VES-13-18-RR:IT:EC 114116 GOB
Evelyn M. Suarez, Esq.
Ross & Hardies
888 Sixteenth Street, N.W.
Washington, D.C. 20006-4103
RE: 19 U.S.C. 1466; Vessel repair; Fuel oil transfer system
Dear Ms. Suarez:
This is in response to your ruling request of September 19,
1997 on behalf of Sea-Land Service, Inc. ("Sea-Land").
FACTS:
You request a ruling "confirming the nondutiable status as a
modification of Fuel Oil Transfer System Modifications under 19
U.S.C. 1466."
In your letter, you describe the work to be performed. You
also submit preliminary specifications for the work.
The work is described as follows in the "General
Description" section of the preliminary specifications:
The Atlantic Class Ships are presently fitted with two
250 mm diameter fuel oil transfer pipes (P/S) running
from the Engine Room through the Duct Keel (pipe
tunnel) forward to Fr. 175+370 mm.
...
The existing eighteen (18) expansion joints shall be
removed and replaced. Two (2) additional new expansion
joints shall be installed at new locations and minor
modifications to the piping arrangement shall be made
to improve the anchoring and alignment of the piping
sections.
Prior to installation of the new and replacement
joints, the place between sections of pipe where the
joints are to be installed shall be adjusted to match
the installation distance of the new joints. The
distance between the pipe flanges shall be adjusted in
the fore and aft direction to the specified mounting
length of the new expansion joints.
Possible methods of setting the correct flange spacing
include moving of the pipe sections, cutting sections
of pipe, or adding sections of pipe.
The work to be performed is also described in the
"Description of Work To Be Performed" section of the preliminary
specifications. It includes such items as: removal of the 18
existing expansion joints; installation of expansion joints at 20
locations; checking of piping alignment; welding of pipe anchors;
reconnecting and modification of steam tracing lines; the
hydrostatic testing of the fuel piping and steam tracing piping;
and associated insulation and cleaning.
You state that the fuel transfer pipes in the Atlantic Class
vessels are in good condition and not in need of repair. You
further state that the new and replacement expansion joints will
provide increased strength and flexibility by using a multi-ply
bellows design, which reduces the mechanical stresses; these
joints are expected to provide significantly increased component
fatigue life and reliability.
ISSUE:
Whether the work to be performed is dutiable under 19 U.S.C.
1466.
LAW AND ANALYSIS:
19 U.S.C. 1466 provides for the payment of duty at a rate of
fifty percent ad valorem on the cost of foreign repairs to
vessels documented under the laws of the United States to engage
in foreign or coastwise trade, or vessels intended to be employed
in such trade.
In its application of the vessel repair statute, the Customs
Service has held that modifications, alterations, or additions to
the hull of a vessel are not subject to vessel repair duties.
The identification of work constituting modifications vis-a-vis
work constituting repairs has evolved from judicial and
administrative precedent. In considering whether an operation
has resulted in a nondutiable modification, the following factors
have been considered. These factors are not by themselves
necessarily determinative, nor are they the only factors which
may be relevant in a given case. However, in a given case, these
factors may be illustrative, illuminating, or relevant with
respect to the issue of whether certain work may be a
modification of a vessel which is nondutiable under 19 U.S.C.
1466:
1. Whether there is a permanent incorporation into the hull
or superstructure of a vessel, either in a structural sense or as
demonstrated by means of attachment so as to be indicative of a
permanent incorporation. See United States v. Admiral Oriental
Line, 18 C.C.P.A. 137 (1930). However, we note that a permanent
incorporation or attachment does not necessarily involve a
modification; it may involve a dutiable repair or dutiable
equipment.
2. Whether in all likelihood an item would remain aboard a
vessel during an extended lay-up.
3. Whether an item constitutes a new design feature and
does not merely replace a part, fitting, or structure that is
performing a similar function.
4. Whether an item provides an improvement or enhancement
in operation or efficiency of the vessel.
After a consideration of the documentation submitted, we
find that the work to be performed on the vessels is a
modification which is not dutiable under 19 U.S.C. 1466. The
documentation does not evidence or indicate a state of disrepair,
nor does it evidence or indicate that the work to be performed is
work which would typically be described as repair work. The work
to be performed is very similar to the type of work which we have
previously determined to be nondutiable modifications.
HOLDING:
The work to be performed, as described in the documentation
submitted, is a nondutiable modification to the vessels.
Sincerely,
Jerry Laderberg
Chief,
Entry Procedures and Carriers
Branch