VES-13-18-CO:R:IT:C 113221 GOB
Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90831
RE: Vessel Repair; 19 U.S.C. 1466; PRESIDENT JEFFERSON, V-303;
Entry No. 110-6461504-7
Dear Sir:
This is in response to your memorandum dated August 31, 1994
which forwarded the application for relief submitted by American
President Lines, Ltd. ("applicant") in connection with the above-
referenced entry.
FACTS:
The record reflects that the PRESIDENT JEFFERSON (the
"vessel") arrived at the port of Seattle, Washington on March 8,
1994 (voyage 303). The above-referenced vessel repair entry was
filed on March 15, 1994.
You request our determination with respect to the following
items:
Invoice No. Item
2703 insurance and security
2704 propeller removal 2704 stern seal assembly
2705 tailshaft magnaflux test
p. 4 CF 226 survey
ISSUE:
Whether the subject items are dutiable pursuant to 19 U.S.C.
1466.
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
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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.
Insurance and Security
We find that the insurance cost is dutiable as a cost
directly related to repairs.
We find that the cost of security is nondutiable because it
appears to be essentially a fire watch service which we have
previously held to be nondutiable as a drydocking cost.
Propeller Removal and Stern Seal Assembly
The applicant claims that the costs of these items are not
dutiable because the vendor repaired these items on a previous
voyage (voyage 299) and the earlier repairs failed. The
applicant indicates that the work on the subject voyage is
covered by a warranty provided by the vendor. However, the
application also states that "[t]he payment of this invoice is in
dispute."
We find that the costs of these items are dutiable as
repairs. The only warranty repairs which are potentially
nondutiable under 19 U.S.C. 1466 are warranty items for new
construction.
Tailshaft Magnaflux Test
We find that this item is nondutiable because the record
indicates that repairs were not associated with this test.
Survey
We find that the survey listed as item 11 on the CF 226 is
dutiable because it is directly related to dutiable repairs.
HOLDING:
As detailed supra, the application is granted with respect
to the security cost and the tailshaft magnaflux test and is
denied with respect to the other items.
Sincerely,
Arthur P. Schifflin
Chief
Carrier Rulings Branch