VES-13-18-RR:IT:EC 114878 GEV
Chief, Liquidation Branch
U.S. Customs Service
Post Office Box 2450
San Francisco, California 94126
RE: Vessel Repair Entry No. C29-0017920-4; GREEN POINT; V-8; General Services;
Modification; Surveys; 19 U.S.C. 1466
Dear Sir:
This is in response to your memorandum dated November 10, 1999, forwarding a petition for review of your office’s decision on an application for relief from duty assessed pursuant to 19 U.S.C. 1466. Our finding is set forth below.
FACTS:
The GREEN POINT is a U.S.-flag vessel owned by Central Gulf Lines, Inc., which incurred foreign costs in May of 1998. Subsequent to the completion of such work the vessel arrived in the United States at Portland, Oregon, on June 5, 1999. A vessel repair entry was timely filed as was an application for relief with supporting documentation.
By letter dated September 17, 1999, your office rendered its decision on the application for relief and informed the applicant of the right to file a petition for review of this decision.
A petition for relief was timely filed and forwarded to this office for review. You request our review of the following items: (1) Galley Modification work referenced on pp. 17, 46 & 47 of Hyundai Mipo Dockyard Co., Ltd. Invoice No. 991461; (2) testing and calibration of fuel oil line equipment referenced on p. 48 of the aforementioned invoice; (3) calibration of pressure and temperature sensors work on p. 64 of the invoice; (4) general services listed on the invoice; and (5) the cost of various surveys conducted by the American Bureau of Shipping (ABS) and listed on ABS invoice nos. 7620890215 and 7620890216.
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ISSUE:
Whether the foreign costs contained within the subject entry for which our review is sought are dutiable under 19 U.S.C. 1466.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466 (19 U.S.C. 1466), provides in pertinent part for the payment of an ad valorem duty of 50 percent of the cost of “...equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States..."
In its application of the vessel repair statute, Customs has held that modifications, alterations, or additions to the hull and fittings of a vessel are not subject to vessel repair duties. The identification of work constituting modifications vis-a-vis work constituting repairs has evolved from judicial and administrative precedent. (See Otte v. United States, 7 Ct. Cust. Appls. 166, T.D. 36489 (1916); United States v. Admiral Oriental Line et al., 18 C.C.P.A. 137, T.D. 44359 (1930); and Customs Bulletin and Decisions, Vol. 31, Number 40, published October 1, 1997.) The factors discussed within the aforementioned authority are not by themselves necessarily determinative, nor are they the only factors which may be relevant in a given case. However, in a given case, these factors may be illustrative, illuminating, or relevant with respect to the issue of whether certain work may be a modification of a vessel which is nondutiable under 19 U.S.C. 1466.
In regard to the galley work in question, we note that the petitioner’s modification claim is not corroborated by the documentation submitted. The record is not only devoid of the specifications referenced on p. 17 of the shipyard invoice, additionally the description of the work found on p. 47 of the aforementioned invoice is indicative of repair work. The lack of clear and probative documentary evidence renders an item dutiable under the vessel repair statute. (see Headquarters ruling 114740, dated June 30, 1999, citing Admiral Oriental Line v. United States, T.D. 43585 (1929)) In addition, conclusory statements offered in support of a position which are unsupported by evidentiary facts are not determinative as to the issue under consideration. Andy Mohan, Inc. v. United States, 74 Cust. Ct. 105, 396 F.Supp. 1280 (1975), aff’d, 63 CCPA 104, 537 F.2d 516 (1976). The petitioner has therefore not met his burden of proof in this matter and the galley work in question is therefore dutiable.
With respect to the costs of testing and calibration of fuel oil line equipment, and the calibration of pressure and temperature sensors work, the petitioner has not submitted documentary evidence probative of his claims. The specialist reports referenced in the invoice for both of these costs were not attached as provided therein. Accordingly, both of these costs are dutiable.
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In regard to the general services in question, we note that the evidence submitted is insufficient to show that they were attributed solely to nondutiable work. In view of the fact that the subject entry contains both dutiable and nondutiable costs, the general services at issue are to be prorated pursuant to Customs ruling letter 113474 and memorandum 113350 both of which addressed Customs implementation of the decision of the U.S. Court of Appeals for the Federal Circuit in Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 44 F.3d 1539 (CAFC 1994).
In regard to the dutiability of inspection/survey costs, we note that C.S.D. 79-277 stated that, "[i]f the survey was undertaken to meet the specific requirements of a governmental entity, classification society, insurance carrier, etc., the cost is not dutiable even if dutiable repairs were effected as a result of the survey." In addition, we have held that a survey undertaken to meet the specific requirements of a governmental entity, classification society, or insurance carrier is not dutiable even when dutiable repairs are effected as a result of a survey. We also held that where an inspection or survey is conducted merely to ascertain the extent of damages sustained or whether repairs are deemed necessary, the costs are dutiable as part of the repairs which are accomplished (emphasis added).
Upon reviewing the survey costs listed on the above-cited ABS invoices, we note that all are duty-free with the exception of the repair survey ($1,350.00), the administrative surcharges ($220.00 and $170.00), the S.A.F. ($800.00 and $940.00), and the total expenses ($193.00).
HOLDING:
The foreign costs contained within the subject entry for which our review is sought are dutiable under 19 U.S.C. § 1466 as discussed in the Law and Analysis portion of this ruling.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers Branch