to
Malta for the 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 the application the following was submitted:
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 (USCG) 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
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the Vice President of Operations of AMT during the time of the
repairs in question), petitioner's counsel, a witness for the
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.
In ruling 111477 GEV, dated July 16, 1991, Customs denied
the petition. This denial was based upon a review of the record
in its entirety, specifically the legal authorities cited
therein which led us to agree 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 noted, 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 relied heavily on the ABS documentation
cited above. While this documentation appeared indicative of the
opinion of ABS on this matter, the record contained no
"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. Furthermore, other than the USCG Report of Accident,
the record contained no USCG documentation of any kind. This
would appeared to run contra to sections 2.01-15 and 31.10-25,
of the USCG Regulations (46 CFR 2.01-15, 31.10-25).
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. The record
contained 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 were 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. Based both on
the record as prepared by counsel for AMT, and our discussion
with USCG officials, it was apparent that the USCG made no
determination whatsoever as to the subject vessel's safety and
seaworthiness prior to its proceeding from Chittagong to Palermo.
Accordingly, Customs held that the petitioner failed to
substantiate its claim for remission under 1466(d)(1) and the
petition was therefore denied.
The entry was subsequently forwarded for liquidation which
took place on September 6, 1991. By letter dated December 3,
1991, counsel, on behalf of AMT filed a supplemental petition.
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Realizing that a supplemental petition is the incorrect vehicle
by which to obtain relief (see Penrod Drilling Co. v. U.S., 727
F.Supp. 1463 (CIT 1989)), counsel properly filed a protest on
December 5, 1991. In support of this protest the following
evidence was submitted: a letter dated August 13, 1991, from the
President of AMT, to the Officer-In-Charge, USCG Marine
Inspection Office (OCMI), New York, N.Y., regarding this matter
(Exhibit B); a letter dated August 20, 1991 (with enclosures)
from the OCMI, New York, N.Y., in response to the aforementioned
letter (Exhibit C); a letter dated September 16, 1991, from
counsel for AMT to the OCMI, New York, N.Y., on this matter
(Exhibit D); and a letter dated November 7, 1991, from the OCMI,
New York, N.Y., in response to the aforementioned letter from
counsel (Exhibit E).
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.
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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. However, the extent of that casualty (i.e.,
parts 2 and 3 of the three-part test set forth above) is the
critical issue upon which this case turns.
All parties concerned are in agreement that the USCG is the
controlling agency that determines questions of a vessel's
fitness to proceed. The procedure by which the USCG renders such
a determination is set forth in sections 2.01-15 and 31.10-25,
USCG Regulations (46 CFR 2.10-15, 31.10-25). The former states
that a vessel may not proceed from one port to another for
repairs unless prior authorization is obtained from the USCG
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. The latter
states that with respect to tank vessels, "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-Charge,
Marine Inspection."
Notwithstanding the clear wording of the above USCG
Regulations, specifically 46 CFR 2.10-15 which does not
distinguish between foreign or domestic locations, the OCMI, New
York, N.Y., states that "A formal Permit to Proceed is not
normally issued to a vessel transiting foreign waters because
the Certificate of Inspection (COI) would have to be removed from
the vessel which would cause problems in transiting foreign
waters." (Exhibit E)
In addition, we have subsequently learned from the Chief,
Merchant Vessel Inspection and Documentation Division, USCG
Headquarters, in a letter dated April 14, 1992, that "Vessel
operators often make casualty reports for U.S. flag vessels
damaged overseas verbally to the proper Coast Guard Marine
Inspection Office, followed by the required written report. The
Coast Guard cannot always send a marine inspector to a damaged
vessel overseas on short notice. In such cases, the Coast Guard
may consider the classification society report and the report of
the vessel's master to determine the required temporary repairs
and voyage restrictions."
A review of the casualty records in the Marine Investigation
Division at USCG Headquarters reveals that the collision in
question took place on November 3, 1989, and was verbally
reported by the operator of the ULTRAMAR to the OCMI in New York
the following day. The required written notification, however,
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was submitted to the OCMI in Honolulu. Notwithstanding the fact
that at the time of the collision the ULTRAMAR was in an overseas
location that is usually covered by the OCMI in Honolulu (where
both the verbal and written notifications to the USCG should have
been reported), then subsequently proceeded to a repair facility
in an area covered by the OCMI in New York, it is the position of
the USCG that the vessel operator violated no laws or regulations
administered by that agency in reporting the vessel casualty and
arranging for inspection. (Exhibit E and the aforementioned
letter from the Chief, Merchant Vessel Inspection and
Documentation Division, USCG Headquarters)
Accordingly, evidence is presented sufficient to prove that
the subject foreign repairs were necessary for the vessel's
safety and seaworthiness thereby warranting remission pursuant to
19 U.S.C. 1466(d)(1).
Parenthetically, we note that in regard to future cases
such as the one now under consideration (i.e., where a vessel
has been damaged foreign, proceeded between two foreign
locations in a state of disrepair prior to its being repaired
foreign, and subsequently sailing to its U.S. port of
destination), notwithstanding any practice of verbally reporting
foreign casualties to the USCG and that agency's subsequent
verbal instructions, remission pursuant to 19 U.S.C. 1466(d)(1)
will not be granted in the absence of documentary evidence that
the casualty occurrence was timely reported to the USCG and that
agency permitted the vessel to proceed between two foreign
locations in a damaged condition. The mere submission of a USCG
Report of Marine Accident, Injury or Death (CG-2692), without
accompanying documentation from the appropriate USCG OCMI (New
York or Honolulu) authorizing the vessel to proceed in a damaged
condition, will not suffice for granting remission pursuant to 19
U.S.C. 1466(d)(1).
HOLDING:
The evidence presented is 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 granted.
Accordingly, the protest is granted.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch