VES-13-18-RR:IT:EC 226737 GOB
U.S. Customs Service
Chief, Liquidation Section II
P.O. Box 2450
San Francisco, CA 94126
RE: Vessel Repair Entry No. 603-1020206-8; 19 U.S.C. 1466; Hull
cleaning; Maintenance; Restoration
Dear Sir:
This is in response to your memorandum dated February 5,
1996, which forwarded the application for relief submitted on
behalf of American Seafoods Company ("applicant") in connection
with the above-referenced vessel repair entry.
FACTS:
The AMERICAN EMPRESS ("the vessel") is a U.S.-flag vessel
owned by the applicant. Certain foreign shipyard work was
performed on the vessel prior to its arrival at the port of
Seattle, Washington on August 3, 1995. The subject entry was
filed on August 4, 1995.
You have asked us to consider the dutiability under 19
U.S.C. 1466 of item 0040, hull cleaning.
ISSUE:
Whether the hull cleaning is 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
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 invoice at issue states in pertinent part:
HULL CLEANING
Providing pressure washing equipment and handling to dock
bottom.
...
Power washing hull with fresh water to remove salt deposits
and marine growth.
...
Hand scraping marine growth...
In Texaco Marine Services, Inc. v. United States, 44 F.3d.
1539 (1994), the Court of Appeals for the Federal Circuit held
that the costs of post-repair cleaning and protective coverings
related to repairs were dutiable under 19 U.S.C. 1466.
In Ruling 112045 dated September 4, 1992, we stated, in
pertinent part:
Cleaning operations which remove rust and deterioration and
worn parts, and which are a necessary factor in the
effective restoration of a vessel to its former state of
preservation, constitute vessel repairs (See C.I.E. 429/61).
Customs has long held the cost of cleaning is not dutiable
unless it is performed as part of, in preparation for, or in
conjunction with dutiable repairs or is an integral part of
the overall maintenance of the vessel; see C.I.E.'s 18/48,
125/48, 910/59, 820/60, 51/61, 429/61, 569/62, 698/62; C.D.
2514; T.D.'s 45001 and 49531. Pursuant to C.I.E. 919/60
remission of duty assessed on repairs is not warranted under
section 1466 where the repairs are maintenance in nature.
In Ruling 111571 dated March 4, 1992, we stated, in
pertinent part:
In analyzing the dutiability of foreign vessel work, the
Customs Service has consistently held that cleaning is not
dutiable unless it is performed as part of, in preparation
for, or in conjunction with dutiable repairs or is an
integral part of the overall maintenance of the vessel.
E.g., Headquarters Ruling Letter 110841, dated May 29, 1990
(and cases cited therein). The Customs Service considers
work performed to restore a part to good condition following
deterioration or decay to be maintenance operations within
the meaning of the term repair as used in the vessel repair
statute. See generally, Headquarters Ruling Letter 106543,
dated February 27, 1984; C.I.E. 142/61,, dated February 10,
1961.
The dutiability of maintenance operations has undergone
considerable judicial scrutiny. The United States Court of
Customs and Patent Appeals, in ruling that the term repair
as used in the vessel repair statute includes "maintenance
painting," gave seminal recognition to the dutiability of
maintenance operations. E.E. Kelly & Co. v. United States,
55 Treas. Dec. 596, T.D. 43322 (C.C.P.A. 1929). The process
of chipping, scaling, cleaning, and wire brushing to remove
rust and corrosion that results in the restoration of a
deteriorated item in preparation for painting has also been
held to be dutiable maintenance. States Steamship Co. v.
United States, 60 Treas. Dec., T.D. 45001 (Cust. Ct. 1931).
Most recently, the United States Customs Court examined
whether the scraping and cleaning of Rose Boxes constituted
dutiable repairs. Northern Steamship Company v. United
States, 54 Cust. Ct. 92, C.D. 1735 (1965). Rose Boxes are
parts fitted at the ends of the bilge suction to prevent the
suction pipes from being obstructed by debris. In arriving
at its decision, the court focused on whether the cleaning
operation was simply the removal of dirt and foreign matter
from the boxes or whether it resulted in the restoration of
the part to good condition after deterioration or decay.
Id. at 98. The court determined that the cleaning did not
result in the restoration of the boxes to good condition
following deterioration and consequently held that the work
was not subject to vessel repair duties. Id. at 99. The
Customs Service has ruled that the regular cleaning of
filters in most instances does not result in liability for
duty. See Headquarters Ruling Letter 107323, dated May 21,
1985.
From these authorities, we determine that the cost of
cleaning the air scavenger spaces is subject to duty under
19 U.S.C. 1466. The term deterioration is defined to mean
degeneration, which in turn denotes declined function from a
former or original state. See The American Heritage
Dictionary of the English Language 376, 387 (2d ed. 1985).
The principal function of the air scavenger spaces is to
either deliver turbo-charged air to the cylinders or receive
spent gasses from the cylinders. The collection of carbon
and other oily deposits poses a fire or explosion hazard and
results in a diminished engine function. The removal of the
carbon deposits through scraping, wire brushing, and wiping
results in a restoration of the scavenger spaces to good
condition following a decline in function of the scavenger
spaces. Such an operation can be distinguished from
cleaning a Rose Box or other filter, for the collection of
debris by these parts results not in a diminution of
function, but alternatively demonstrates the proper function
of the part.
(All emphasis in original.)
In States Steamship v. United States, T.D. 45001 (Cust. Ct.,
1931), the court stated in pertinent part as follows:
Considering first the question whether the cleaning of deep
tanks constitutes a repair, it is observed that the
testimony does not show precisely the nature of the
cleaning. It does not appear whether the cleaning process
was simply the removal of accumulated dirt, or whether it
was a restoration of the inner portion of the tanks to a
good condition after deterioration. It is clear, however,
that the process, whatever it may have been, was quite
elaborate. The cost as shown by the bill of the foreign
contractor, amounted to yen 650, and from this fact it is
safe to assume that such cleaning process included more than
removing foreign substances in the tanks such as would be
necessary to prevent the bean-oil cargo from becoming
impure.
We are of the opinion that the plaintiff has failed to
establish that the cleaning of the deep tanks of the steamer
Illinois did not constitute a repair.
In respect to the work of chipping, scaling, cleaning, and
wire brushing it was testified that such work became
necessary on account of rust and corrosion, which of course
is a deterioration and damage to the vessel upon which it
occurs. Even although the work of chipping, scaling, and
wire brushing is considered an independent act from painting
it is a necessary factor in order to have the work of
restoration of the vessel to its former state of
preservation become effective.
In H.C. Gibbs v. United States, 28 Cust. Ct. 318, C.D. 1430
(1952), the court stated in pertinent part as follows:
Relative to painting the hull of the vessel black between
the decks and repainting the ship's name thereon, as well as
the expenses of cartage of materials and labor, this court
is of the opinion that the cost thereof is properly dutiable
under the provisions of section 466 as "repairs." Although
it is contended that the painting in question was strictly
ornamental and in no sense performed for the preservation of
the vessel and, therefore, cannot be considered "maintenance
painting," it remains a fact that, irrespective of the
intention behind the act, the painting of the ship black in
order to present a better appearance to the public had the
effect of restoring the old and rusted surfaces, and since
the repainting of the hull covered the ship's name, it
became necessary thereafter to paint the name Gretna Victory
over the new black paint.
In its letter of October 17, 1995, the applicant states that
"cleaning is not a repair and that the cleaning was not done in
connection with any repairs to the vessel." In its letter of
December 5, 1995, the applicant states that "merely cleaning the
hull is not a repair within the intention of the statute since
there was no further work done in the nature of a repair such as
painting or renewing the hull."
The pertinent invoice states that the hull cleaning was to
remove salt deposits and marine growth from the hull of the
vessel and that hand scraping of marine growth
was performed. It seems clear that this work will enhance the
operation of the vessel in terms of speed, efficiency of the
hull, fuel efficiency, etc.
After a consideration of this matter, we determine that the
hull cleaning is more akin to a restoration and/or maintenance
item than it is akin to an item that involves no restoration or
maintenance. The description of the work, including the removal
of "salt deposits and marine growth" and "hand scraping marine
growth," indicate to us that the work goes beyond "mere
cleaning." The work performed is closer to a restoration of the
hull to its former state and is an integral part in the overall
maintenance of the vessel.
Accordingly, the hull cleaning is dutiable pursuant to 19
U.S.C. 1466.
The applicant has cited the telegram in file 104943 in
support of its position. We decline to follow 104943 because it
is clearly inconsistent with numerous court decisions and Customs
rulings, including the court decisions and Customs rulings cited
supra. Telegram 104943 is not a Customs ruling, nor was it in
ruling format.
HOLDING:
The hull cleaning is dutiable pursuant to 19 U.S.C. 1466.
Sincerely,
William G. Rosoff
Chief, Entry and Carrier Rulings
Branch