VES-13-18-RR:IT:EC 114165 GOB
Port Director of Customs
Attn: Vessel Repair Liquidation Unit
423 Canal Street, Room 303
New Orleans, LA 70130-2341
RE: Vessel Repair Entry No. C16-0012107-8; SEA-LAND ATLANTIC, V-606/607; 19 U.S.C. 1466; Protest
Dear Sir:
This is in response to your memorandum dated November 5,
1997, which forwarded the protest submitted on behalf of Sea-Land
Service, Inc. (the "protestant" or "Sea-Land") with respect to
the above-referenced vessel repair entry.
FACTS:
The SEA-LAND ATLANTIC (the "vessel") is a U.S.-flag vessel
owned and operated by the applicant. In 1996, certain foreign
shipyard work was performed on the vessel. On August 14, 1996,
the vessel arrived in the United States. The subject vessel
repair entry was subsequently filed.
Sea-Land protests the dutiability of certain costs. It
states that transportation, administration, and telephone costs
are nondutiable. Sea-Land claims that the costs associated with
a Sperry Marine Limited technician are nondutiable because the
technician did not perform any repairs. Sea-Land further
contends that interest was charged erroneously upon liquidation
of the entry.
ISSUE:
Whether the subject costs are dutiable pursuant to 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, and
equipment purchased in a foreign country for, 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.
The subject entry is a "post-Texaco" entry, i.e., an entry
filed after the appellate decision in Texaco Marine Services,
Inc., and Texaco Refining and Marketing, Inc. v. United States,
44 F.3d 1539 (CAFC 1994), aff'g 815 F.Supp. 1484 (CIT 1993).
Accordingly, the Texaco decision applies to this entry.
In Texaco, the Court of Appeals for the Federal Circuit
stated in pertinent part:
Texaco urges us to reject the Court of International
Trade's "but for" approach and to interpret "expenses
of repairs" so as to exclude those expenses (e.g.,
expenses for clean-up and protective covering work) not
incurred for work directly involved in the actual
making of repairs. Such a reading has no basis in the
plain language of the statute, however. Aside from the
inapplicable statutory exceptions, the language
"expenses of repairs" is broad and unqualified. As
such, we interpret "expenses of repairs" as covering
all expenses (not specifically exempted in the statute)
which, but for dutiable repair work, would not have
been incurred. (Emphases supplied.)
We find that the costs of the Sperry Marine Limited
technician are dutiable under 19 U.S.C. 1466. Such costs were
occasioned by the state of disrepair of the vessel and were
incurred by Sea-Land with a view to repair the vessel.
Accordingly, we find that such costs are dutiable foreign repair
costs. The transportation costs which pertain to the Sperry
Marine Limited technician are dutiable as costs incident to
dutiable repairs.
Administrative costs which are directly attributable to
dutiable repairs are dutiable. They are costs which, but for
dutiable repair work, would not have been incurred. See the last
sentence of the excerpt from the Texaco case, above.
The record reflects that certain interest was inadvertently
collected in connection with the subject entry. This interest
should be refunded to Sea-Land.
HOLDING:
As detailed above, the protest is denied with respect to the
costs associated with the Sperry Marine Limited technician and
administrative costs. The interest which was inadvertently
collected should be refunded to Sea-Land.
In accordance with Section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by
your office to the protestant no later than 60 days from the date
of this letter. Any reliquidation of the entry in accordance
with the decision must be accomplished prior to mailing of the
decision. Sixty days from the date of the decision the Office of
Regulations and Rulings will take steps to make the decision
available to Customs
personnel via the Customs Rulings Module in ACS and the public
via the Diskette Subscription Service, the Freedom of Information
Act and other public access channels.
Sincerely,
Jerry Laderberg
Chief,
Entry Procedures and Carriers
Branch