HQ 111333: Vessel Repair; Foreign Shipyard; Warranty; SEA-LAND VOYAGER V-150; Entry No. 110-0104005-1; 19 U.S.C. 1466; 19 C.F.R. 4.14.

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 111333

                        February 19, 1991


VES-13-18  CO:R:IT:C  111333  JBW

CATEGORY:  Carriers

Chief, Technical Branch
Commercial Operations
Pacific Region
1 World Trade Center
Long Beach, CA 90831

RE:  Vessel Repair; Foreign Shipyard; Warranty; SEA-LAND VOYAGER
     V-150; Entry No. 110-0104005-1; 19 U.S.C. 1466; 19 C.F.R.
     4.14.

Dear Sir:

     This letter is in response to your memorandum of October 2,
1990, which forwards for our review and ruling the above
referenced application for relief from the assessment of vessel
repair duties.

FACTS:

     The record reflects that the subject vessel, the SEA-LAND
VOYAGER, arrived in the port of Tacoma, Washington, on July 15,
1990.  Vessel repair entry, number 110-0104005-1, was filed on
the same day as arrival.  The vessel repair entry states, among
other items, that repairs were made to the hinged frame at hatch
7A.  The Mitsubishi Heavy Industries, Ltd., invoice indicates
that no charge was made, for these repairs were made pursuant to
a warranty on a contract for a previous modification made to the
ship performed by the shipyard.  Nevertheless, the invoice
covering the repairs indicates a cost of 50,000.  The vessel
owner claims that no duty is owed on this cost.

ISSUE:

     Whether the cost of foreign repairs performed pursuant to a
warranty on a contract with a foreign shipyard for vessel
modification is dutiable under 19 U.S.C. 1466 (1988).


LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides in
pertinent part for payment of duty in the amount 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 engage in such trade.

     The Customs Service has consistently held that duty
allowance will not be made for foreign shipyard warranties.
Headquarters Ruling Letter 110658, dated April 9, 1990.  The
Court of International Trade recognized one narrow category of
foreign shipyard warranties as potentially eligible for duty
refund.  Sea-Land Service, Inc. v. United States, 683 F. Supp.
1404 (CIT 1988).  The Court in that case found that, under
certain conditions, warranties issued pursuant to new vessel
construction contracts should be honored for duty refund
purposes.  Id. at 1409.  This decision did not disturb, however,
our long-standing position that disallows other classes of
foreign warranty work.

     The repair work performed by Mitsubishi Heavy Industries
was not performed pursuant to a new vessel construction contract
warranty.  It does not, therefore, qualify under the exception
established in the Sea-Land decision discussed in the previous
paragraph.  Failing qualification for this exception, we conclude
that the work performed under warranty to repair the hinged frame
at hatch 7A is dutiable.

HOLDING:

     The cost of repair work performed pursuant to a warranty on
a vessel modification contract for which the vessel owner seeks
relief is dutiable under 19 U.S.C. 1466.


                              Sincerely,



                              B. James Fritz
                              Chief
                              Carrier Rulings Branch