HQ 112673: Protest No. 2002-92-101556; New Orleans, Louisiana, Vessel Repair Entry No. CO-20-0037412-7, dated January 21, 1991; M/V PRIDE OF TEXAS, Voyage 48; Casualty; 19 U.S.C. 1466(d)(1); 19 CFR 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 112673

                         October 7, 1993


VES-13-18 CO:R:IT:C  112673 BEW

CATEGORY:  Carriers

Regional Director, Commercial Operations
U.S. Customs Service
South Central Region
New Orleans, Louisiana 70130

RE:  Protest No. 2002-92-101556; New Orleans, Louisiana, Vessel
     Repair Entry No. CO-20-0037412-7, dated January 21, 1991;
     M/V PRIDE OF TEXAS, Voyage 48; Casualty; 19 U.S.C.
     1466(d)(1); 19 CFR 4.14 

Dear Sir:

     This is in response to your memorandum that forwards protest
No. 2002-92-101556, filed on behalf of Intercargo Insurance Co.,
concerning vessel repair entry No. CO-20-0037412-7, relating to
the M/V PRIDE OF TEXAS, Voyage 48.

FACTS:
          
     The M/V PRIDE OF TEXAS is an United States-flag vessel owned
by Hull 751-IRFC-1 Partnership.  The record shows that the
subject vessel arrived in the port of New Orleans, Louisiana, on
January 21, 1992, after having undergone repairs in the ports of
Maputo, Mozambique, and Cape Town, South Africa, during the
period of November 12 through December 3, 1991, and December 24,
1991, through January 1, 1992, respectively.  Neither an
application for relief nor a petition for relief from duties was
filed.  The entry was liquidated on April 17, 1992.  A formal
demand for payment was issued to the surety company, the
protestant, on November 4, 1992.  A protest was timely filed by
the surety company on November 13, 1992, alleging that the
subject repairs were necessary due to "casualty", i.e., due to
pilot error.  On November 12, 1991, the vessel collided while
approaching the dock at Maputo, Mozambique.  On November 14,
1993, the American Bureau of Shipping (ABS) surveyed the vessel
for damage to the forepeak tank.  The ABS surveyor permitted the
vessel to proceed on single passage to discharge at the port of
Beira, Mozambique, and then to Durban, R.S.A. with the
recommendation that "favourable weather routing is followed and 
the vessel's speed be adjusted to prevent further damage, and   - 2 -


that the damage to the forepeak tank be further examined and
dealt with to the satisfaction of the attending surveyor at
Durban upon the vessel's arrival at that port."  The protestant
has submitted the following documents to sustain its claim.

     American Bureau of Shipping Invoice No. SF3133
     Manutencao Naval, E.E. Invoice No. 375689
     Marcol Invoice No. DBN 0043
     Globe Engineering Works (PTY) Limited Invoice No. S31227
     Globe Engineering Works (PTY) Limited Invoice No. S31228
     APV Rands 1,721.04
     Peninsular Power Rands 15,609.04
     American Bureau of Shipping Invoice No. SF3218
     American Bureau of Shipping Invoice No. SF3213
     Marcol Invoice No. DBN 0044

     The protestant claims that the all of the subject invoices,
except the APV and Peninsular Power invoices relate to the
repairs necessary because of a casualty. 

ISSUE:

     Whether sufficient evidence is presented to establish that
the subject repairs were necessitated by a "casualty" which is
remissible under the vessel repair statute (19 U.S.C. 1466).

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466(a), 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 the foreign or
coastwise trade, or vessels intended to be employed in such
trade.

     Paragraph (1), subsection (d) of section 1466 provides that
duty may be remitted if good and sufficient evidence is furnished
establishing that the vessel was compelled by stress of weather
or other casualty to put into a foreign port to make repairs to
secure the safety and seaworthiness of the vessel to enable her
to reach her port of destination.  It is Customs position that
"port of destination" means a port in the United States.

     The statute thus sets forth a three-part test that must be
met in order to qualify for remission under the subsection, this
being:

     1.   The establishment of a casualty occurrence.

     2.   The establishment of unsafe and unseaworthy conditions.
                              - 3 -


     3.   The inability to reach the port of destination without
          obtaining foreign repairs. 

The term "casualty" as it is used in the statute has been
interpreted as something that, like stress of weather, comes with
unexpected force or violence, such as fire, spontaneous explosion
of such dimensions as to be immediately obvious to ship's
personnel, or collision (Dollar Steamship Lines, Inc. v. United
States, 5 Cust. Ct. 28-29, C.D. 362 (1940)).  In this sense, a
"casualty" arises from an identifiable event of some sort.  In
the absence of evidence of such a casualty event, we must
consider the repair to have been necessitated by normal wear and
tear (ruling letter 106159, September 8, 1983).

