VES-13-18-RR:IT:EC 115109 RSD
Port Director of Customs
Attn: Vessel Repair Liquidation Unit, Room 415
P.O. Box 2450
San Francisco, California 94126
Re: Vessel Repair Entry No. C-30-106985-6; APL SINGAPORE V-038;
19 U.S.C. 1466; application; ineffective repairs;
Dear Sir/Madam:
This is in response to your memorandum of July 14, 2000, which forwarded the application for relief from duty, on behalf of American Ship Management with respect to the above-referenced vessel repair entry.
FACTS:
The evidence in the record indicates that the ALP SINGAPORE (“vessel”) a U.S.-flag vessel owned by American President Lines, Ltd., arrived in the port of Seattle, Washington, on April 1, 2000. According to the vessel repair entry and other documents in the file, the vessel previously underwent certain repair work at the Jurong Shipyard in Singapore. The subject vessel repair entry was subsequently filed.
The vessel operator has filed an Application for Relief contesting the dutiability of certain items. Your office has requested that we review two items in the entry and provide your office with our determination as to the dutiability of these two items. Specifically the items submitted for determination include outboard shaft (item 301), and ABS invoice #6410806015 Damage/Repair Survey (item 1).
2
ISSUE:
Whether the costs of the subject items are dutiable pursuant to 19.U.S.C. 1466(a).
LAW AND ANALYSIS:
Title 19, United States Code, Section 1466, 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 foreign or coastwise trade, or vessels intended to engage in such trade.
The applicant’s first claim for relief is based on allegedly ineffective repair work performed on a Seal repair/replacement, when the vessel was previously drydrocked on February 21-March 3, 1999, for underwater painting and ABS Special Survey No. 1. In regard to the applicant's claim, Customs has long-held that repairs which are completely ineffective and of no value to the vessel are repairs not subject to duty under the vessel repair statute (see T.D. 55193(24) and C.I.E. 1156/62). The record indicates that during the 1999 drydocking, John Crane Lips refitted the outboard stern seal fiber sealing face, iron rotating face, and lip seal. John Crane/Deep Sea Seals guaranteed the work for five years. This drydocking was reported on Entry No 110-7995856-4, March 25, 1999. Specifically, the applicant states that about one month after the vessel was drydrocked, the No. 1 ABS-SSDDX seals were reported leaking again. Shortly after the February/March drydocking on April 12, 1999, a diver’s inspection revealed a stern seal leakage of 21 liters per hour. Underwater repairs proved futile, necessitating the re-docking of the vessel at JSL on March 14-17, 2000.
In support of its claim for relief the applicant has submitted, memorandums and an inspection report. One memorandum from a Customer Support Manager at John Crane-Lips indicates that through discussions the conclusion had been reached that rectification should be fully explored in a drydrock.
An e-mail included in the file indicates that:
All of the possible problem areas were checked over the last few days and no misalignment, that was believed could have been the root cause of the problem, was found. The seal was found to be practically destroyed with excessive wear on both the seat and face rings. The damage found was not the typical damage found at the previous seal renewals. It is suspected
that incorrect seal assembly, during the last dry-dock may be the root cause of the failure. However, there is concern over possible corrosion of the seal components and after checking the respective hardness value of both old and new seal rings, there may be material problems in old seat ring. This is presently under investigation with a local Singapore NDT Company.
We note, however, that the record contains no proof to substantiate the claim that the specific prior repairs in question performed on seals were completely ineffective and of no value to the vessel. The statements submitted by the applicant only indicate that it was suspected that the repairs performed in March 1999 on the seals may not have been performed correctly, but there is no indication that these prior repairs were completely ineffective and of no value to the vessel. Moreover, the vessel survey was completed and the repairs to the seals were performed almost a year after the previous repairs on the seals were performed. It thus appears that the vessel was able to function during that time. Accordingly, in the absence of evidence to the contrary, we find the repairs on additional item1 to be dutiable.
The other remaining item which is in dispute is item number 301, outboard shaft seal renewal. The applicant has not provided any information regarding this item and we cannot discern evidence in the record to indicate why this item should not be considered dutiable. Accordingly, item 301 will remain dutiable.
We have also been advised by the vessel repair liquidator that it there is a clerical error on the applicant’s spread sheet because the numbers showing duty owed on item 2 were transposed so the actual duty owed on item 2 should be $52.88 instead of $25.88.
HOLDING:
The costs contained within the subject entry for which the applicant seeks relief are dutiable under 19 U.S.C. § 1466 as discussed in the Law and Analysis portion of this ruling.
Sincerely,
Larry L. Burton
Chief
Entry Procedures and Carriers Branch