VES-13-18-RR:IT:EC 115194 GEV
Chief, Residual Liquidation and Protest Branch
U.S. Customs Service
6 World Trade Center
New York, New York 10048-0945
RE: M/V STRONG VIRGINIAN; Vessel Repair Entry No. U17-
0970731-3; Protest No. 1303-00-100169; Modifications;
Drydocking Costs; General Services; Spare Parts; 19 U.S.C.
§ 1466(h)(3)
Dear Sir:
This is in response to your memorandum dated October 20, 2000, which forwarded for our review the above-referenced vessel repair protest. Our ruling on this matter is set forth below.
FACTS:
The M/V STRONG VIRGINIAN is a U.S.-flag vessel operated by Van Ommeren Shipping (USA) LLC. The vessel underwent extensive operations in Rotterdam, The Netherlands. Upon completion of the work in question, the vessel departed for the United States and arrived at the port of Baltimore, Maryland, on September 5, 1997. A vessel repair entry was timely filed.
An application for relief with supporting documentation was timely filed. Pursuant to Customs ruling letter 114647, dated October 22, 1999, the application for relief was granted in part and denied in part. No petition for review was filed. Consequently, the entry was liquidated on March 31, 2000, in the amount of $509,886.63. A protest, dated June 27, 2000, was timely filed. The protestant requests relief for the following: (1) drydocking and general services costs allegedly incurred pursuant to modification work; and (2) spare parts pursuant to 19 U.S.C. § 1466(h)(3).
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ISSUES:
Whether the costs for drydocking and general services for which
the protestant seeks relief were incurred solely for modification
work thereby rendering them non-dutiable.
Whether the items for which the protestant seeks relief are
classifiable under subheading 9818.00.05, HTSUS (19 U.S.C.
§ 1466(h)(3).
LAW AND ANALYSIS:
Title 19, United States Code, § 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…”
With respect to the costs of drydocking and general services, in the absence of documentary evidence probative of a claim that such costs are attributed solely to non-dutiable work, the costs are to be prorated between dutiable and non-dutiable costs contained within the entry in accord with our oft-stated position. (See Customs ruling letters 115024 and 115039, dated June 26, 2000) The specific charges listed on Wilton-Fijenoord invoice no. 7620/70312 A for which the protestant attributes to the aforementioned tank modification work are as follows:
C. 1.8 Shore Power Connection
C. 1.8 Shore Power
C. 1.10 Heating Lamps
C. 1.19 Gasfree/Hotwork
C. 2.1 Docking
C. 2.15 Ballast Water
In regard to the above-listed drydocking and general services costs, we note that the protestant’s claim is not corroborated by the documentation submitted. Notwithstanding the statement of the project manager that these costs “were required to accomplish the modification to the ballast and fuel tanks” (see Exhibit B), upon reviewing the invoice descriptions of the above-listed charges it is readily apparent that only item no. C. 1.19 is attributable solely to the tank modification work. The remainder of these listed charges,
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although quite possibly attributed in part to modification work, could also be attributed in part to dutiable repairs contained within this entry (see e.g., invoice no. C. 1.8 which states, “2 Shore power connections made whilst vessel under repairs…” Emphasis added) 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 regard to the aforementioned project manager’s statement, we note that 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). Consequently, with the exception of item no. C 1.19, the protestant has not met his burden of proof in seeking non-dutiable treatment for the above-listed drydocking and general services costs.
The protestant also seeks relief pursuant to 19 U.S.C. § 1466(h)(3) with regard to certain parts specified in Exhibits 9, 23, 27, 31 and 32. With respect to the protestant’s claims, we note that statutory provision provides as follows:
(3) the cost of spare parts necessarily installed before the
first entry into the United States, but only if duty is paid
under appropriate commodity classifications of the
Harmonized Tariff Schedule of the United States upon
first entry into the United States of each spare part
purchased in, or imported from, a foreign country.
A part under § 1466 is determined to be something which does not lose its essential character or its identity as a distinct entity but which, like materials, is incorporated into a larger whole. It would be possible to disassemble an apparatus and still be able to readily identify a part. The term part does not mean part of a vessel, which practically speaking would encompass all elements necessary for a vessel to operate in its designed trade. Examples of parts as defined are seen in such items as piston rings and pre-formed gaskets, as opposed to gaskets which are cut at the work site from gasket material.
For purposes of § 1466, the term materials is determined to mean something which is consumed in the course of its use, and/or loses its identity as a distinct entity when incorporated into the larger whole. Some examples of materials as defined are seen in such items as a
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container of paint which is applied to vessel surfaces, and sheets of steel which are incorporated into the hull and superstructure of a vessel.
The term equipment is determined to mean something which constitutes an operating entity unto itself. Equipment retains at least the potential for portability. Equipment may be affixed to a vessel in a non-permanent fashion, such as by means of bolts or other temporary methods, which is a feature distinguishing it from being considered an integrated portion of the hull and superstructure of a vessel. Examples of equipment as defined are seen in such items as winches and generators.
Upon reviewing the additional documentation submitted with the protest pertaining to these articles (Exhibits 9(a), 9(b), 9(c)) we are in accord with the protestant’s claim that these articles are parts entitled to treatment under the provisions of 19 U.S.C. § 1466(h)(3).
HOLDINGS:
With the exception of item no. C. 1.19, the evidence submitted does not support the protestant’s claim that the costs for drydocking and general services for which relief is sought were incurred solely for modification work.
The items for which the protestant seeks relief are classifiable under subheading 9818.00.05, HTSUS (19 U.S.C. § 1466(h)(3)).
Accordingly, the protest should be granted in part and denied in part.
In accordance with § 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to mailing this decision. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the
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decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Larry L. Burton
Chief
Entry Procedures and Carriers Branch