HQ 112007: Vessel Repair; Modification; Casualty; Collision; Seaworthiness; 19 U.S.C. 1466; SEA-LAND DEVELOPER, V-126; Entry No. 110-0103988-9.

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 112007

                          May 13, 1992

VES-13-18   CO:R:IT:C  112007  JBW

CATEGORY:   Carriers

Chief, Technical Branch
Commercial Operations
Pacific Region
1 World Trade Center
Long Beach, CA 90831

RE:  Vessel Repair; Modification; Casualty; Collision;
     Seaworthiness; 19 U.S.C. 1466; SEA-LAND DEVELOPER, V-126;
     Entry No. 110-0103988-9.

Dear Sir:

     This letter is in response to your memorandum dated November
26, 1991, which forwards for our ruling the petition for review
filed in conjunction with the above-referenced vessel repair
entry.

FACTS:

     The vessel SEA-LAND DEVELOPER arrived at the port of Tacoma,
Washington, on March 19, 1990, and filed a timely vessel repair
entry. The entry indicated that the vessel underwent foreign
shipyard work while in Japan, Hong Kong, Singapore, and Taiwan.

     An application for relief was filed by the vessel operator
in which it was claimed that certain items were not subject to
duty as modifications to the vessel or as a casualty resulting
from the collision of the vessel. This office allowed in part and
denied in part the application for relief.  Headquarters Ruling
Letter 111293, dated September 5, 1991.  The vessel owner has
supplied further information and explanation on certain items
that we previously denied and petitions for review of these
items.

ISSUE:

     (1)  Whether the foreign shipyard work described herein
would constitute modifications to the hull and fittings so as to
render the work nondutiable under 19 U.S.C. 1466.

     (2)  Whether the damage resulting from the collision of the
vessel impaired the safety and seaworthiness of the vessel.

LAW AND ANALYSIS:

I.   Modifications to the Vessel.

     Title 19, United States Code, section 1466, provides in
pertinent part for payment of an ad valorem duty of fifty percent
of the cost of foreign repairs to or equipment purchased for a
vessel documented under the laws of the United States to engage
in the foreign or coastwise trade.

     In its application of the vessel repair statute, Customs has
held that modifications to the hull and fittings of a vessel are
not subject to vessel repair duties.  Over the course of years,
the identification of modification processes has evolved from
judicial and administrative precedent.  In considering whether an
operation has resulted in a modification which is not subject to
duty, the following elements may be considered.

1.  Whether there is a permanent incorporation into the hull or
superstructure of a vessel (see United States v. Admiral Oriental
Line et al., T.D. 44359 (1930)), either in a structural sense or
as demonstrated by the means of attachment so as to be indicative
of the intent to be permanently incorporated.  This element
should not be given undue weight in view of the fact that vessel
components must be welded or otherwise "permanently attached" to
the ship as a result of constant pitching and rolling.  In
addition, some items, the cost of which is clearly dutiable,
interact with other vessel components resulting in the need,
possibly for that purpose alone, for a fixed and stable
juxtaposition of vessel parts.  It follows that a "permanent
attachment" takes place that does not necessarily involve a
modification to the hull and fittings.

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

3.  Whether, if not a first time installation, an item under
consideration replaces a current part, fitting or structure which
is not in good working order.

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

     Very often when considering whether an addition to the hull
and fittings took place for the purpose of 19 U.S.C. 1466, we
have considered the question from the standpoint of whether the
work involved the purchase of "equipment" for the vessel.  It is
not possible to compile a complete list of items that might be
aboard a ship that constitute its "equipment".  An unavoidable
problem in that regard stems from the fact that vessels differ as
to their services.  What is required equipment on a large
passenger vessel might not be required on a fish processing
vessel or offshore rig.

     "Dutiable equipment" has been defined to include:

          ...portable articles necessary or appropriate
          for the navigation, operation, or maintenance
          of a vessel, by not permanently incorporated
          in or permanently attached to its hull or
          propelling machinery, and not constituting
          consumable supplies.  Admiral Oriental,
          supra., (quoting T.D. 34150, (1914))

     By defining what articles are considered to be equipment,
the Court attempted to formulate criteria to distinguish non-
dutiable items which are part of the hull and fittings of a
vessel from dutiable equipment, as defined above.  These items
might be considered to include:

          ...those appliances which are permanently
          attached to the vessel, and which would
          remain on board were the vessel to be laid
          up for a long period...  Admiral Oriental,
          supra., (quoting 27 Op. Atty. Gen. 228).

