HQ 110929: Vessel Repair Entry No. C10-4907958-0; Date of Arrival: October 12, 1989; Port of Arrival: Linden, N.J.; Vessel: M/V FRANCES HAMMER.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 110929

                         August 7, 1990


VES-13-11/18  CO:R:P:C  110929  JBW

CATEGORY:  Carriers

Deputy Assistant Regional Commissioner
Classification and Value Division
ATTN:  Regional Vessel Repair Liquidation Unit
6 World Trade Center
New York, New York 10048-002980

RE:  Vessel Repair Entry No. C10-4907958-0; Date of Arrival:
     October 12, 1989; Port of Arrival: Linden, N.J.; Vessel: M/V
     FRANCES HAMMER.

Dear Sir:

          This letter is in response to your transmittal of March
14, 1990, regarding a request for relief submitted by Ocean
Chemical Carriers, Inc., on the above referenced vessel repair
entry.

FACTS:

          The record reflects that the subject vessel arrived at
the port of Linden, New Jersey, on October 12, 1989.  Vessel
repair entry number C10-4907958-0, Customs Form 226, was filed
the same day indicating foreign repairs to the ship's radar
performed by Marel Technical, S.A., in St. Theodore, Greece, on
September 25, 1989.  This document reveals labor charges in the
amount of 64,940 drachma ($386.26 entered U.S. cost) for repair
services.  The form indicates no charges for material parts or
equipment.

          On December 13, 1989, the Vessel Repair Unit issued a
notice of action that requested the submission of invoices for
the cost of spare parts used in the repairs and indicated a
proposed increase in duty based on these costs.  On December 20,
1989, the ship's owner submitted two invoices from Raytheon
Service Company (Raytheon), both dated November 8, 1989, for the
spare parts replaced in Jacksonville, Florida, on October 19,
1989:

        - Invoice No. B0345-01895 for replaced CRT Tube in the
          amount of $703.80.

        - An unnumbered invoice for an indicator power module
          replaced without charge "as item is covered under
          WARRANTY CONTRACT."

The ship's owner asserts in this letter that it incurred "no
actual labor charges" for the labor performed in Greece, for such
charges were covered by Raytheon under a maintenance contract.

          On January 4, 1990, the Vessel Repair Unit issued
another notice of action in which it sought, among other things,
a copy of the maintenance agreement and the amount of the total
premiums for the service contract covering the ship's items
repaired.  Enclosed with a letter dated January 19, 1990, the
ship's owner forwarded the maintenance agreement and
documentation showing a monthly premium for the contract of
$974.00.  Under the maintenance agreement, Raytheon agrees to
maintain electronic equipment manufactured by it.  The
maintenance includes, among other items, materials and labor to
replace worn out or defective parts and to replace parts or
supplies used from the normal equipment spares during a voyage.
The agreement excludes coverage of the magnetron and picture tube
and replacement of damaged or defective parts caused by other
than normal use or wear and tear.  Both companies to the contract
are United States companies.  Payment is made in United States
dollars and is drawn on a United States bank.

ISSUES:

          (1)  Whether an application for relief from vessel
repair duties that is submitted after sixty days from the date of
arrival of the vessel is timely under the regulations.

          (2)  Whether the costs of foreign repairs performed
under a maintenance or service contract between United States
companies and paid for in United States dollars is dutiable under
19 U.S.C. 1466(a) (1982).

LAW AND ANALYSIS:

          Title 19, United States Code, section 1466, provides in
pertinent part for payment of an ad valorem duty of 50 percent of
the cost of foreign vessel repairs to a vessel documented under
the law of the United States to engage the foreign or coastwise
trade.

          Section 4.14(d) of the Customs Regulations provides
specific time limitations for the submission of an application
for relief of vessel repair duties.  This section states:

          The application for relief, with supporting
          evidence, shall be filed within 60 days from
          the date of first arrival of the vessel.
          However, if good cause is shown, the
          appropriate vessel repair unit may authorize
          one 30-day extension of time to file beyond
          the 60-day filing period.