     In addition, if the above requirements are satisfied by
evidence, the remission is restricted to the cost of the minimal
repairs necessary to "secure the safety and seaworthiness of the
vessel to enable her to reach her port of destination" (19 U.S.C.
1466(d)(1)).  Repair costs beyond that minimal amount are not
subject to remission.  

     Customs Regulations require that certain supporting evidence
be submitted with an application for relief from duties on
repairs resulting from stress of weather.  This evidence includes
photocopies of the relevant parts of the vessel's logs,
certification of any claimed casualty by the master or other
responsible vessel officer with personal knowledge of the facts,
and a certification by the master that the repairs were necessary
for the safety and seaworthiness of the vessel to enable her to
reach her port of destination in the United States (19 C.F.R.
  4.14(d)(1)(iii)(D)-(F)).

     The Salvage Association survey report No. 277.91 indicates
that while the vessel was berthing in Maputo on November 12,
1991, with a pilot on board but without the assistance of
tugboats, the starboard bow struck the quay at 8:25 hours causing
extensive damage to the shell plating in the forepeak ballast
tanks.  The damage extended from the soft nose to frame 212 in
the 2nd. strake below the forecastle sheer, just above the 37
feet draft mark, with the plating torn open over approximately 7
meters x 0.5 meters wide.  The internals were torn away and
heavily buckled.  The report further indicates that because of
extremely limited facilities in Mozambique, repairs would be
deferred.  It is clear from the evidence submitted with the
protest that the vessel was damaged when she collided with the
quay in Maputo, Mozambique.  Subsequently, the vessel proceeded
to the port of Capetown, South Africa, where the repairs were
made.

                              - 4 -


     The United States Coast Guard (USCG) is the controlling
agency that determines questions of a vessel's fitness to
proceed.  The procedure by which the USCG renders such a
determination is set forth in sections 2.01-15 and 31.10-25, USCG
Regulations (46 CFR 2.10-15, 31.10-25).  The former states that a
vessel may not proceed from one port to another for repairs
unless prior authorization is obtained from the USCG Officer-In-
Charge, Marine Inspection (OCMI) either through the issuance of a
USCG "Permit to Proceed to Another Port for Repairs" (CG-948) or
a CG-835 that would specify the restrictions on, and duration of,
any voyage undertaken prior to obtaining permanent repairs.  The
latter states that with respect to tank vessels, "No extensive
repairs to the hull or machinery which affect the safety of a
vessel shall be made without the knowledge of the Officer-In-
Charge, Marine Inspection." 
 
     Notwithstanding the clear wording of the above USCG
Regulations, specifically 46 CFR 2.10-15 that does not
distinguish between foreign or domestic locations, Customs has
been informed by the OCMI, New York, New York, in a letter dated
November 7, 1991, that "A formal Permit to Proceed is not
normally issued to a vessel transiting foreign waters because the
Certificate of Inspection (COI) would have to be removed from the
vessel that would cause problems in transiting foreign waters." 

     In addition, we have subsequently learned from the Chief,
Merchant Vessel Inspection and Documentation Division, USCG
Headquarters, in a letter dated April 14, 1992, that "Vessel
operators often make casualty reports for U.S. flag vessels
damaged overseas verbally to the proper Coast Guard Marine
Inspection Office, followed by the required written report.  The
Coast Guard cannot always send a marine inspector to a damaged
vessel overseas on short notice.  In such cases, the Coast Guard
may consider the classification society report and the report of
the vessel's master to determine the required temporary repairs
and voyage restrictions."

     Our review of the evidence submitted with the protest
reveals that the damage was caused by a casualty.  The report
shows that the damage to the vessel was caused on November 12,
1991, when the vessel collided with the quay in Maputo.  With
regard to the evidence that the vessel was in need of repairs to
secure her safety and seaworthiness, the documents show that the
repairs were not made until December 3, 1991, when the vessel
arrived in the port of Capetown, Africa.

     In cases such as the one under consideration, (i.e., where a
vessel that has been damaged foreign, proceeds in a state of 
disrepair between two foreign locations prior to being repaired 
                              - 5 -

foreign, and subsequently sails to its U.S. port of destination),

notwithstanding any practice of verbally reporting foreign
casualties to the USCG and that agency's subsequent verbal
instructions, remission pursuant to 19 U.S.C. 1466(d)(1) will not
be granted in the absence of documentary evidence that the
casualty occurrence was timely reported to the USCG and that
agency, directly or through the medium of a marine surveyor,
permitted the vessel to proceed between two foreign locations in
a damaged condition.  The mere submission of a USCG Report of
Marine Accident, Injury or Death (CG-2692), without accompanying
documentation from the appropriate USCG OCMI (New York or
Honolulu) authorizing the vessel to proceed in a damaged
condition, will not suffice for granting remission pursuant to 19
U.S.C. 1466(d)(1). 

     The evidence submitted sustains the fact that a 
determination of the USCG regarding the subject vessel's safety
and seaworthiness was made by ABS prior to the vessel leaving
Maputo, and that USCG gave the vessel permission to proceed to
Capetown for repairs.

     In C.I.E. 429/61 we noted that:

          ... expenses which are incurred in conducting
          inspections made subsequent to the repairs,
          so as to ascertain whether the work had been
          properly performed, are dutiable as integral
          parts of the expenses of repairs although
          separatly [sic] itemized.  Moreover, testing
          which is effected for the purpose of
          ascertaining whether repairs to certain
          machinery or parts of the vessel are
          required, or are performed in order to
          ascertain if the work is adequately
          completed, are also integral parts of the
          repairs and are accordingly dutiable.

     Pursuant to the holdings in C.I.E. 429/61, and extending the
concept to surveys as well as inspections, if a survey is
conducted to ascertain the need for repairs, or to ascertain if
the work is adequately completed, the costs are dutiable as part
of the repairs which are accomplished.  In cases where we find a
remissible casualty, these costs are considered nondutiable costs
as a part of the casualty.  In the subject case, certain surveys
were conducted as a part of the repairs relating to the casualty. 
With respect to the American Bureau of Shipping (ABS) Surveys, we
find as follows:

     ABS Invoice No. SF3133 relating to the damage listed in ABS
     Report No. DB13237 which occurred on November 12, 1991,
     relating to the collision at Maputo, all costs are
     remissible.
                              - 6 -


     ABS Invoice No. SF3218 relating to ABS Report No. CT5630
     which was performed December 24, 1991 through January 1,
     1992, as a follow-up of Report No. DB13237, recommended by
     the ABS surveyor, relating to the subject casualty, all
     costs are remissible.

     ABS Invoice No. ST3213 relates to ABS Report CT5629 - The
     documents submitted with the entry relate to a special
     continuous machinery and electrical equipment survey and the
     starboard main engine entableture, Customs has held that
     where periodic surveys are undertaken to meet the specific
     requirements of a classification society, insurance carrier,
     etc., the cost of the surveys is not dutiable even when
     dutiable repairs are effected as a result thereof; however,
     in the liquidation process Customs should go beyond the mere
     labels of "continuous" or "ongoing" before deciding whether
     the item is dutiable.  If an inspection or survey is
     conducted as a part of an ongoing maintenance and repair
     program labelled "continuous" or "ongoing" the cost is
     dutiable.  Also, if the survey is to ascertain the extent of
     damage sustained, or to ascertain if the work is adequately
     completed, the costs are dutiable as part of the repairs
     which are accomplished pursuant to holdings in C.I.E.
     429/61, C.S.D. 79-2, and C.S.D. 79-277. The costs associated
     with ABS Invoice No. SF3213 are dutiable.

     With regard to the remaining invoices we find as follows:

     Manutencao Naval, E.E. Invoice No. 375689, all costs are
     associated with the casualty and are remissible.
     
     Marcol Invoice No. DBN 0043, all costs are associated with
     the casualty and are remissible.
     
     Globe Engineering Works (PTY) Limited Invoice No. S31227,
     all costs are associated with the casualty and are
     remissible.                     

     Globe Engineering Works (PTY) Limited Invoice No. S31228,
     all costs are associated with the casualty and are
     remissible.
     
     Marcol Invoice No. DBN 0044, all costs are associated with
     the casualty and are remissible.

     With regard to the APV invoice (Rands 1,721.04) and the 
Peninsular Power invoice (Rands 15,609.04), we note that the
protestant has indicated that these invoices are not a part of
the protest.  We have, however, reviewed these invoices and find
that all items of cost are dutiable. - 7 -

HOLDING:

     The evidence presented is sufficient to substantiate that
the subject repairs were necessitated by a casualty.  The costs
relating to the subject invoices are remissible under 19 U.S.C.
1466, with the exception of the costs relating to the APV
invoice, Peninsular Power invoice and ABS invoice No. SF3213, 
which costs are dutiable.  The district director should grant in
part and deny in part the subject protest.  A copy of this
decision should be attached to the Customs Form 19 and forwarded
to the protestant as part of the notice of action on the protest.

                                     Sincerely,




                                     Arthur P. Schifflin
                                     Chief
                                     Carrier Rulings Branch