     A more contemporary working definition might be that which
is used under certain circumstances by the Coast Guard; it
includes a system, accessory, component or appurtenance of a
vessel.  This would include navigational, radio, safety and,
ordinarily, propulsion machinery.

     After reviewing the evidence regarding the specific items
submitted for our consideration, we find the following:

     MHI Invoice 14 A, Item No. 3-1-10: Upper Pintle Inspection
Cover:

          The invoice description and the additional drawings
          submitted by the petitioner indicate that the rudder
          access plate was modified by installing hinges and a
          locking mechanism.  This modification will permit
          easier access for inspection of the rudder and pintle.
          This work represents a new design feature, and we
          conclude that the cost of the operation is not subject
          to duty.

     MHI Invoice 14 A, Item No. A-9:  Chain Locker Eductor Pipe:

          The invoice description of this item indicates that a
          clogged eductor pipe was cleaned out.  Such work
          constitutes a dutiable repair.  The invoice indicates
          that work was also performed to permanently correct the
          persistent clogging of the eductor pipe.  This
          operation would have qualified as a non-dutiable
          modification had the costs of the repairs and the
          modification been segregated.  Absent such segregation,
          the entire cost is dutiable.

     MHI Invoice Item ADD. 5 A & B: Cargo Securing Boxes:

          The invoice indicates that boxes were constructed and
          installed to hold cargo securing gear.  While these
          boxes are similar to boxes already on the vessel, these
          boxes do not replace the existing boxes.  The
          installation constitutes a new design feature and is
          not dutiable.

     MHI Invoice 17, Item 17:  Paint Locker:

          The existing paint locker was divided into two rooms
          through the addition of a division bulkhead and a
          separate entrance.  This partition did not previously
          exist and represents a new design.  The cost for this
          modification is not dutiable.

II.  Damage Resulting from the Collision of the Vessel.

     The vessel repair statute provides for the remission of
duties in those instances where good and sufficient evidence is
furnished to show that foreign repairs were compelled by "stress
of weather or other casualty" and were 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).  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, explosion, or collision.  Dollar
Steamship Lines, Inc. v. United States, 5 Cust. Ct. 23, 28-29,
C.D. 362 (1940).  In the absence of evidence of such a casualty
causing event, we must consider the repair to have been
necessitated by normal wear and tear.  C.S.D. 89-95, 23 Cust. B.
& Dec., No. 43, 4, 5 (1989).

     In ruling on the application, we determined that a casualty
had occurred, but that the evidence presented did not enable us
to infer that the damage--a six-foot long, two to three inch deep
gouge in the shear strake--impaired the safety and seaworthiness
of the vessel.  As part of the petition, the petitioner included
an explanation from Sea-Land's General Manager, Fleet
Engineering, regarding the need for immediate repairs.  The
General Manager stated that the shear strake is a critical
strength member of the hull and requires immediate attention when
damaged.  With such damage, he stated that it is not recommended
that a vessel proceed on a trans-Pacific winter crossing.  These
conclusions are supported by the recommendation of the American
Bureau of Shipping that the sheer strake plate be cropped and
partly renewed with a new seam and new butts at the gouge.  Based
on this information, we conclude that the repairs made to the
shear strake were necessary to secure the safety and
seaworthiness of the vessel to enable her to reach her port of
destination. The duty paid on the cost of such repairs may
therefore be remitted.

HOLDINGS:

     (1)  We find that certain work, as detailed in our analysis
above, constitutes modifications to the vessel, the cost of which
is not subject to duty under 19 U.S.C. 1466.

     (2)  From the information presented, we conclude that the
repairs made to the shear strake were necessary to secure the
safety and seaworthiness of the vessel to enable her to reach her
port of destination. The duty paid on the cost of such repairs
may therefore be remitted.


                              Sincerely,



                              B. James Fritz
                              Chief
                              Carrier Rulings Branch