HQ 112781: Vessel Repair; Petition; Survey; Inspection; Modification; Dunnage;19 U.S.C. 1466; M/V STRONG TEXAN; Entry No. C15-0012674-8

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 112781

                          November 16, 1993

VES-13-18 CO:R:IT:C  112781 DEC

CATEGORY:  Carriers

Deputy Assistant Regional Commissioner
Commercial Operations
423 Canal Street
New Orleans, Louisiana  70130-2341

RE:  Vessel Repair; Petition; Survey; Inspection; Modification;
     Dunnage;19 U.S.C.  1466; M/V STRONG TEXAN;
     Entry No. C15-0012674-8

Dear Sir:

     This letter is in response to your memorandum dated June 22,
1993, which forwards the petition for review filed in conjunction
with the above-referenced vessel repair entry for our review.


FACTS:

     The M/V STRONG TEXAN arrived at the port of Wilmington, North
Carolina, on March 4, 1992, and filed a timely vessel repair entry
and application for relief.  This timely-filed petition for review 
is in response to Headquarters Ruling 112398 (Mar. 30, 1993) and is
challenging the dutiability of the following two items.

           Application
           Item Number          Invoice/Description

                17              Lloyd's Register Invoice #6059052
                                Required Inspections DH 9900

                19              G&H Mortgage Invoice #05053503
                                Modification DH12000


ISSUE:

     Whether the cost of the foreign shipyard work completed aboard
the M/V STRONG TEXAN is dutiable pursuant to 19 U.S.C.  1466.


LAW AND ANALYSIS:

     Title 19, United States Code, section 1466(a) provides, in
pertinent part, for payment of a fifty percent ad valorem duty on
the cost of foreign repairs to a vessel documented under United
States law to engage in the foreign or coastwise trade, or to a
vessel intended to be employed in such trade.
                                 -2-


INSPECTION COSTS

     This item represents charges for various surveys/inspections
conducted by the vessel's insurer.  In the ruling on the application
for relief, Customs denied relief from the assessment of vessel
repair duty because no documentation establishing that the surveys
actually occurred was submitted.

     Since the vessel operator has submitted the survey reports with
its petition, Customs is able to examine whether the assessment of
vessel repair duty is appropriate.  Customs has consistently held
that "[i]f the survey was undertaken to meet the specific
requirements of a governmental entity, classification society,
insurance carrier, etc., the cost is not dutiable even if dutiable
repairs were effected as a result of the survey."  C.S.D. 79-277. 
It is the cost of these types of surveys that are not dutiable.  The
repairs carried out that are associated with these surveys are
dutiable repairs.  Applying these principles to the submitted
invoices, Customs finds that the expense of the surveys is not
subject to duty.  However, the "radiotele renewal" is subject to
duty because it is a maintenance repair.


MODIFICATION

     At the application stage, relief from vessel repair duty was
denied with respect to the charges associated with the installation
of the A-60 bulkhead insulation because it was the position of
Customs that this installation did not represent a permanent
incorporation into the vessel.  The May 14, 1991, facsimile
referencing Mr. David Bengtsson's March 6, 1991, letter stated that
this item was originally intended to be a permanent installation,
however, the purpose for the installation was to carry a limited
number of cargoes.  Since various parts would have to be removed to
carry later cargoes, Mr. Bengtsson asked for approval to use speed
clips and chicken-wire covering to install the bulkhead insulation. 
From this letter, it was deemed that a "permanent incorporation"
into the vessel was not intended.  Headquarters Decision 112398
(Mar. 30, 1993).

     In support of the petitioner's claim for relief, counsel cites
Headquarters Decision 112211 (Jun. 30, 1992) in which Customs held
that a removable grate installed to prevent people from walking on
insulation was a non-dutiable modification.  Counsel seeks to extend
this holding to the temporary installation of the bulkhead
insulation.  We disagree.

     In Headquarters Decision 112211, Customs stated that although
the metal grate at issue was removable to provide access, it was
apparent that the grate was intended to be a permanent part of the
vessel.  This fact is in sharp contrast to the case at hand.  At
issue in this petition is the temporary installation of bulkhead 

                                 -3-


installation which is designed for specific and limited cargoes. 
The use of the speed clips and chicken-wire covering serve to
buttress the initial conclusion of Customs that this item is part of
the vessel's equipment that is readily removable from the vessel to
accommodate the "Heavy-lift Cargoes" rather than a permanent
incorporation into the vessel's superstructure.

     An argument not raised at the application or petition stage is
that the bulkhead insulation is dunnage.  Duty with respect to
dunnage is to be remitted.  Dunnage is defined as "loose wood or
other material used in a ship's hold for the protection of cargo." 
R. de Kerchove, International Maritime Dictionary 250 (2ed. 1961);
see also, Black's Law Dictionary 451 (5th ed. 1979); Headquarters
Decision 103736 (Feb. 14, 1979).  Applying this definition to the
case at hand, the insulation used for the limited purpose of
carrying the explosives for a limited number of voyages is properly
classified as dunnage.

     Title 19, United States Code, section 1466(d)(3) permits
remission for equipment, parts, materials, or labor used for the
packing or shoring of cargo.  The Customs Simplification Act of 1953
added 19 U.S.C.  1466(d)(3) (Section 3115(3), Revised Statutes). 
The legislative history discloses that the purpose of this provision
was to permit installation abroad, without the payment of duty, of
facilities on vessels for handling shipments of a type not usually
carried and thus enable vessels to secure cargoes for their homeward
voyage that they would not otherwise be equipped to handle.  C.I.E.
1274/63 (Aug. 13, 1963) citing H. Rep. No. 2174, 82nd Cong., 2d
Sess. (1953).

     Customs finds that the bulkhead insulation installed aboard the
M/V STRONG TEXAN is dunnage.  Accordingly, the duty assessed on this
item is to be remitted.


HOLDING:

     Following a thorough review of the facts in this case as well
as an analysis of the law and applicable precedents which bear upon
those facts, we have determined that the Petition for Review should
be granted in full for the reasons set forth in the Law and Analysis
section of this ruling.

                                Sincerely,




                                Arthur P. Schifflin
                                Chief