VES-13-18-CO:R:IT:C 113161 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; Entry No. C19-0008505-6; M/V
KODIAK I, V-1; Application; Stress of weather or other
casualty; U.S. parts; Survey; Cleaning and coating
Dear Sir:
This is in reply to your memorandum dated June 27, 1994, which
forwarded the application for relief submitted on behalf of Ensco
Marine Company ("applicant") with respect to the above-referenced
entry.
FACTS:
The record reflects the following. The KODIAK I ("vessel";
now known as the M/V ENSCO KODIAK I) is a U.S.-flag vessel owned
and operated by the applicant. The vessel was formerly operated
by the Penrod Drilling Corporation. Certain foreign shipyard work
was performed on the vessel on its first voyage. The vessel
arrived at the port of Pascagoula, Mississippi on February 16,
1994. A vessel repair entry was filed.
You ask for our determination with respect to the following
issues:
1. Stress of weather or other casualty;
2. Parts reportedly manufactured in the U.S.;
3. ABS hull repair survey; and
4. Cleaning and coating of tanks.
ISSUES:
Whether certain costs are dutiable pursuant to 19 U.S.C.
1466(a). Whether the duty on certain items is remissible pursuant
to 19 U.S.C. 1466(d)(1) and (d)(2).
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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.
Stress of Weather or Other Casualty
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;
3. the inability to reach the port of destination without
foreign repairs.
The application states in part:
Many of the repairs at issue arise from the casualty which
occurred in heavy weather wherein a hole came into the
fuel tank causing fuel oil to come into the chain
locker...Surely, a situation where volatile and flammable
fuel oil is a condition which must be remedied to "secure the
safety and seaworthiness of the vessel." As the affidavit of Max
Reeves illustrates, this condition arose due to operation of
the vessel in heavy weather. This is further supported by a
similar type of damage occurring at a different level on the rear
deck of the vessel.
Mr. Max Reeves' affidavit establishes the cause, as well
as the necessity of these repairs.
The affidavit of Max Reeves, the applicant's area director of
Brazil operations, states in part:
On January 5, 1993, the crew of the vessel discovered that
the chain locker of the vessel was receiving fuel oil,
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leaking from the vessel's fuel tank. The fuel tank was
discovered to have a hole which was the result of the
vessel's operation in heavy weather resulting in a fracture to
the fuel tank. This was obviously a dangerous situation
presenting a risk of fire and/or explosion, and hence directly
affected the safety and seaworthiness of the vessel.
We find that the applicant has not met the requirements of 19
U.S.C. 1466(d)(1) for remission.
The applicant has not submitted good and sufficient evidence
that stress of weather or other casualty was the cause of the
vessel's problems. We note additionally that rough weather, in
and of itself, is not sufficient to establish that the repairs were
necessitated by stress of weather or other casualty. For such a
finding there must be documentation sufficiently establishing a
link between the stress of weather or other casualty and the
repairs. The applicant has not submitted such documentation.
With respect to a casualty, we have stated as follows in
numerous decisions:
The term "casualty", as it is used in the vessel repair
statute (19 U.S.C. 1466) 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 (see Dollar Steamship Lines, Inc. v. United States,
5 Cust. Ct. 28-29, C.D. 362 (1940)). In the absence of such a
casualty event, we must consider the repair to have been
necessitated by normal wear and tear (ruling 106159, September
8, 1983).
In Dollar Steamship Lines, the court stated in pertinent part:
We are of the opinion that a casualty similar to "stress of
weather" should be of necessity a happening that comes with
the violence of the turbulent forces of nature.
Black's Law Dictionary (Fifth Edition, 1979) defines casualty
as follows:
A serious or fatal accident. A person or thing injured,
lost or destroyed. A disastrous occurrence due to sudden,
unexpected or unusual cause. Accident; misfortune or mishap; that
which comes by chance or without design. A loss from such an
event or cause; as by fire, shipwreck, lightning, etc.
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Further, the applicant has not submitted good and sufficient
evidence that the repairs were necessary to enable the vessel to
reach its port of destination in the United States. Frequently,
this documentation takes the form of a U.S. Coast Guard statement
that the repairs are necessary for the vessel to reach its port of
destination in the United States.
Parts Reportedly Manufactured in the United States
The record reflects that the applicant has requested that
certain parts be treated as remissible pursuant to 19 U.S.C.
1466(d)(2) based on the fact that those parts were manufactured in
the United States. However, the applicant has not submitted
documentation establishing that these parts were manufactured or
produced in the United States. Accordingly, remission under 19
U.S.C. 1466(d)(2) is denied.
With respect to this issue, we note that we will frequently
accept proof of purchase in the United States (i.e., an invoice
from the United States seller) as documentation that the parts were
manufactured or produced in the United States, in the absence of
any other information which would indicate that the parts are not
of United States manufacture or production.
ABS Hull Repair Survey
We find that the ABS hull repair survey is dutiable.
A survey to assess damage and to determine the necessary
repairs is dutiable. Similarly, a post-repair survey to determine
the adequacy of repairs is dutiable. We note that we
have held that a required and periodic survey by a classification
society or government agency is nondutiable if any repairs made as
a result of the required and periodic survey are separately
itemized.
Cleaning and Coating of Tanks
The applicant claims nondutiable treatment for certain
cleaning and coating (item 33). We are unable to find an invoice
for this item. We further note that the invoice for item 33 is
substantially illegible. The application states with respect to
the cleaning and coating:
This involved no repair or additions of parts, equipment and
material, but simply the cleaning of the tanks and then
their necessary recoating following cleaning, so the repairs to
the fuel tank, chain locker and back deck could be performed.
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We find that this item is dutiable. The costs of cleaning
and coating prior to and incident to dutiable repairs are dutiable.
HOLDING:
As detailed supra, the application is denied.
Sincerely,
Arthur P. Schifflin
Chief
Carrier Rulings Branch