19 C.F.R. 4.14(d)(1)(ii) (1989).  Unless steps are taken to
validate or complete an application within the time period
established by the regulations, the entry is subject to
immediate liquidation upon the expiration of this time period.
Headquarters Ruling Letter 110739, dated March 21, 1990.

          The vessel under consideration first arrived on October
12, 1989.  The 60-day filing period in this case expired December
11, 1989.  Yet, the first communication by the ship's owner
appearing in the record is dated December 20, 1989.
Notwithstanding subsequent compliance by the ship's owner to your
requests for additional information, we are of the opinion that
the request for relief was untimely filed and consequently should
be denied.  We caution, however, that the use of the "Notice of
Action" forms might be construed by applicants to be extensions
of time.  We urge you to use these forms only within the time
periods authorized in the regulations for submission of
applications for relief or evidence of costs and to reiterate on
the form that the notice of action does not constitute an
extension of time.

          In your transmittal memorandum, you address the
question of whether costs for foreign repairs covered under a
service contract are dutiable.  We have held that the vessel
repair statute authorizes no exception where the cost of repairs
is either prepaid or paid in the United States under a service or
maintenance contract.  Headquarters Ruling Letter 101748, June 9,
1976; see also, Headquarters Memorandum 104516, November 18,
1980.  That the ship's owner itself incurred no foreign labor
costs does not exempt it from payment of duty assessed against
its ship for repairs performed by foreign labor in a foreign
shipyard.

          Citing this precedent, we stated that the fact that
foreign repairs to a radar of a United States-flag vessel were
performed under a warranty contract does not, by itself, exempt
the repairs from vessel repair duties.  Headquarters Ruling
Letter 107004, dated December 31, 1984.  The repairs must be
satisfactorily shown to have been due to casualty under 19
U.S.C. 1466(d)(1) (1982), as interpreted by the Customs Service
(e.g., the "one-round-voyage" rule), for the duties thereon to be
remitted, or they must meet some other statutorily-authorized
criterion for remission or exemption of duty.  In this case, the
ship's owner has submitted no evidence or documentation that
supports a casualty claim or other statutorily permitted
exemption.  The labor costs for repair of the radars by Marel
Technical, S.A., in Greece are therefore dutiable.

          No declaration was made regarding parts and materials
used for the repairs.  The description of the repairs and the
invoices submitted by the ship's owner indicate that a CRT tube
and indicator power module were replaced from the ship's spares.
The record does not indicate whether these spares were of United
States origin, nor does the ship's owner make such a claim.  We
have held in the past that parts, manufactured in the United
States, purchased by the vessel owner in the United States, and
installed by foreign labor, have not been included in determining
foreign costs for vessel repair duty. T.D. 75-257, 9 Cust. B. &
Dec. 576, 576-77 (1975). (Note that the continued application of
this rule has been called into question in a Headquarters
Memorandum dated April 19, 1989.  23 Cust. B. & Dec. No. 19, 15,
15-16 (1989)).  However, absent evidence or proof of the origin
and place of purchase of these parts, we conclude that the cost
of the CRT tube and the indicator power module must be included
in determining the cost of foreign repairs.

          You requested a "like cost" for the indicator power
module.  We are unable to provide this from our files.  We
suggest that you contact the radar company directly to determine
the cost.

HOLDING:

          The request for relief should be denied for it was
untimely filed.  The foreign labor costs to the vessel under
consideration are dutiable under 19 U.S.C. 1466 regardless of
the fact that, because of a service contract, the ship's owner
did not directly incur these cost.  Furthermore, the costs for
parts used from the ship's spares should be included in the
calculation of the foreign repair costs.


                              Sincerely,



                              B. James Fritz
                              Chief
                              Carrier Rulings Branch