VES-13-18-CO:R:IT:C 112232 BEW
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 June 2, 1992,
forwarding a petition for relief from duties assessed under 19
U.S.C. 1466.
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 August-September,
1991. After 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 did not
contain a basis for granting relief but merely requested
remission of duty for Items 12-20 and 22. Submitted with the
application were various invoices, job control orders and ABS
surveys covering the work in question. Upon reviewing the
documentation submitted it appeared that the repairs for which
remission was requested were necessitated due to the failure of
the ship's service turbo generator that self-destructed at 4:15
p.m. on August 21, 1991, while the vessel was enroute from Dutch
Harbor, Alaska, to Yokohama, Japan. Although not stated in the
application, the supporting documentation characterized this
damage as a casualty. Based on the evidence submitted, in ruling
No. 112078 GEV, dated February 19, 1992, it was held that:
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).
The petition for relief centers primarily around the alleged
casualty.
The petition contains affidavits from Frank Harrison, Marine
Service Engineer, Houma, Louisiana, concerning the inspection of,
and service to the vessel's engines prior to its voyage overseas;
relevant pages from the vessel's log; Notice of Damage to company
officials; the English translation of Item 13, a foreign invoice,
and ABS surveys relating to the alleged casualty.
ISSUE:
Whether sufficient evidence is presented to establish that
foreign repairs were necessitated by a "casualty" which is
remissible under the vessel repair statute (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 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 that must be met in
order to qualify for remission under the subsection, this 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 that, like stress of weather, comes with
unexpected force or violence, such as fire, 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 "secure the safety and seaworthiness of the
vessel to enable her to reach her port of destination" (19 U.S.C.
1466(d)(1)). Repair costs beyond that minimal amount are not
subject to remission.
Customs Regulations require that certain supporting evidence
be submitted with an application for relief from duties on
repairs resulting from stress of weather. This evidence includes
photocopies of the relevant parts of the vessel's logs,
certification of any claimed casualty by the master or other
responsible vessel officer with personal knowledge of the facts,
and a certification by the master that the repairs were necessary
for the safety and seaworthiness of the vessel to enable her to
reach her port of destination in the United States (19 C.F.R.
4.14(d)(1)(iii)(D)-(F)).
It is clear from the evidence submitted with the petition
that on August 21, 1991, the vessel's service turbo generator
suffered major damage due to failure of hydraulic amplifier
controlling throttle, compounded by failure of overspeed trip
device to operate when overspeed occurred. With regard to the
evidence that the vessel was in need of repairs to secure her
safety and seaworthiness, however, the documents show that the
permanent repairs were not made until September 6, 1991, when the
vessel was in the port of Yokohama. The evidence contained in
the file shows that after the explosion, the vessel proceeded
from the port of Yokohama to Kobe where temporary repairs were
made, and returned to Yokohama for permanent repairs.
The United States Coast Guard (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 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 that 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 that does not
distinguish between foreign or domestic locations, Customs has
been informed by the OCMI, New York, New York, in a letter dated
November 7, 1991, 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 that would cause problems in transiting foreign waters."
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."
The ABS Report No. YO26228, dated August 22, 1991, reports
that the vessel suffered damage as a "result of turbine over-
speed due to control malfunction of governor at 16:15 hours on 21
August 1991 whilst generator turbine was under loaded service
condition," however it further states, "It is recommended that
the above recommendations to be dealt with to the satisfaction of
ABS Surveyor at the vessel's next port of call Kobe, Japan, on 24
August 1991."
The ABS Report No. KO18154, dated August 24, 1991, reports
that:
The damaged turbine and generator were re-examined at
this time and found in accordance with the ABS Yokohama
Report YO26228 dated 22 August 1991 and turbine and
reduction gearing were considered beyond repair.
Recommendations for permanent repair are not dealt with
herein and remain outstanding as noted in Report No.
YO226228. Further details of the damage are not
considered necessary except as noted below.
The report further states that the vessel's owners tried to
procure a suitable temporary packaged marine generator unit at
this time but without success, and that temporary repairs were
carried out in order to allow the vessel to proceed. The ABS
considered the vessel fit to proceed to her intended voyage at
that time relative to the temporary repairs and upon her return
to Yokohama this current voyage and not later than 12 September
1991, a proper marine type packaged generator unit be fitted and
properly installed. The ABS Report No. YO26233, dated September
6, 1991, shows that a diesel generator unit was installed.
In cases such as the one under consideration, (i.e., where a
vessel that has been damaged foreign, proceeds in a state of
disrepair between two foreign locations prior to being repaired
foreign, and subsequently sails 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, directly or through the medium of a marine surveyor,
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).
The term "seaworthy" is admittedly relative. Whether a ship
is seaworthy to traverse the Mediterranean during the summer or
the northern Atlantic Ocean in mid-winter, are questions that
involve disparate considerations. But as a practical matter
questions of seaworthiness must often fall within limited factual
circumstances that preclude such far-reaching speculations. We
consider whether a particular ship with a particular mission, is
seaworthy in terms of accomplishing that mission and about 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.
Federal regulations provide for evidence that permits an
expeditious resolution of the question of seaworthiness. The
applicant has met the burden of proof that the particular repairs
to the subject vessel were necessary for the safety and
seaworthiness of the vessel.
Accordingly, we found from the evidence submitted with the
petition that the damage was caused by a casualty, and that the
ABS permitted the vessel to proceed between two foreign locations
in a damaged condition. The petitioner has submitted evidence
sufficient to substantiate its claim for remission under
1466(d)(1).
HOLDING:
The evidence presented is sufficient to prove that the
foreign repairs performed on the subject vessel were necessitated
by a casualty occurrence, thus warranting remission pursuant to
19 U.S.C. 1466. The petition is granted as to the casualty.
Sincerely,
Acting Chief