VES-13-18-CO:R:IT:C 112937 GOB
Deputy Assistant Regional Commissioner
Commercial Operations Division
Attn: Regional Vessel Repair Liquidation Unit
New Orleans, Louisiana 70130
RE: Vessel Repair; 19 U.S.C. 1466(d)(1); Entry No. C15-0019314-
4; GALVESTON BAY, V-27; Application; Casualty
Dear Sir:
This is in response to your memorandum dated October 21, 1993,
which forwarded the application for relief submitted on behalf of
Afram Lines (USA) Inc. ("applicant") with respect to the above-
referenced vessel repair entry.
FACTS:
The S.S. GALVESTON BAY ("vessel") is a U.S.-flag vessel owned
and operated by the applicant. Certain foreign shipyard work was
performed on the vessel between March 24, 1992 and August 15, 1992
at (a) Freetown, Sierra Leone; (b) Dakar, Senegal; (c) Las Palmas,
Canary Islands; (d) Newport, Wales; and (e) Tilbury, England.
The evidence of record indicates that the vessel made contact
with the "Carpenter Rock Shoal" and ran aground on March 17, 1992.
The vessel sustained damage in the form of propeller damage and
holes and indentations in its bottom hull. On March 24, 1992, the
vessel was permitted to proceed to Dakar, Senegal, where the vessel
was examined and temporary repairs were accomplished. The vessel
then proceeded to Las Palmas, Canary Islands, where permanent
repairs were effected.
ISSUES:
Whether certain items are dutiable pursuant to 19 U.S.C. 1466.
Whether, pursuant to 19 U.S.C. 1466(d)(1), good and sufficient
evidence has been submitted which warrants the remission of vessel
repair duties which are dutiable.
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LAW AND ANALYSIS:
19 U.S.C. 1466 provides for the payment of duty at a rate 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 be employed in such
trade.
19 U.S.C. 1466(d)(1) provides in part that the Secretary of
the Treasury is authorized to remit or refund such duties if the
owner or master of the vessel furnishes good and sufficient
evidence that the vessel was compelled by stress of weather or
other casualty to put into a foreign port and make repairs to
secure the safety and seaworthiness of the vessel to enable her to
reach her port of destination.
19 CFR 4.14(c)(3)(i) provides that "port of destination" means
such port in the United States and "...only the duty on the cost
of the minimal repairs needed for the safety and seaworthiness of
the vessel is subject to remission or refund."
19 U.S.C. 1466 and 19 CFR 4.14 essentially set forth a three-
part test, each of the elements of which must be established by
good and sufficient evidence to qualify for remission:
1. a casualty occurrence;
2. an unsafe and unseaworthy condition; and
3. the inability to reach the port of destination without
foreign repairs.
We make the following findings with respect to the items for
which you have requested our review.
The applicant has submitted good and sufficient evidence in
satisfying the three-part test, supra. Accordingly, duty on
certain of the work performed on the vessel in (a) Freetown, Sierra
Leone; (b) Dakar, Senegal; and (c) Las Palmas, Canary Islands is
remissible pursuant to 19 U.S.C. 1466(d)(1).
The duty on items 0107 through 0135 on Astican invoice 316/92
(Exhibit C8) is remissible because there is a sufficient nexus
between these items and the work which was required as a result of
the casualty.
The duty on items 8822 and 9094 on Astican invoice 316/92
(Exhibit C8) is not remissible because these repairs were not
related to the casualty.
The drydocking survey, annual hull-machinery surveys, and
annual load line survey invoiced on American Bureau of Shipping
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("ABS") invoice no. SP007959 (Exhibit C8) are dutiable and not
remissible because these items include dutiable repairs which are
not related to the casualty and which are not separately invoiced.
All transportation costs which are segregated are nondutiable.
Freon gas is nondutiable as a consumable supply. See CIE
887/64 and C.S.D. 80-197.
The annual cargo gear survey invoiced on ABS invoice no.
SP007961 (Exhibit 6) is dutiable and not remissible because the
item includes dutiable repairs which are not related to the
casualty and which are not separately invoiced.
We concur with your analysis with respect to the work
performed after Las Palmas, Canary Islands, i.e., the work
performed in Newport, Wales and Tilbury, England. This work is
dutiable and not remissible with the exception of the
"classifiably free" items which you have indicated to be
nondutiable.
The survey items listed on ABS invoice no. UK323185 (Exhibit
7), a loadline survey and an annual cargo gear inspection, are
dutiable and not remissible. That invoice lists repairs which are
not separately itemized.
HOLDING:
As detailed supra, the application is granted in part and
denied in part.
Sincerely,
Arthur P. Schifflin
Chief
Carrier Rulings Branch