HQ 112890: Protest No. 1001-2-106045; Vessel Repair Entry No. 458- 0006594-3 dated October 8, 1991; Date of Arrival: October2, 1991; Port of Arrival: Staten Island, New York; Vessel Name: ITB GROTON.

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 112890

                           October 12, 1993  

VES-13-18:CO:R:IT:C    112890 GOB

CATEGORY:   Carriers

Chief, Residual Liquidation and Protest Branch
New York Region
Six World Trade Center
New York, New York 10048-0945

RE:  Protest No. 1001-2-106045;  Vessel Repair Entry No. 458-
     0006594-3 dated October 8, 1991;  Date of Arrival:  October
2,   1991;  Port of Arrival:  Staten Island, New York;  Vessel
     Name:  ITB GROTON.

Dear Sir:

     This is in response to your memorandum dated September 16,
1993, which forwarded the above-referenced protest seeking
reliquidation of the above-referenced entry.

FACTS:

     The record reflects that the subject vessel, the ITB GROTON
("the vessel"), which is owned by First Tug and Barge Corporation
("protestant"), arrived at Staten Island, New York on October 2,
1991 and filed a vessel repair entry on October 8, 1991.  Certain
repairs and modifications were effected at the Viktor Lenac
Shipyard in Rijeka, Yugoslavia.

     In Ruling 112168 dated May 21, 1992, Customs denied relief
from the assessment of vessel repair duties because an application
for relief was not filed in a timely fashion as required by 19 CFR
4.14(b)(2)(ii)(2). 

     The entry was liquidated on June 26, 1992, with duties in the
amount of $2,014,997 owing.
     
     The protestant makes numerous claims, which will be discussed
infra.

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.


                              - 2 -

     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 (See      
          United States v. Admiral Oriental Line, 18             
C.C.P.A. 137 (1930)), either in a structural sense               or
as demonstrated by means of attachment so as to             be
indicative of the intent to be permanently                  
incorporated.  

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

          3.   Whether an item under consideration 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 under consideration provides an   
               improvement or enhancement in operation or
               efficiency of the vessel.

     After a consideration of the evidence of record, we make the
following findings.

     The following items in the protest are nondutiable.  The item
numbers refer to the item number stated in the Memorandum in
Support of Protest dated September 24, 1992.

          Item      Invoice No.    Description

           2        G-1X           Gas-freeing tug storage tank
           3        H-14           IGS sea chest and piping modif.
           6-8      S-1-A-3,4,5    Modifications to No. 3 starboard
                                   wing ballast tank
           9-11     S-1-B-3,4,5    Modification to No. 3 port wing
                                   ballast tank
           21       S-4            Davit fabrication & installation
           22       S-6            Installation of davits and
                                   access hatches port and
                                   starboard forward pontoons    
                                   of tug                        
           23       S-7            Installation of new hose and  
                                   accomodation ladder rack
                              - 3 - 

          Item      Invoice No.    Description

           24       S-8            Installation of new lighting
                                   stands in cargo manifold area 
           25       S-10           Modification of ladders and
                                   platforms at cargo manifold
           26       S-14           Tug mast modifications
           28       S-58X          Rewelding of rungs on ladder to
                                   boom vert. support stanchion  
           29       S-70X          Modification of hydraulic crane
                                   vert. support boom extension  
           30       IG-7           Inspection of inert gas system
                                   non-return check valve
           31       M-12X          Modification of control valve
                                   for constant tension winches
           32       M-13X          Capstan modifications
           34       P-4            Modification of king gauge line
                                   to forepeak tank
           35       P-10           Main engine air intake
                                   modifications
           36       P-13           Modification of ballast pump
                                   eductor system
           37       P-14           Cargo manifold and fill valve
                                   replacement
           38       P-15           Mooring winch and capstan
                                   control box relocation
           39       P-16           Installation of new fresh water
                                   system
           40       P-18           Hydraulic crane installation
           41       P-21           Port capstan hydraulic piping
                                   modification
           42       P-24           Main engine, generator engine,
                                   and boiler exhaust pipe
                                   modification
           43       P-32           Installation of new slop line
           44       P-34           Barge exhaust pipe modification
           45       P-35           Fuel oil purification system
                                   modification
           46       P-36           Diesel oil purification system
                                   modification
           47       P-48           Slop line manifold valve
                                   replacement
           48       P-16X          VGO starboard tank suction valve
                                   reach rod modification

     The following items are dutiable.

     Item #1, G-1, Gas-free certificate.  The cost of this item is
to be apportioned between dutiable and nondutiable items

     


                              - 4 -

     Item #4, H-22, Barge tongue recess inspection.  This item is
dutiable because the invoice indicates the inspection was incident
to a repair.  

     Item #5, S-1-(B)(1), Link arm - removal of cylinders for
inspection.  The invoice states that this is a repair item.

     Items #12-14, S-1-C(3), (4), and (7), Modifications to forward
port and starboard wing ballast tank.  The invoices indicate that
the work performed with respect to these items were repairs, e.g.,
"[t]he aft center section is now fractured and wasted."  The
protestant claims that the actual repair cost of these items is
$180 out of the total cost of $74,516.  We find that the
protestant's estimate of the repair cost of $180, when viewed in
the context of the evidence of record, i.e., the invoices and the
American Bureau of Shipping ("ABS") documentation, is not
acceptable.  The evidence of record indicates that the entire cost
of these items is properly treated as dutiable repairs.  We note
that the replacement of existing structure which has deteriorated
is a repair item.  Segregated costs for transportation and cranage
are nondutiable.

     Items #15-19, S-1-D(2), (3), (5), (6), and (7), Forepeak tank. 
The evidence of record indicates that the work performed
constitutes repairs, e.g., the ABS report states: "fore peak tank
was internally close examined and internals found excessively
wasted."

     Item 20, S-1(I), Tank top repairs.  The evidence of record
indicates that these costs are for repairs.  The invoice describes
these costs as "Tank Top Repairs."  Further, the part of the
invoice at issue refers to "damaged coating."

     Item #27, S-20X, Engine room supply fan plenum modification. 
The invoice states in part: "Cleared and repaired drains as
necessary."  The protestant states:  "the invoice indicates that
the drains were `repaired.'  However, the statement is inaccurate. 
As part of the modification process, the existing drains were
blanked and new drains added."  With the presence of a clear and
unambiguous statement on the invoice, and in the absence of any
other evidence other than the protestant's statement, we find this
cost to be dutiable.  The bare statement of the protestant is not
sufficient to overcome the clear and unambiguous language of the
invoice.

     Item #33, M-24X, Modification of tug anchor windlass.  The
invoice for this item is entitled: "TUG ANCHOR WINDLASS - REPAIRS." 
One part of the invoice states:  "...upwelded cracks in area."  The
protestant states: "The reference to `repairs' on the invoice is
inaccurate."  Once again, with the presence of clear and
unambiguous statements on the invoice, and in the absence of any 


                              - 5 -

other evidence other than the protestant's statement, we find this
cost to be dutiable.   

     The protestant claims that the cost of services provided under
Hydrospace Systems, Inc. ("Hydrospace") invoice #740-1 in the
amount of $17,157 is nondutiable because the clerical and drafting
work was performed in the United States by United States residents
and that any assistance provided by Hydrospace with respect to the
specifications and sketches was performed by a United States
resident.  The protestant has not substantiated this claim. 
Accordingly, this cost is dutiable.

HOLDING:

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



                              Sincerely,



                              Stuart P. Seidel
                              Director, International
                              Trade Compliance Division