VES-13-07/13-18 CO:R:IT:C 112689 JBW
Deputy Regional Director
Commercial Operations
Pacific Region
1 World Trade Center
Long Beach, CA 90831
RE: Vessel Repair; Maintenance; Cleaning; Air Scavenger Spaces;
19 U.S.C. 1466; Protest Number 2704-93-100886; PRESIDENT
MONROE, V-95.
Dear Sir:
This letter is in response to your memorandum that forwards
for our review and ruling the above-referenced protest.
FACTS:
The PRESIDENT MONROE arrived at the port of San Pedro,
California, on November 23, 1992, and filed a timely vessel
repair entry. The entry indicated that the vessel underwent
foreign shipyard work to remove carbon and oil deposits from the
main engine scavenger spaces.
The scavenging spaces of a diesel engine are steel chambers
that are permanently attached to the cylinders of the engine.
The scavenging spaces serve two functions. First, the scavenging
spaces receive the discharge from the turbo-chargers and deliver
the charged air to each cylinder via reed valves and intake
ports. Second, air from the piston underside is pumped into the
scavenging space via reed valves to supplement turbo-charger-
delivered air. This air enters the cylinders via inlet ports
uncovered when the piston gets to the bottom end of its stroke
and serves to "scavenge" the burnt gasses out of the cylinder.
This process cleans the cylinders of spent energy and provides a
clean air discharge for the next fuel injection. As a result of
this process, some gasses containing unburnt carbon may be left
and deposited in the scavenging spaces.
These carbon deposits and other oily deposits in the
scavenger spaces may result in fire or explosion. They also
reduce the efficient operation of the engine. Diesel engine
maintenance manuals therefore require periodic cleaning of the
scavenger spaces to permit the safe and efficient operation of
the vessel. The maintenance of a scavenger space involves
removing access plates and scraping, wire brushing, and wiping
the inside of the space. This operation is labor intensive and
would take a single worker up to two working days to clean a
single cylinder.
The San Francisco vessel repair liquidation unit liquidated
the entry on March 5, 1993, holding the cleaning of the air
scavenger spaces to be dutiable. The vessel operator now
protests this decision.
ISSUE:
Whether removing carbon and oil deposits from diesel engine
air scavenger spaces constitutes a nondutiable cleaning or a
dutiable maintenance operation under 19 U.S.C. 1466.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466, provides in
pertinent part for payment of duty in the amount of fifty percent
ad valorem on the cost of foreign repairs to vessels documented
under the laws of the United States to engage in foreign or
coastwise trade, or vessels intended to engage in such trade.
In analyzing the dutiability of foreign vessel work, the
Customs Service has consistently held that cleaning is not
dutiable unless it is performed as part of, in preparation for,
or in conjunction with dutiable repairs or is an integral part of
the overall maintenance of the vessel. E.g., Headquarters Ruling
Letter 110841, dated May 29, 1990 (and cases cited therein). The
Customs Service considers work performed to restore a part to
good condition following deterioration or decay to be maintenance
operations within the meaning of the term repair as used in the
vessel repair statute. See generally, Headquarters Ruling
Letter 106543, dated February 27, 1984; C.I.E. 142/61, dated
February 10, 1961.
The dutiability of maintenance operations has undergone
considerable judicial scrutiny. The United States Court of
Customs and Patent Appeals, in ruling that the term repair as
used in the vessel repair statute includes "maintenance
painting," gave seminal recognition to the dutiability of
maintenance operations. E. E. Kelly & Co. v. United States, 55
Treas. Dec. 596, T.D. 43322 (C.C.P.A. 1929). The process of
chipping, scaling, cleaning, and wire brushing to remove rust and
corrosion that results in the restoration of a deteriorated item
in preparation for painting has also been held to be dutiable
maintenance. States Steamship Co. v. United States, 60 Treas.
Dec. 30, T.D. 45001 (Cust. Ct. 1931).
Most recently, the United States Customs Court examined
whether the scraping and cleaning of Rose Boxes constituted
dutiable repairs. Northern Steamship Company v. United States,
54 Cust. Ct. 92, C.D. 1735 (1965). Rose Boxes are parts fitted
at the ends of the bilge suction to prevent the suction pipes
from being obstructed by debris. The court determined that the
removal of dirt and foreign matter from the boxes did not result
in the restoration of the boxes to good condition following
deterioration and consequently held that the work was not subject
to vessel repair duties. Id. at 99.
The protestant cites this line of judicial and
administrative decisions and contends that these decisions
establish a position of the Customs Service with regard to the
dutiability of cleaning air scavenger spaces. We do not dispute
that this line of decisions generally establishes the position of
the Customs Service on the non-dutiability of cleaning operations
unrelated to repairs or the dutiability of maintenance
operations. However, the precise issue presented is whether the
cleaning of air scavenger spaces may be characterized as simple
cleaning or as maintenance, not whether cleaning or maintenance
operations are dutiable or non-dutiable.
The protestant's conclusion that the cleaning of air
scavenger spaces is a "simple" cleaning and is a fortiori not
subject to duty based on the decisions cited is untenable. The
protestant attempts to characterize the cleaning of air scavenger
spaces as "simple" cleaning needed only for inspection of the
engine valves. This characterization fails, however, to include
the threat of fire or explosion posed by the failure to properly
maintain the scavenger spaces. It further fails to note the
decline in efficiency of the engines that results from the
collection of the carbon and oil deposits in the air scavenger
spaces. As stated in our previous rulings, the collection of
carbon and oil deposits results in a deterioration--as manifested
in the safety and efficiency problems--of the air scavenger
spaces that may only be corrected by cleaning the air scavenger
spaces. See generally Headquarters Ruling Letter 111700, dated
November 19, 1991. We therefore reaffirm our position that
cleaning air scavenger spaces is a maintenance operation that is
subject to duty under 19 U.S.C. 1466.
The protestant contends that the Customs Service did not
publish its "surprise change of position" as required by the
Administrative Procedure Act and the Customs Regulations. The
Customs Regulations require the publication in the Federal
Register with an opportunity for public comment of a ruling that
has the effect of changing a practice that results in a higher
rate of duty. 19 C.F.R. 177.10(c)(1) (1992). The Customs
Service first addressed the issue of cleaning air scavenger
spaces in Headquarters Ruling Letter 110911, dated December 3,
1990. The protestant has failed to cite a ruling or to
demonstrate otherwise that the Customs Service had in fact
established a position on the dutiability under 19 U.S.C. 1466
of the cleaning of air scavenger spaces prior to Headquarters
Ruling Letter 110911. Moreover, as shown in the previous
paragraph, we do not believe that the protestant has demonstrated
that the holding in Headquarters Ruling Letter 110911 deviates
from existing judicial decisions or results in a reversal or
modification of any of the existing administrative rulings. We
submit that the reasoning and conclusion of that letter and
subsequent rulings on the issue are consistent with the precedent
identified in those ruling letters and by the protestant. Thus,
publication of a change of practice was not required.
Finally, the protestant contends that the Customs Service
has not held the cleaning of air scavenger spaces to be dutiable
since 1982. Headquarters Ruling Letter 110911 was issued in
response to an application for relief forwarded by the New York
Vessel Repair Liquidation Unit (VRLU) following which we learned
that from 1982 to 1990 the San Francisco VRLU had not been
assessing duty whereas the two other regional VRLU's were.
Absent a ruling letter or a published statement of position, we
hold that the protestant cannot rely on determinations made by
the San Francisco VRLU to establish a position of the Customs
Service. See Superior Wire v. United States, 7 Fed. Cir. (T) 43,
45-46, 867 F.2d. 1409, 1412-13 (1989).
HOLDING:
The removal of carbon and oil deposits from the main engine
scavenger spaces is a maintenance operation the cost of which is
subject to duty under 19 U.S.C. 1466. The protest is therefore
denied.
Sincerely,
Stuart P. Seidel
Director, International Trade