VES-13-18 CO:R:IT:C 111489 BEW
Deputy Assistant Regional Commissioner
Commercial Operations
c/o Regional Commissioner
New Orleans, Louisiana 70130-2341
RE: Protest No. 1703-90-000119; SS CAPE INSCRIPTION, Voyage No.
1; Vessel Repairs; casualty; one-round voyage; delicate and
sensitive
Dear Sir:
This is in reference to a memorandum from your office which
transmitted protest No. 1703-90-000119, relating to vessel repair
entry No. C17-0001381-1, concerning the SS CAPE INSCRIPTION,
Voyage No. 1, which arrived at the port of Savannah, Georgia, on
December 9, 1989. The entry was filed on December 9, 1989.
FACTS:
In November 1989, while in Livorno, Italy, and Alexandria,
Egypt, respectively, the vessel CAPE INSCRIPTION underwent
various shipyard operations. The dutiability of these operations
has previously been considered by your office. The protestant
filed an Application for Relief on January 29, 1990. The entry
was liquidated on April 27, 1990. The protest was timely filed
on June 14, 1990. Included in your considerations was the matter
of whether the cost associated with the installation of the
following items is dutiable under the statute:
Item #5 - Purchase of batteries for the general alarm
system.
Item #6 - Repairs to the 3CM Radar system.
These are the only items which are presently being
protested.
The protestant claims that the subject items should be duty
free for the following reasons:
Item #5 was purchased for the general alarm system. The
general alarm system is the basic design method on vessels
to alarm the crew advising status of emergencies including,
but not limited to fire, abandon ship and other incidents.
It claims that the general alarm batteries were
satisfactorily tested for the USCG at New Orleans on
October 2, 1989. It states that on October 6, 1989, the
vessel sustained a fire with casualty at sea. The general
alarm system was used in connection with this casualty. It
claims that the vessel proceeded to Savannah, Georgia, for
repairs relating to the fire casualty and the system was
again satisfactorily checked prior to her departing on her
assigned foreign Military Sealift Command voyage activity.
It is claimed that the radar system failed during the
foreign voyage for unexplained and unforeseen reasons. The
protestant claims that the radar installations are part of
the navigation equipment for vessels of this size and is
mandated by USCG regulations. It claims that maintenance
service had been performed on the radar system and that it
was satisfactorily checked by a cognizant authority
immediately prior the subject voyage.
ISSUE:
Whether sufficient evidence is presented to establish that
the foreign repairs which were made to the alarm system and
to the radar system were necessitated by a "casualty" which
are remissible under the vessel repair statute (19 U.S.C.
1466).
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.
Paragraph (1), subsection (d) of section 1466 provides that
duty may also 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. It is Customs
position that "port of destination" means a port in the United
States."
The statute thus sets a three-part test which must be met in
order to qualify for remission under the subsection, these being:
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.
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, or spontaneous
explosion of such dimensions as to be immediately obvious to
ship's personnel, or collision (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. In the absence of evidence of such a casualty event, we
must consider the repair to have been necessitated by normal wear
and tear (ruling letter 106159, September 8, 1983).
In addition, if the above requirements are satisfied by
evidence, the remission is restricted to the cost of the minimal
repairs necessary to enable the vessel to reach her port of
destination. Repair costs beyond that minimal amount are not
subject to remission.
Customs Regulations require that certain supporting
evidence be submitted with an application for relief for damages
resulting from stress of weather. This evidence includes
photocopies of the relevant parts of the vessel's logs,
certification of any claimed casualty by the master or other
responsible vessel officer with personal knowledge of the facts,
and a certification by the master that the repairs were necessary
for the safety and seaworthiness of the vessel to enable her to
reach her port of destination in the United States (19 C.F.R.
4.14(d)(1)(iii)(D)-(F)).
It is clear from the evidence that the vessel was in need of
repairs to secure her safety and seaworthiness, however,
the evidence is insufficient to show what actually caused the
break down of the alarm and radar systems. Absent clear proof of
an identifiable event to show an unexpected force or violence,
such as fire, explosion, or collision resulting in damage, such
cost of repairs is not remissible (see C.I.E. 1826/58). The
documentation submitted is insufficient to support a finding of a
casualty as provided in section 1466(d)(1). The petitioner has
not submitted documentation to substantiate that the damage was
due to an identifiable event of some sort which caused the
damage.
The "one round voyage" rule is abstracted in Treasury
Decision (T.D.) 71-83(38), 5 Cust. B. & Dec. 160, 167 (1971).
That Treasury Decision provides:
If satisfactory evidence is furnished clearly
showing any part of a vessel to have been
repaired and/or serviced just prior to the
commencement of a voyage from a United States
port, it is reasonable to assume that the
part is seaworthy for a round voyage,
foreign and return. Unless evidence
indicates some other reason necessitated the
repairs during the voyage, failure of that
part to function within six month after the
repair and/or servicing in the United States
may be considered a casualty within the
meaning of [19 U.S.C. 1466(d)]. However,
remission of duty under that statute in the
circumstances is limited to duty on the
essential, minimum foreign repairs to the
parts.
Section 4.14(c)(3)(i), Customs Regulations (19 C.F.R.
4.14(c)(3)(i)), provides, with regard to the "one round voyage"
rule, that:
For the purposes of this section, the term
"casualty" does not include any purchases or
repairs necessitated by ordinary wear and
tear, but does include a part's failure to
function if satisfactory evidence shows that
the specific part was repaired or serviced
immediately before starting the voyage from
the United States port and that the part
failed to function within six months of such
repair or servicing.
With regard to electronic equipment, Customs has held that
if evidence furnished clearly shows that electronic equipment
has been repaired and/or serviced just prior to the commencement
of a voyage from a United States port, it is reasonable to assume
that the equipment is seaworthy for a round voyage, foreign and
return. The protestant has not submitted any evidence to show
that any repairs and/or service were made on the alarm system or
the radar system prior to the vessel's departure from the United
States.
Accordingly, the protest is denied as set forth in the
findings above.
HOLDINGS:
The evidence presented is insufficient to substantiate that
the subject repairs were necessitated by a casualty or that
repairs and/or service were made to the alarm system or radar
system prior the vessel departing the United States for foreign.
The protest is denied.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch2