HQ 113403: 19 U.S.C. 1466; Vessel Repair Entry No. 514-3005082-6; Petition; S/S RESOLUTE, V-66

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 113403

                              April 24, 1995

VES-13-18-R:IT:C   113403 GOB

CATEGORY: Carriers

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

RE:  19 U.S.C. 1466;  Vessel Repair Entry No. 514-3005082-6; Petition; S/S           RESOLUTE, V-66

Dear Sir:

     This is in response to your memorandum dated April 7, 1995 , which forwarded
the petition submitted by Farrell Lines Incorporated ("petitioner") with respect to the
above-referenced vessel repair entry.

     The record indicates the following.  The S/S RESOLUTE ("the vessel") is a U.S.-flag vessel owned by the U.S. Maritime Administration.  The vessel had foreign
shipyard work performed in Valletta, Malta and Cadiz, Spain in early 1994.  On March
1, 1994, the vessel arrived at the port of Newark, New Jersey.  The subject vessel
repair entry was subsequently filed.    

     In Ruling 113310 dated March 8, 1995, it was determined that the foreign costs
for which relief was sought were dutiable.

ISSUE:

     Whether the subject costs are dutiable under 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.

     

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     The petitioner claims that because the port boiler desuperheater repairs proved
unsatisfactory and had to be reworked, those repairs should be nondutiable.  It has
submitted an invoice from Kerney Ship Repair, Inc., a U.S. firm, in support of its claim.

     In the application ruling in this case, Ruling 113310, we stated as follows:

     Customs has long held that repairs which are completely ineffective and of no   value to the vessel are not repairs subject to duty under the vessel repair statute
     (see T.D. 55193(24) and C.I.E. 1156/ 62).  We note, however, that the record     contains no proof to substantiate the claim that the specific repairs in question    performed by Malta Drydocks were ineffective.  Accordingly, in the absence of   evidence to the contrary, we find the repairs on the two invoices in question to be dutiable.  (Emphasis supplied.)

     In C.S.D. 82-119, where the item at issue was found to be dutiable under 19
U.S.C. 1466, we stated:

     CIE 1128/60 [reissued as T.D. 55193(24)] stands for the proposition that where  repairs are completely ineffective and consequently of no value to the vessel,  the cost thereof is not dutiable under the vessel repair statute...
     
     On the facts of the case presented, the repairs made were ineffective in the    sense that the radar was not made operational as a result of the work      performed.  On the other hand, we cannot say that the work was of no value to             the
vessel because the cause of the radar not being functional was diagnosed   and a
partial remedy was effected even though the radar was not made   operational as a
result.

     After a consideration of the record, we find that the petitioner has not
established that the foreign repairs were completely ineffective and of no value.  The
petitioner has not established a conclusive nexus between the repairs accomplished in
Malta and Spain.  Further, it has not established a conclusive nexus between the
foreign repairs and the repairs performed by Kerney Ship Repair, Inc.  Additionally, the
petitioner would have to establish that the foreign repairs were of no value, which it has
not done.









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HOLDING:

     As detailed supra, the petition is denied.


                              Sincerely,


                              Harvey B. Fox
                              Director
                              Office of Regulations and Rulings