HQ 111993: Vessel Repair Entry No. C10-4907958-0; Protest No. 1001-90- 008645; 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 111993

                        February 19, 1992


VES 13-11/18 CO:R:IT:C 111993 MLR

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; Protest No. 1001-90-
     008645; M/V FRANCES HAMMER.

Dear Sir:

     This letter is in response to your memorandum of November
13, 1991, forwarding the above-referenced protest filed by Givens
& Kelly on October 30, 1990, on behalf of Ocean Chemical Carriers
Inc.

FACTS:

     Marel Technical, S.A. (Marel) performed repairs to the
FRANCES HAMMER's radar systems in Greece on September 25, 1989.
Raytheon Service Company (Raytheon) paid the cost of the repairs
for Ocean Chemical Carriers Inc. (Ocean Chemical), the vessel's
owner, in accordance with a maintenance contract.  Marel's
invoice indicates that the vessel's radar repairs involved:  (1)
the starboard display radar 16" unit (16" unit), (2) the ARPA
Raypath display unit, and (3) the port radar 12" unit (12" unit).
It appears that the 16" unit was inoperative because of a broken
CRT tube.  The ARPA Raypath unit was inoperative because of a
defective power supply unit.  The 12" unit was malfunctioning
because of dirty relays.

       The vessel repair entry (C10-4907958-0), filed October 12,
1989, the same date the vessel arrived at the port of Linden, New
Jersey, lists labor costs in the amount of 64,940 drachma
($386.26 entered U.S. cost).  Ocean Chemical asserted that since
it did not incur labor costs because the charges were covered by
Raytheon under a maintenance contract, the cost of the foreign
labor is not dutiable.  The vessel repair entry did not list
amounts for material parts or equipment.  Since the Marel invoice
recommended that the 16" unit required a CRT tube and an
indicator power module, but did not clearly indicate whether
such foreign parts were purchased, the Vessel Repair Unit issued
a notice of action requesting that invoices be submitted for the
cost of parts used in the foreign repairs.  The notice of action
also indicated a proposed increase in duty based on these costs.
     On December 20, 1989, Ocean Chemical submitted two invoices
that it received from Raytheon.  The first invoice (No. BO345-
01895) was for a 12" CRT, which was allegedly replaced in
Jacksonville, Florida on October 19, 1989.  The second invoice
(unnumbered) was for an indicator power module, also allegedly
replaced in Jacksonville, Florida, on October 19, 1989 (although
the invoice does not state this).

     On January 4, 1990, the Vessel Repair Unit issued another
notice of action, asking whether the 12" CRT Tube replaced in
Raytheon Invoice No. BO345-01895 was the same piece mentioned in
the Marel invoice.  On January 19, 1990, Ocean Chemical confirmed
that the CRT was the same.  Since the Marel invoice referred to
a 16" CRT tube, and Ocean Chemical submitted an invoice for a 12"
CRT tube, Headquarters Letter Ruling 110929, dated August 7,
1990, held that the 16" CRT tube was replaced in Greece from the
ship's spares.  The cost of the CRT tube was considered a part of
the foreign repair because its origin was not proven.

     In the protest before us, Raytheon invoice no. BO345-89364
is submitted, indicating that a CRT and a power supply were
replaced in the 16" unit on October 13, 1989, in Linden, New
Jersey.

ISSUE:

     Whether the evidence presented is sufficient to prove that
the parts for which the protestant seeks relief were replaced in
the United States and therefore are not subject to the duty set
by 19 U.S.C. 1466.

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides in
pertinent part, for payment of an ad valorem duty of 50 percent
on the cost of foreign parts purchased and foreign repairs to
vessels documented under the laws of the United States to engage
in the foreign or coastwise trade.

     With regard to the foreign labor charge which Raytheon paid
for Ocean Chemical under a maintenance contract, Headquarters
Ruling Letter 110929, dated August 7, 1990, 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 (citing Headquarters Ruling Letter 101748,
June 9, 1976; Headquarters Memorandum 104516, November 18,
1980).  Accordingly, the Marel labor costs for repair of the
radars are dutiable.

     In the protest currently under consideration, the protestant
has submitted two Raytheon invoices documenting that a CRT tube
and an indicator power supply were installed in the 16" unit in
the United States.  The Marel invoice, now read in conjunction
with the Raytheon invoices, indicates that the 12" unit was tuned
and the relays were cleaned.  Further, the ARPA Raypath unit was
repaired by using the power supply from the 16" unit.  It appears
that upon the vessel's subsequent return to Linden, New Jersey,
a power supply and a CRT tube of U.S. origin were installed in
the 16" unit on October 13, 1989.  Therefore, we conclude that no
additional or spare parts were used in the repairs performed in
Greece.  Accordingly, the cost of the CRT tube and the indicator
power module should not be included in determining the cost of
the foreign repairs.

HOLDING:

     The foreign labor costs to the vessel are dutiable under 19
U.S.C. 1466 regardless of the fact that, because of a maintenance
contract, the vessel's owner did not directly incur these costs.
Further, the additional invoices submitted show that no foreign
parts were purchased, but that U.S. parts were installed
subsequent to the vessel's arrival in the United States.  Thus
the parts are not subject to the duty set by 19 U.S.C. 1466.

                                   Sincerely,




                                   B. James Fritz
                                   Chief
                                   Carrier Rulings Branch