VES-13-18-CO:R:P:C 111015 GV
Deputy Assistant Regional Commissioner
Commercial Operations
c/o Regional Commissioner
New Orleans, Louisiana 70130-2341
RE: Vessel Repair; Entry No. C18-0014538-0; S/S ULTRAMAR V-96B;
Casualty; Degrees of Seaworthiness
Dear Sir:
This is in response to your memorandum dated April 25, 1990,
forwarding an application for relief from duties assessed
pursuant to 19 U.S.C. 1466 on the cost of foreign repairs
performed on the subject vessel. Our findings are set forth
below.
FACTS:
The S/S ULTRAMAR is a U.S.-flag vessel owned by Bankers
Trust Company, and operated by American Maritime Transport, Inc.
The subject vessel had foreign shipyard work performed in
Palermo, Sicily, during the period of November 23-December 6,
1989. Subsequent to the completion of the work the vessel
arrived in the United States at Tampa, Florida, on December 23,
1989. A vessel repair entry covering the work in question was
apparently untimely filed on January 2, 1990 (we note that Box
25E on the CF 226 for the entry date is blank, however, the
handwritten date of "1/2/90" appears in Box 18).
An application for relief, dated February 1, 1990, was filed
requesting remission pursuant to 19 U.S.C. 1466(d)(1). The
applicant states that on November 3, 1989, while the S/S ULTRAMAR
was anchored and discharging cargo to a lightering vessel in
Chittagong, Bangladesh, the M/V ADEL, for reasons unknown,
struck the S/S ULTRAMAR with her bow making a deep indentation in
the port side in way of the hold and ballast tanks 1 and 2,
extending approximately 80 feet in length. The applicant states
that, "After examination by the American Bureau of Shipping it
was agreed that permanent repairs would be required before the
vessel could return to oceangoing service. Because there were no
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adequate repair facilities in the area, temporary repairs only
were accomplished by the crew in Chittagong. The ABS surveyor
recommended that the vessel proceed in ballast to Malta for the
required permanent repairs prior to returning to the U.S.
Pursuant to the recommendations of ABS, the vessel sailed to
Palermo, Sicily (near Malta) where the required repairs were
accomplished."
In support of their claim the applicant has submitted the
following: the vessel log of November 3, 1989 (Exhibit A(1));
the vessel log of November 4, 1989 (Exhibit A(2)): a fax from the
Master dated November 3, 1989 (Exhibit B); a Note of Protest
(Exhibit C); a U.S. Coast Guard Report of Accident (Exhibit D);
an American Bureau of Shipping (ABS) letter dated November 20,
1989; ABS Report no. CI 1252 (Exhibit F(1)); ABS Report no.
PL6963 (Exhibit F(2)); a picture of the repairs in progress
(Exhibit F(3)); an affidavit of the Master (Exhibit G); a report
from The Salvage Association (Exhibit H); and shipyard invoices.
ISSUE:
Whether evidence is presented sufficient to prove that the
foreign repairs performed on the vessel for which relief is
sought, were necessary for its safety and seaworthiness thus
warranting remission pursuant to 19 U.S.C. 1466(d)(1).
LAW AND ANALYSIS:
Title 19, United States Code, section 1466, provides in part
for payment of an ad valorem duty of 50 percent of 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 engage in such 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.
The term "casualty" as it is used in the vessel repair
statute, has been interpreted as something which, like stress of
weather, comes with unexpected force or violence, such as fire,
explosion or collision (see Dollar Steamship Lines, Inc. v.
United States, 5 Cust. Ct. 28-29, C.D. 362 (1940). In the
absence of evidence of such casualty causing event, we must
consider the foreign repairs to have been necessitated by normal
wear and tear and thus dutiable.
It is noted that section 4.14(c)(3)(i), Customs Regulations
(19 CFR 4.14(c)(3)(i)), provides that "port of destination" means
such port in the United States. This is an embellishment upon
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section 1466(d)(1) which sets forth the following three-part test
which must be met in order to qualify for remission:
1. The establishment of a casualty occurrence.
2. The establishment of unsafe and unseaworthy conditions.
3. The inability to reach the port of destination without
obtaining foreign repairs.
Regardless of the interpretation of the phrase "port of
destination", the establishment of the other elements remains
essential. In the case under consideration, the evidence
supports the claim that the subject vessel suffered a marine
casualty. The extent of that casualty is, however, the critical
issue upon which this case turns.
The applicant argues that the collision damage incurred by
the subject vessel at Chittagong, Bangladesh, rendered it
unseaworthy for crossing the Atlantic Ocean, yet after temporary
repairs by the crew in Chittagong (it is contended that the
facilities in Chittagong were inadequate for performing permanent
repairs), it was considered seaworthy to proceed in ballast
across the Indian Ocean, through the Suez Canal, and halfway
across the Mediterranean Sea where permanent repairs were
performed in Palermo, Sicily. We have previously stated that we
are of the opinion that as a general proposition, there do not
exist degrees of seaworthiness (see Customs Ruling 110027
LLB/110130 KMF/ 110138 KMF).
To support their argument the applicant relies heavily on
the ABS letter of November 20, 1989 (Exhibit E) which states
that, "The ABS Surveyor at Palermo concurred with our prior
Chittagong surveys recommendation for permanent repairs to be
carried out before the vessel be allowed to return to its
intended ocean going [sic] service. Temporary repairs had been
carried out at Chittagong which allowed the vessel to proceed in
ballast from Chittagong to Malta (nearby Palermo)."
In regard to the applicant's claim that the facilities in
Chittagong were inadequate for performing permanent repairs and
therefore the vessel had to proceed in ballast to Palermo, we
note that several ports closer to Chittagong capable of
performing the subject repairs (most notably Singapore) were
bypassed in favor of sailing a much greater distance to Palermo.
Furthermore, although we have ruled that sailing totally within
the confines of the Mediterranean Sea in a state of disrepair did
not demonstrate a vessel's general seaworthiness so as to deny
remission pursuant to section 1466(d)(1) (see Customs Ruling
110027 LLB/110130 KMF/110138 KMF, noted above) we note that in
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the case now under consideration the S/S ULTRAMAR, after having
obtained temporary repairs in Chittagong, then traversed the
Indian Ocean, proceeded through the Suez Canal, and then halfway-
across the Mediterranean Sea. We are of the opinion that such a
voyage is sufficient to demonstrate the subject vessel's
seaworthiness so as to deny remission under section 1466(d)(1).
HOLDING:
The evidence presented is not sufficient to prove that the
foreign repairs performed on the subject vessel for which relief
is sought were necessary for its safety and seaworthiness
therefore remission pursuant to 19 U.S.C. 1466(d)(1) is denied.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch