HQ 112948: Vessel Repair; 19 U.S.C. 1466; Petition; SEA-LAND INDEPENDENCE, V-142/165; Vessel Repair Entry No. C27-00882357- 1; Instruments of International Traffic; Modification;Survey and Inspection; Cleaning

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 112948

                           November 19, 1993

VES-13-18-CO:R:IT:C   112948 GOB

CATEGORY:  Carriers

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

RE:  Vessel Repair; 19 U.S.C. 1466; Petition; SEA-LAND
     INDEPENDENCE, V-142/165; Vessel Repair Entry No. C27-
00882357- 1; Instruments of International Traffic; Modification;
Survey    and Inspection; Cleaning 

Dear Sir:

     This is in response to your memorandum dated October 26,
1993, which forwarded the petition submitted by Sea-Land Service,
Inc. ("petitioner") in connection with the above-referenced
entry.

FACTS:

     The record reflects the following.  The vessel is owned by
The Connecticut National Bank and operated by the petitioner. 
The vessel arrived at the port of Los Angeles on February 9,
1993; a vessel repair entry was filed on February 12, 1993. 
Prior to its arrival, certain foreign shipyard work was performed
on the vessel. 
     By Ruling 112779 dated July 26, 1993 the application for
relief in this case was granted in part and denied in part.

Petitioner's Claims

     The petitioner claims that the following items are
nondutiable as instruments of international traffic within the
meaning of 19 U.S.C. 1322(a) and 19 CFR 10.41(a): item 10 -
supply of lashing gear; item 126 - 422 steel shackles; and items
143, 145-149, 166, 182, 194, 205, and 207 - components of the
lashing gear system.

     It contends that the following items are nondutiable
modifications to the hull and fittings of the vessel: item 128 -
 after tailshaft seal bonding; item 132 - shipyard modifications;
items 135 and 137 - lashing gear modifications; and item 139 -
relay for modification.  

                              - 2 -

     The petitioner maintains that the work associated with item
128 (after tailshaft seal bonding) is nondutiable because it was
performed in conjunction with the periodic tailshaft inspection
required under American Bureau of Shipping ("ABS") rules.  It
claims that the work associated with item 131 is nondutiable
because it was an ABS survey required to maintain vessel
classification. 

     The petitioner asserts that item 140 (sea clean 16 drums) is
a nondutiable cleaning operation undertaken in conjunction with
modifications. 

ISSUE:

     Whether the costs of the above-described 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.

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

Instruments of International Traffic Issue

     19 U.S.C. 1322(a) states in part:

     Vehicles and other instruments of international traffic, of
     any class specified by the Secretary of the Treasury, shall
be   excepted from the application of the customs laws to such
     extent and subject to such terms and conditions as may be
     prescribed in regulations or instructions of the Secretary
of   the Treasury.

     The Customs Regulations issued under the authority of 19
U.S.C. 1322 are contained in 19 CFR 10.41a.  19 CFR 10.41a(a)(1)
designates lift vans, cargo vans, shipping tanks, skids, pallets,
caul boards, and cores for textile fabrics as instruments for
international traffic.

     19 CFR 10.41a(a)(1) also authorizes the Commissioner of
Customs to designate as instruments of international traffic such
additional articles or classes of articles as he shall find
should be so designated.  Instruments so designated may be
released without entry or the payment of duty, subject to the
provisions of 19 CFR 10.41a.

                              - 3 - 

     To qualify as an instrument of international traffic within
the meaning of 19 U.S.C. 1322(a) and 19 CFR 10.41a, an article
must be used as a container or holder; the article must be
substantial, suitable for and capable of repeated use, and used
in significant numbers in international traffic.  See
Headquarters decisions 108084, 108658, 109665, and 109702.

     In Ruling 112627 dated May 16, 1993, we stated as follows:

     ... we note that T.D. 82-147 held twist-lock stackers used
by   steamship operators to secure containers to the deck of a
     vessel and to other stacked containers to be instruments of
     international traffic.  The underlying rationale for this
     decision was that the twist-lock stackers are similar to
other     articles deemed instruments of international traffic
(e.g.,    container adapters (T.D. 68-296), inflatable dunnage
units     (C.I.E. 525/63), and automotive frame spacers (T.D. 69-
220))     in their function and otherwise meet the requirements
of an     instrument of international traffic (i.e., substantial,
     suitable for and capable of repeated use, and used in
     significant numbers).

     Accordingly, in view of the fact that container lashing
rods,     like twist-lock stackers, are components of the
container      lashing system, and possess the same
characteristics required      of an instrument of international
traffic as do those article   [sic] discussed above, they are
designated as such, rather    than vessel equipment, and are not
subject to entry or the  payment of duty.

     We find that the following items in this case are designated
as instruments of international traffic: 10, 126, 143, 145-149,
166, 182, 194, 205, and 207.  Accordingly, they are exempt from
duty pursuant to 19 U.S.C. 1466.

Repair/Modification Issue

     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 the intent to be permanently incorporated.  See United States
v. Admiral Oriental Line, 18 C.C.P.A. 137 (1930).

                              - 4 -

     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.

     We find that the following items are nondutiable
modifications: 132, 135, 137, and 139.

Survey/Inspection Issue

     We find that the cost associated with item 128 (after
tailshaft seal bonding) is nondutiable because that item does not
reflect a repair.

     We find that the cost associated with item 131 is dutiable
because the pertinent invoices reflect that repairs were
accomplished as part of this cost.

Cleaning Issue

     We find that the cost associated with item 140 (sea clean 16
drums) is nondutiable because it is not related to a repair.

HOLDING:

     As detailed supra, the petition is granted with respect to
all items for which relief is sought with the exception of item
131, which is dutiable.



                                                                 
                              Sincerely,



                              Arthur P. Schifflin
                              Chief
                              Carrier Rulings Branch