VES-13-18 CO:R:IT:C 112065 BEW
Deputy Assistant Regional Commissioner
Commercial Operations Division
South Central Region
New Orleans, Louisiana 70130
RE: Jackson, Florida, Vessel Repair Entry No. C18-0016861-4; SS
CHESTNUT HILL, V/150; Application; casualty; crew negligence
Dear Sir:
This is in reference to your memorandum of January 6, 199(1)
which transmitted an application for relief from duties filed by
Keystone Shipping Co., on behalf of Mellon Bank (East) N.A., in
relation to the above referenced vessel repair entry dated
August 23, 1991. The entry and the application were timely
filed. The vessel arrived at the port of Jacksonville, Florida,
on August 23, 1991.
FACTS:
The SS CHESTNUT HILL is a U.S.-flag vessel owned by Mellon
Bank (East) N.A. The record shows that foreign repairs were
performed on the subject vessel at Dubai, United Arab Emirates
(UAE) on November 24 through November 30, 1990 and February 3
through 16, and April 11 through 17, 1991; Algeciras, Spain, on
November 1, 1990; Jeddah, KSA on December 8, 1990 and January 8,
1991, and in Trieste, Italy.
The applicant claims that the following invoices relate to
the repairs necessary because of a casualty:
Invoice No. 2 - Item No. 2 - Nico Int'l Invoice 14459
Invoice No. 5 - ABS Tech invoice
Invoice No. 8 - Marine Technical Services, Inc.
Invoice No. 10 - Nico International UAE
Invoice No. 11 - Dubai Drydocks
Invoice No. 13 - Nico International UAE
Invoice No. 14 - Marine Technical Services, Inc.
The applicant contends that the alleged casualty was caused
by crew negligence which resulted in the rupturing of the No. 2
main cargo pump expansion joint. You have referred for our
review the vessel operator's claim of remissible casualty due to
negligence by a crew member.
ISSUE:
Whether sufficient evidence is presented to establish that
the foreign repairs which were made to the vessel main cargo
pump expansion joint were necessitated by a "casualty" i.e.
crew negligence, thus warranting remission pursuant to 19
U.S.C. 1466(d)(1).
LAW AND ANALYSIS:
Title 19, United States Code, section 1466(a), provides in
pertinent part for payment of duty in the amount of 50 percent ad
valorem on 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 be employed in such
trade.
Paragraph (1), subsection (d) of section 1466 provides that
duty may also be remitted if good and sufficient evidence is
furnished establishing that the vessel was compelled by stress of
weather or other casualty to put into a 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 Customs
position that "port of destination" means a port in the United
States."
The statute thus sets a three-part test which must be met in
order to qualify for remission under the subsection, these
being:
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.
The term "casualty" as it is used in the statute, has been
interpreted as something which, like stress of weather, comes
with unexpected force or violence, such as fire, or spontaneous
explosion of such dimensions as to be immediately obvious to
ship's personnel, or collision (Dollar Steamship Lines, Inc. v.
United States, 5 Cust. Ct. 28-29, C.D. 362 (1940)). In this
sense, a "casualty" arises from an identifiable event of some
sort. In the absence of evidence of such a casualty event, we
must consider the repair to have been necessitated by normal wear
and tear (ruling letter 106159, September 8, 1983).
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.
The statements of the Chief Engineer and Third Assistant
Engineer, the Engineer's and Official log books, and the Coast
Guard Form 2692, Casualty Report, indicate that on October 31,
1990, the expansion joint of the No. 2 main cargo pump blew out
due to improper shut down by the Third Assistant Engineer.
The documents submitted with the application substantiates
that the improper shut down of the Main Cargo No. 2 pump caused
damage to the subject pump and the foreign repairs were necessary
for the safety and seaworthiness of the vessel.
Upon reviewing the record in its entirety, we find that the
damage sustained to the subject vessel which occurred on October
31, 1990, was the result of a "casualty" within the meaning of
section 1466.
The Customs Service has ruled that single acts of negligence
of crewmembers which cause damage to vessels, whether
attributable to officers or not, will be considered "other
casualties" within the meaning of section 1466(d)(1), provided no
evidence of owner direction or inducement is present (see C.S.D.
82-42).
In C.I.E. 429/61 we noted that:
... expenses which are incurred in conducting
inspections made subsequent to the repairs,
so as to ascertain whether the work had been
properly performed, are dutiable as integral
parts of the expenses of repairs although
separatly [sic] itemized. Moreover, testing
which is effected for the purpose of
ascertaining whether repairs to certain
machinery or parts of the vessel are
required, or are performed in order to
ascertain if the work is adequately
completed, are also integral parts of the
repairs and are accordingly dutiable.
Pursuant to the holdings in C.I.E. 429/61, and extending the
concept to surveys as well as inspections, if a survey is
conducted to ascertain the extent of damage sustained, or to
ascertain if the work is adequately completed, the costs are
dutiable as part of the repairs which are accomplished. In the
subject case, the surveys were conducted as a part of the repairs
relating to the casualty, and is therefore remissible as a part
of the foreign repairs made to the No. 2 main cargo pump.
HOLDING:
Following a thorough review of the facts and evidence, and
after an analysis of the law and applicable precedent decisions,
we have determined to allow the Application for Relief, as
specified in the law and analysis portion of this decision.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch