HQ 112377: Vessel Repair Entry No. C31-0005021-1; 19 U.S.C. 1466; EXXON NEW ORLEANS, V-9; Modification

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 112377

                                March 14, 1995

VES-13-18-CO:R:IT:C 112377 GOB

CATEGORY:    Carriers

Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90831-0700

RE:  Vessel Repair Entry No. C31-0005021-1;  19 U.S.C. 1466;  EXXON NEW    ORLEANS, V-9;  Modification

Dear Sir:

     This is in response to your memorandum dated June 30, 1992,  which forwarded
the application for relief submitted on behalf of Exxon Shipping Company ("applicant")
with respect to the above-referenced vessel repair entry.

FACTS:

     The record reflects that the EXXON NEW ORLEANS ("the vessel") arrived at the
port of Valdez, Alaska on October 12, 1991 and filed the subject vessel repair entry on
October 15, 1991.

     You request our determination with respect to the following items:

          Item No.            Description
            253                    new gangway installation
            317                    accommodation modification
            321                    emergency towing package
             A6                    crew's expenses - Esso Singapore
             B6                    crew's expenses/ship provisions - Esso                                Singapore
             X5                    ABS surveys, tank repairs



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ISSUE:
  
     Whether the subject items are dutiable pursuant to 19 U.S.C. 1466.

LAW AND ANALYSIS:

     19 U.S.C. 1466 provides for the payment of duty at a rate 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 be
employed in such trade.

Modification Issue 

     The applicant claims that the costs of item nos. 253, 317, and 321 are
nondutiable because such items are modifications to the hull and fittings of the vessel.

     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.  The identification of work constituting modifications vis-a-vis
work constituting repairs has evolved from judicial and administrative precedent.  In
considering whether an operation has resulted in a nondutiable modification, the
following factors have been considered:

     1.  Whether there is a permanent incorporation into the hull or superstructure of
a vessel, either in a structural sense or as demonstrated by means of attachment so as
to be indicative of a permanent incorporation.  See United States v. Admiral Oriental
Line, 18 C.C.P.A. 137 (1930).  However, we note that a permanent incorporation or
attachment does not necessarily involve a modification; it may involve a dutiable repair.

     2.  Whether in all likelihood an item would remain aboard a vessel during an
extended lay-up. 

     3.  Whether an item constitutes a new design feature and does not merely
replace a part, fitting, or structure that is performing a similar function.

     4.  Whether an item provides an improvement or enhancement in operation or
efficiency of the vessel.

     After a consideration of the record, we find that the costs of item nos. 253, 317,
and 321 are nondutiable because those items are nondutiable modifications.




                              - 3 -

Other Items

     With respect to item nos. A6 and B6, we find that the crew's expenses and the
ship's provisions are nondutiable.  The repair/spare parts and other charges are
dutiable, as is indicated on the applicant's worksheet.

     With respect to item X5, we find that the surveys, the loadline renewal, and the
travel and living expenses are nondutiable.  The tank repairs are dutiable; repairs are
not within the scope of duty-free treatment accorded to certain surveys or inspections
which are periodic and required by a government entity or a classification society.

HOLDING:

     As detailed supra, the application is granted in part and denied in part.


                         Sincerely,



                         Arthur P. Schifflin
                         Chief
                         Carrier Rulings Branch