VES-13-18-RR:IT:EC 227073 CC
Chief, Liquidation Branch
U.S. Customs
P.O. Box 2450
San Francisco, CA 94126
RE: Vessel Repair Entry No. 110-6461840-5; SEA-LAND TRADER; V-90; 19 U.S.C. 1466; Modifications; Application for
Relief
Dear Sir:
This is in response to your memorandum dated June 18, 1996,
which forwarded the application for relief submitted by Sea-Land
Service, Inc. (applicant), with respect to the above-referenced
vessel repair entry.
FACTS:
The SEA-LAND TRADER is a U.S.-flag vessel operated by Sea-Land Service, Inc. (Sea-Land). Subsequent to completion of
foreign shipyard work, the vessel arrived at the port of Tacoma,
Washington, on January 12, 1996. A vessel repair entry was filed
on January 22, 1996.
Pursuant to an authorized extension of time, an application
for relief with supporting documentation was timely filed. You
have asked for our determination with respect to the following
items:
Item No. Description
3.2-2 Rudder Pintle Bushing to Thordon
3.2-7 Stern Tube Seal
3.2-8 Main Reduction Gear Box End Covers
8.1-1 Centerline Transverse
Hatch Coaming Brackets
8.1-3 Transverse Coaming Stiffeners
8.1-5 Container Entry Guides Hatch #4
8.1-12 Hatch Cover Guides
8.1-13 Hatch Cover Bearing Pads
8.1-21 Drain Well
8.1-22 Manhole Cover Access
4001 Accommodation Ladder Turn table
4007 Main Circulating Suction Valve
4008 Chlorpac Dispersal Tube Bracketing
4018 Overboard Piping and Insert Plate
in E/R Port Side
4047 Bow Thruster Tunnel's Plate Covers
ISSUE:
Whether evidence is presented sufficient to prove that the
work covered by the subject items constitutes modifications to
the hull and fittings of the vessel so as to render the work
nondutiable under 19 U.S.C. 1466.
LAW AND ANALYSIS:
Title 19, United States Code, 1466, provides in pertinent
part for payment of duty in the amount of 50 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 engage in such trade.
In its application of the vessel repair statute, the Customs
Service has held that modifications, alterations, or additions to
the hull and fittings of a vessel are not subject to vessel
repair duties. Over the course of years, the identification of
modification processes has evolved from judicial and
administrative precedent. In considering whether an operation
has resulted in a modification that is not subject to duty, the
following elements may be considered:
1. Whether there is a permanent incorporation into the hull or
superstructure of a vessel (see United States v. Admiral
Oriental Line, 18 C.C.P.A. 137 (1930)), either in a
structural sense or as demonstrated by the means of
attachment so as to be indicative of the intent to be
permanently incorporated. This element should not be given
undue weight in view of the fact that vessel components must
often be welded or otherwise "permanently attached" to the
ship because ships are subject to constant pitching and
rolling. In addition, some items, the cost of which are
clearly dutiable, operate with other vessel components,
resulting in the need, possibly for that purpose alone, for
a fixed and stable attachment to those vessel parts. It
follows that a "permanent attachment" may take place that
does not necessarily involve a modification to the hull and
fittings.
2. Whether in all likelihood, an item under consideration would
remain aboard a vessel during an extended lay-up.
3. Whether, if not a first-time installation, an item under
consideration replaces a current part, fitting, or structure
which is not in good working order.
4. Whether an item under consideration provides an improvement
or enhancement in operation or efficiency of the vessel.
Our determinations on the subject items are as follows:
3.2-2. Rudder Pintle Bushing to Thordon. The applicant
states that the ruddle pintle bushing was modified with a
specially designed polymer, Thordon material. The ABS survey
states that the housing for the rudder lower pintle bush was
found wasted and was re-bored and fitted with a new bushing.
Consequently, we find that this item was a repair, and,
therefore, the costs are dutiable.
3.2-7. Stern Tube Seal. The applicant states that this
work was done to "enhance the running time of the vessel without
having problems of the stern tube seals leaking and causing
environmental damage to the environment." The ABS survey states
that the "complete aft seal assembly (outboard) was replaced
using a KOBELCO type simplex seal under supervision of maker's
representative." An invoice shows that before the stern tube
seals were converted they were inspected and found to be in good
condition. Thus, we find the work was done to convert the seals
to make them more efficient and not to repair an item not in good
working order. Therefore, this item is not dutiable.
3.2-8. Main Reduction Gear Box End Covers. The applicant
states that the existing covers were removed and larger covers
were installed in order that ABS requirement to inspect these
areas at regular intervals could be met. The applicant has
provided no evidence that this work was done incident to a
nondutiable ABS survey; consequently, this item is dutiable.
8.1-1. Centerline Transverse Hatch Coaming Brackets. The
applicant states that this work was done to prevent future
cracking. Some of this work consists of renewing existing
coaming brackets. Consequently, this item is a dutiable repair.
8.1-3. Transverse Coaming Stiffeners. The applicant states
that this work was done to prevent future cracking. Some of this
work relates to renewing existing coaming stiffeners; therefore,
this item is a dutiable repair.
8.1-5. Container Entry Guides Hatch #4. The applicant
states that this work was done to increase the productivity of
the longshoremen in loading the vessel. This item is a
modification and is nondutiable.
8.1-12. Hatch Cover Guides. The applicant states that 6 new
hatch cover guides were installed on top of existing guides which
were too short to help in lowering the hatch covers back into
position. This work is a modification and is nondutiable.
8.1-13. Hatch Cover Bearing Pads. The applicant states that
the existing bearing pads were not holding up. Thus, according
to the applicant, certain coaming pads were completely renewed
and new coaming pads were installed. Some of this work relates
to the repair of existing articles. Therefore, this item is
dutiable.
8.1-21. Drain Well. The applicant states that the cargo
holds, originally designed as large refrigerated spaces and
completely insulated with thick foam, have been converted to
normal container cargo holds. The foam was removed to allow
water to drain properly to the bilge well. This work is a
modification and is nondutiable.
8.1-22. Manhole Cover Access. The applicant states that
manhole covers were modified by removing sections of the coaming
dam to allow water to drain correctly. This work is a
modification and is nondutiable.
4001. Accommodation Ladder Turn Table. The applicant
states that the accommodation ladder turn tables were modified
from hydraulically actuated to manually operated by removing all
hydraulics and electrical equipment. This was done to prevent
oil spills and environmental damage. This work is a modification
and is nondutiable.
4007. Main Circulating Suction Valve. The applicant
states that the main circulator suction valve was required to be
removed by the USCG for inspection and survey. We find no
evidence that shows this work was done incident to a required
survey, and, therefore, this item is dutiable.
4008. Chlorpac Dispersal Tube Bracketing. The applicant
states that the piping bracket broke and was corrected with new
modified bushing and material. This work constitutes a repair
and is therefore dutiable.
4018. Overboard Piping and Insert Plate in E/R Port Side.
The applicant states that the piping was removed as a result of
the survey showing a possible safety hazard. This item consists
of a repair the result of the survey. Consequently, this item is
a repair that is dutiable.
4047. Bow Thruster Tunnel's Plate Covers. The applicant
states that one of the plates was modified by installing a small
2-inch threaded plug to facilitate inspections. This item is a
nondutiable modification.
HOLDING:
The subject items are dutiable in part and nondutiable in
part as detailed in the Law and Analysis portion of this ruling.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch