VES-13-18-CO:R:P:C 110710 BEW
Deputy Assistant Regional Commissioner
Commercial Operations
ATTN: Regional Vessel Repair Liquidation Unit
New York, New York 10048-0945
Re: Vessel Repair Entry No. C11-0002186-9, dated August 10,
1988; Date of Arrival: July 30, 1988; Port of Arrival:
Pennsauken, New Jersey; Vessel: M/V AMERICAN CONDOR,
Voyage No. 033
Dear Sir:
This is in reference to an application for relief from
duties filed by American Transport Lines, in relation to the
above referenced vessel repair entry dated August 10, 1988,
transmitted to this office by memorandum dated December 18, 1989.
We have reviewed the entire record, and render the following
advice.
FACTS:
The record shows that the shipyard work in question was
performed on the subject vessel in Brixham, United Kingdom,
during the month of July 1988.
The subject vessel arrived in the United States at the port
of Pennsauken, New Jersey, on July 30, 1988.
The applicant claims that relief for the subject items
should be granted because the items should be classified as
nondutiable items covered under title 19, United States Code,
section 1466 and sections 4.14(a) and 4.14(c) of the Customs
Regulations.
The entire vessel repair entry involves a potential duty of
$4,951.
You have requested our advice concerning the following
items. We will refer to the work using the item numbers and
invoice descriptions shown on the attachments and invoices
submitted with your memorandum.
ISSUE:
Whether the foreign work performed on the subject vessel is
dutiable under 19 U.S.C. 1466.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466, provides in
pertinent part for payment of an ad valorem duty of 50 percent of
the cost of foreign repairs to a vessel documented under the laws
of the United States to engage in the foreign or coastwise trade.
Section 1466 (d)(1) provides that the Secretary of the
Treasury is authorized to remit or refund such duties if the
owner or master of the vessel was compelled by stress of weather
or other casualty to put into such foreign port to make repairs
to secure the safety and seaworthiness of the vessel to enable
her to reach her port of destination.
We have reviewed all of the elements for which relief is
sought and render the following advice:
2. DHS Services invoice - all items are dutiable. The
evidence submitted is insufficient to sustain that
these costs were labor for general cleaning operations
or for cleaning operations relating to
modifications/alterations/additions to the hull and
fittings.
3. Aber Marine invoice - all items are dutiable, except
those costs for rail/air travel, taxi, meals and
transportation.
4. D. Van de Wetering B.V. invoice No. 8458 - all items
are dutiable. We note that the invoice indicates that
the total cost includes transportation and general
expenses. Pursuant to C.I.E. 1325/58 and C.I.E.
565/55, duties may not be remitted where the invoice
does not segregate the dutiable costs from the non-
dutiable costs. Since the cost for transportation is
not segregated, the entire cost is dutiable.
5. Bestobell C & I, order No. (80224/A) - all items are
dutiable.
In its application of the vessel repair statute (19 U.S.C.
1466), Customs has consistently held that modifications/altera-
tions/additions to the hull and fittings of a vessel which allow
the vessel to operate more efficiently are not subject to vessel
repair duties. Alterations to the hull and fittings of vessels
are not within the purview of section 1466, and the cost of the
work is not subject to duty. An article must be permanently
attached to the vessel and it most be essential to the successful
operation of the vessel (see Otte v. United States, 7 C.C.P.A.
166 (1916), and United States v. Richard & Co., 8 Ct. Cust. App.
231, T. D. 37496 (1917). To be found non-dutiable as a
modification/alteration/addition, the work must involve no
element of repair due to damages, deterioration or wear and tear.
If those are present, the work will be considered a repair and
dutiable. After reviewing the record, we consider the work done
under the following item to be in the nature of non-dutiable
modifications/alterations/additions to the hull and fittings
rather than dutiable repairs to the vessel due to damage or
deterioration:
Item No. 1 - Fleetserve Engineering invoice - items 1 and 4
are considered non-dutiable modifications to the hull and
fittings. All other items are dutiable, except rail/air
travel and taxi, which are nondutiable expenses.
HOLDING:
The foreign repair work for which the applicant seeks
relief is dutiable under 19 U.S.C. 1466 with exception of those
items noted above.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch