VES-13-18-CO:R:IT:C 112078 GEV
Chief, Technical Branch
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90731
RE: Vessel Repair Entry No. 335-0100604-4; PRESIDENT JOHNSON
V-242; Machinery Breakdown; Casualty
Dear Sir:
This is in response to your memorandum dated January 8,
1992, forwarding an application for relief from duties assessed
under 19 U.S.C. 1466. You request our advice regarding ten (10)
items. Our findings are set forth below.
FACTS:
The PRESIDENT JOHNSON is a U.S.-flag vessel owned by
American President Lines, Ltd., of Oakland, California. The
subject vessel underwent foreign repairs during the period of
August-September, 1991. Subsequent to the completion of the
repairs the vessel arrived in the United States at Seattle,
Washington, on September 15, 1991. A vessel repair entry was
filed on September 20, 1991.
Pursuant to an extension of time, an application for relief
was timely filed on December 16, 1991. The application itself
does not contain a basis for granting relief but merely requests
remission of duty for Items 12-20 and 22. Submitted with the
application are various invoices, job control orders and ABS
surveys covering the work in question. Upon reviewing the
documentation submitted it appears that the repairs for which
remission is requested were necessitated due to the failure of
the ship's service turbo generator which self-destructed at 4:15
p.m. on August 21, 1991, while the vessel was en route from Dutch
Harbor, Alaska, to Yokohama, Japan. Although not so stated in
the application, various of the supporting documentation has
characterized this damage as a casualty.
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ISSUE:
Whether evidence is presented sufficient to prove that the
foreign repairs performed on the vessel for which relief is
sought were necessitated by a casualty occurrence 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.
The term "casualty", as it is used in the vessel repair
statute (19 U.S.C.1466) 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 (see
Dollar Steamship Lines, Inc., v. United States, 5 Cust. Ct. 28-
29, C.D. 362 (1940)). 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 106159, September 8,
1983).
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, as
stated above, 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.
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In regard to the case under consideration, at the outset we
note that the application submitted is deficient in that it does
not meet the requirements set forth in section 4.14, Customs
Regulations (19 CFR 4.14) for an application in that no claim for
relief is made under either paragraph (a) (items that are not
subject to duty) and/or paragraph (c) (circumstances allowing
remission of duty otherwise due). Furthermore, Item 13 for our
review is a foreign invoice which is not accompanied by an
English translation as it required by 19 CFR 4.14(d)(1)(iv).
Notwithstanding the documentary deficiencies noted above,
the record contains no conclusive evidence as to what caused the
failure of the ship's service turbo generator. Pursuant to
C.S.D. 79-32, Customs has held that a breakdown or failure of
machinery may not be regarded as a casualty within the meaning of
section 1466(d)(1) in the absence of a showing that it was caused
by some extrinsic force. Accordingly, remission in this case is
denied with the exception of the following expenses which are
classifiably free under the vessel repair statute: Item 14
(equipment rental, meals, transportation costs); Item 17
(equipment rental, meals, crane, staging, rigging, transportation
costs); Item 18 (transportation costs).
HOLDING:
The evidence presented is insufficient to prove that foreign
repairs performed on the subject vessel for which relief is
sought were necessitated by a casualty occurrence thereby
warranting remission pursuant to 19 U.S.C. 1466(d)(1).
Accordingly, the application is denied with the exception of
those classifiably free items noted above.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch