VES-13-18-CO:R:P:C 110639 KVS
Chief, Technical Branch
Commercial Operations Division
1 World Trade Center
Suite 705
Long Beach, CA 90831
RE: Vessel repair; modification; inspection
Protest No. 312689-000016
Vessel: ARCO SPIRIT V-CF48
Date of Arrival: August 20, 1988
Port of Arrival: Valdez, Alaska
Vessel Repair Entry No. C31-0005008-8
Dear Sir:
This is in response to your memorandum of October 31, 1989,
which forwarded for our consideration protest no. 312689-000016,
filed in connection with the ARCO SPIRIT, vessel repair entry no.
C31-0005008-8. Our findings are set forth below.
FACTS:
The ARCO SPIRIT, owned by ARCO Marine, Inc. (hereinafter
referred to as "protestant"), underwent shipyard operations in
Korea from July 24, 1988 to August 10, 1988. The vessel arrived
in the United States at Valdez, Alaska on August 20, 1988 and
made timely entry. The protestant filed an application dated
October 14, 1988. Our letter of July 31, 1989 denied the
application as deficient and the entry was liquidated on August
16, 1989.
The protest currently under consideration was timely filed
on September 20, 1989.
ISSUE:
Whether the foreign shipyard work undertaken on the subject
vessel is subject to duty under the vessel repair statute, 19
U.S.C. 1466.
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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.
In its application of 19 U.S.C. 1466, Customs has held that
modifications/alterations/additions to the hull and fittings of a
vessel are not subject to vessel repair duties. Customs has held
that for an item to be characterized as a nondutiable
modification, it must encompass the installation of an item as a
new design feature, not as a replacement for, or restoration of,
parts now performing a similar function. Customs Memorandum
108871 (4-16-87). Customs has also held that the decision in
each case as to whether an installation constitutes a
nondutiable addition to the hull and fittings of the vessel
depends to a great extent on the detail and accuracy of the
drawings and invoice descriptions of the actual work performed.
Customs Memorandum 108871 (4-16-87), citing C.S.D. 83-35. Even
if an article is considered to be part of the hull and fittings
of a vessel, the repair of that article, or the replacement of a
worn part of the hull and fittings, is subject to vessel repair
duties. See, C.I.E. 233/60.
After thorough analysis of the documents submitted, we find
the following items to be non-dutiable:
Item 108 Rudder stock modification
Item 108-2 X-Ray
Item 304-2 Main/stand-by generator modification
Item 305 Circulation water sea valves modification
Item 307 Main condenser vent modification
(installation) coating
Item 319 Main condenser level control modification
Item 320 Boiler fuel piping modification
Item 321 Fuel oil treatment modification
(installation)
Item 810 Dirty ballast part flow system installation
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Item 812 No. 7 Port and starboard cargo tank sounding
tubes installation
Item 819 Cargo pump discharge pipe installation
Item 821 P/S gallows stand pipe modification
Item 825 Cargo manifold drain modification
Item 826 Cargo pump temperature alarms modification
Item 902 I.G.S. modifications and removals
Item 303 is a main turbine throttle valve inspection. The
shipyard invoice indicates that the work involved labor and
material to "check, operate and lubricate all main turbine
throttle valves". The fact that all of the valves were
lubricated as well as inspected indicates that this task was more
a maintenance function than part of a classification survey.
Accordingly, the cost of the inspection is dutiable.
HOLDING:
Following a thorough review of the evidence provided, and as
detailed in the "Law and Analysis" section of this ruling, we
resommend that the protest be granted in part and denied in part.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch