VES-13-18-RR:IT:EC 113919 GOB
Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 415
P.O. Box 2450
San Francisco, CA 94126
RE: Vessel Repair Entry No. 110-7992211-5; 19 U.S.C. 1466; SEA-LAND TACOMA, V-318; Application
Dear Madam:
This is in response to your memorandum dated April 18, 1997,
which forwarded the petition submitted by Sea-Land Service, Inc.
(the "applicant") with respect to the above-referenced vessel
repair entry.
FACTS:
The SEA-LAND TACOMA (the "vessel"), a U.S.-flag vessel owned
and operated by the applicant, arrived at the port of Tacoma,
Washington on December 6, 1996. The subject vessel repair entry
was subsequently filed. The vessel underwent certain foreign
shipyard work in Canada in November and December of 1996.
You ask for our determination with respect to the following
items: Kawasaki Heavy Industries' invoice - four items pertaining
to Mr. Miyauchi; administrative expense on King Bros. Limited
invoice; labor, materials, and equipment rental for underwater
survey markings and hull video for inspection by ABS (#0630; 3.1-14 on Vancouver Shipyards (Esquimalt) Ltd. invoice); and labor,
materials, and equipment rental for hull welding inspection
(#0870 on Vancouver Shipyards (Esquimalt) Ltd. invoice).
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
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.
The subject entry is a "post-Texaco" entry, i.e., an entry
filed after the appellate decision in Texaco Marine Services,
Inc., and Texaco Refining and Marketing, Inc. v. United States,
44 F.3d 1539 (CAFC 1994), aff'g 815 F.Supp. 1484 (CIT 1993).
Accordingly, the Texaco decision applies to this entry.
Kawasaki Heavy Industries' Invoice - four items pertaining
to Mr. Miyauchi - The Kawasaki invoice reflects certain costs
with respect to the work performed by Mr. Miyauchi. A memorandum
dated March 19, 1997 from J. Breglia, port engineer of the
applicant's Fleet Repair Group to N. Gruchalla of the applicant's
Ocean Transport Service Group states:
Please be advised that theKawasaki [sic] Engineer - Mr.
Miyauchi was used exclusively for the Controllable
Pitch Propeller Inspection. This inspection was
required in order to get credit for Special Survey
Tailshaft...
Mr. Breglia further states that the expenses of the second
engineer, Mr. Tsuji, are dutiable based on the work he supervised
and performed.
We find that the items pertaining to Mr. Miyauchi are
nondutiable because they are items incident to a nondutiable
inspection or survey.
Administrative Expense on King Bros. Limited Invoice - We
find that this item should be prorated along with the other
drydock costs and general services costs.
Underwater Survey Markings and Hull Video for Inspection -
The invoice (#0630; 3.1-14 on Vancouver Shipyards (Esquimalt)
Ltd. invoice) reflects that this work was performed preparatory
to or incident to a nondutiable ABS inspection. Accordingly, we
find that this work, including material and equipment rental, is
nondutiable.
Hull Welding Inspection - The invoice (#0870 on Vancouver
Shipyards (Esquimalt) Ltd. invoice) reflects that this work was
performed incident to a nondutiable inspection. Accordingly, we
find that this work, including material and equipment rental, is
nondutiable.
HOLDING:
As detailed above, the application is granted in part and
denied in part.
Sincerely,
Jerry Laderberg
Acting Chief,
Entry and Carrier Rulings Branch