VES-13-18-CO:R:IT:C 111294 KVS
Chief
Residual Liquidation and Protest Branch
6 World Trade Center
New York, NY 10048-0954
RE: Casualty; collision; inflatable life rafts; ineffective
radar repairs; untimely entry
Vessel: ASHLEY LYKES V-84
Vessel Repair Entry No. 84-103943
Date of Arrival: May 17, 1984
Port of Arrival: Detroit, Michigan
Dear Sir:
This is in response to your memorandum dated October 20,
1989 (received by our office on September 18, 1990) which
transmits for our review an application for relief from vessel
repair duties filed in connection with the ASHLEY LYKES, vessel
repair entry no. 84-103943. Our findings are set forth below.
FACTS:
The ASHLEY LYKES, an American-flag vessel, while afloat at
Port Said Harbor, Egypt on April 23, 1984, made contact with the
M/V GULL, a Greek-flag vessel, and sustained damage to its #2
port side lifeboat and port side gangway. The vessel
subsequently underwent various repair operations before returning
to the United States. The vessel arrived in the United States on
May 17, 1984 at Detroit, Michigan. Formal entry was made on June
25, 1984.
Although an application for relief from vessel repair duties
was filed with the formal entry documents, these documents were
apparently misplaced. In response to a notice of action dated
July 27, 1989, a duplicate entry and application was filed.
These documents, together with an accompanying memorandum
dated October 20, 1989, were apparently transmitted to Customs
Headquarters but never received. The documents were re-
transmitted to Headquarters and received on September 18, 1990.
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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
engaged, intended to engage, or documented under the laws of the
United States to engage in the foreign or coastwise trade.
Paragraph (1), subsection (d) of section 1466 provides that
duty may be remitted if good and sufficient evidence is furnished
establishing that the vessel was compelled by stress of weather
or other casualty to put into a foreign port to make repairs to
secure the safety and seaworthiness of the vessel to enable her
to reach her port of destination. Thus, it is necessary that in
order to qualify for duty remission, the party seeking relief
must show both the occurence of a casualty and the minimum
repairs necessary for safety and seaworthiness.
The term "casualty" as it is used in the statute, has been
interpreted as something which, like stress of weather, comes
with unexpected force or violence, such as fire, spontaneous
explosion of such dimensions as to be immediately obvious to the
vessel's personnel or collision (see Dollar Steamship Lines, Inc.
v. United States, 5 Cust. Ct. 28-29, C.D. 362 (1940)). In this
sense, a "casualty" arises from an identifiable event of some
sort.
Three elements necessary under the statute to qualify for
remission after a casualty has been proven are, 1) evidence of
unsafe and unseaworthy condition, 2) the inability of the vessel
to reach its port of destination without first obtaining foreign
repairs and 3) the performance of only those minimal repairs
necessary to enable the vessel to reach its port of destination.
In the absence of evidence of such casualty, we must consider a
repair to have been necessitated by normal wear and tear (Custom
letter ruling 105159 (dated September 8, 1983)).
After thorough review of American Bureau of Shipping
(A.B.S.) damage report no. PD1284, A.B.S. certificate no.
PD1284X, statements from the responsible vessel's officers,
extracts of the ships logs as well as other documents, we find
that, in addition to proving the occurence of a casualty, the
applicant has satisfied the criteria detailed above. Therefore,
we find the cost of the inflatable liferafts ($12,300) to be non-
dutiable.
We concur with the applicant's assessment that the costs of
repairs to the vessel's radar listed on Pan-Arab Marine
Electronic Services # P.112/8 in the amount of $300.00 and
Electronica Radiomare invoice in the amount of 550,500 lire.
The Customs Service has held that the cost of transporting men
and material is non-dutiable (C.I.E. 970/60). Therefore, we find
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cost of a boat launch ($75.00) and traveling and waiting time
($75.00) listed on Eastern Electronics invoice # 534 to be non-
dutiable. We agree with the applicant that the remainder of the
charges ($960.00) are dutiable.
The applicant asserts that the cost of radar repairs listed
on Atlas invoice # 01018 is non-dutiable as an unsucessful
repair. In support of this assertion, the applicant has
submitted a copy of a telex dated May 15, 1984, stating "radar
not able to be repaired - no parts available."
C.S.D. 82-119 addressed the dutiability of repairs to a
vessel's radar system when the completed repairs are ineffective.
In that case, as in the instant case, the repairs made to the
vessel's radar were ineffective in the sense that the radar was
not made operational as a result of the work. The case, in
discussing Customs precedent referred to C.I.E. 1128/60, which
held that repairs which are completely ineffective and
consequently of no value to the vessel are non-dutiable. The
case also referred to C.I.E. 1156/62, which distinguished the
completely ineffective repairs contemplated by C.I.E. 1128/60 and
those repairs made "as a temporary expediency which prove
insufficient to restore continued operation," which were held to
be dutiable.
In holding similar repairs to be dutiable, C.S.D. 82-119
stated, "we cannot say that the work was of no value to the
vessel because the cause of the radar not being functional was
diagnosed and a partial remedy was effected even though the radar
was not made operational as a result."
In the case before us, although the radar was not made
operational, certain parts were purchased for the vessel.
Furthermore, notwithstanding the fact that certain other
replacement parts were not available, the cause of the malfuction
was diagnosed. Therefore, consistent with our holding in C.S.D.
82-119, since the trouble-shooting and replacement of radar parts
were of considerable value to the subject vessel, we find the
cost of the repair (Can.$ 472.74) to be dutiable. The segregated
charge for transportation (Can.$ 20.00), however, is non-
dutiable.
Finally, we note that, in the case under consideration, the
ASHLEY LYKES arrived in the United States on May 17, 1984.
Section 4.14(b)(2), Customs Regulations (19 CFR 4.14(b)(2)
provides that, "entry shall be filed with the appropriate Customs
officer at the port of first arrival within five working days
after arrival." Here, the vessel did not make formal entry until
June 25, 1984. Therefore, you may want to refer the matter for
appropriate action.
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HOLDING:
1). Where satisfactory evidence has been submitted
indicating the existence of a casualty, the unsafe and
unseaworthy condition of the vessel, the inability of the vessel
to reach its port of destination without obtaining foreign
repairs and the performance of only those minimal repairs
necessary to enable the vessel to reach its port of destination,
the cost of the those repairs are non-dutiable.
2). Where the repairs made to a vessel's radar system
consist of the diagnosis of the source of the radar malfunction,
as well as the replacement of certain parts, the repairs are of
considerable value to the vessel and the cost of the repairs are
dutiable notwithstanding the fact that the radar system was not
made operational as a result of the repair.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch