HQ 112112: Vessel Repair; 19 U.S.C. 1466; Modification; Hatch Support Structure; Advisory Ruling; SEA-LAND CONSUMER; SEA-LAND PRODUCER

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 112112

                          June 16, 1992

VES-13-18-CO:R:IT:C 112112 MLR

CATEGORY:  Carriers

Robert S. Zuckerman
Deputy General Counsel-Corporate
Sea-Land Service, Inc.
P.O. Box 800
Iselin, New Jersey  08830

RE:  Vessel Repair; 19 U.S.C. 1466; Modification; Hatch Support
     Structure; Advisory Ruling; SEA-LAND CONSUMER; SEA-LAND
     PRODUCER

Dear Mr. Zuckerman:

     This is in reference to your letter dated February 13, 1992,
seeking an advisory ruling on the assessment of duty to certain
changes to the hatch support structure on the SEA-LAND CONSUMER
and SEA-LAND PRODUCER.

FACTS:

     Sea-Land plans to change the support structures of hatch
groups 2, 3, 6, 8, 9 and 10 on the SEA-LAND CONSUMER and SEA-LAND
PRODUCER, SL-18P class vessels, in a foreign shipyard.  The hatch
groups will be changed from continuous skirt supports to discrete
supports.  At this time, the project is described in "SL-18P
Hatch Cover Liner Modifications, October 1991," (Exhibit 2), as
follows:

     1.   Hatch Groups 2, 3, 8, 9 and 10

          a.   Hatch coamings and box girders shall be inspected
               for skirt wear all around.  Any wear shall be
               cleaned or ground out and filled with weld, then
               ground down to a smooth surface level with
               surrounding structure.

          b.   Box girders shall be inspected for trapped water
               and drained if water is found.

          c.   Remove existing seal bar all around and replace
               with 1/2" flat bar as shown on drawing 265.501.
               Care shall be taken when levelling so that a
               minimum of 3/8" penetration in the rubber gasket
               is achieved all around when cover is resting
               evenly on all liner support pads, as described in
               (j) below.

          d.   Repair or replace gasket channel as shown on
               drawing.  Replace rubber gasket all around.
               Details to be as shown on drawing 256.501.  Sand
               blast or clean to bare metal and apply two coasts
               with inorganic zinc before installing new rubber
               gasket.

          e.   Inspect and repair hatch cover skirt plate where
               damaged.

          f.   Fabricate and install landing liner support
               brackets on hatch covers as shown on drawing
               265.501.  The drawing shows an acceptable approach
               to achieving proper alignment.  Other methods are
               acceptable subject to Owner's approval.

          g.   Fabricate and install landing liner support
               "stools" on hatch coamings and box girders as
               shown on drawing 265.501.

          h.   Install owner supplied Merriman Lubrite F
               permanently lubricated sliding bearings to the
               adjacent mating surfaces of the stools and the
               support brackets.  Overall thickness of the
               Lubrite F bearings is 1".  See drawing 265.501 for
               mounting details of the Lubrite F bearing.
               Temperature shall be kept below 400 degrees F when
               welding teflon plate to support bracket.

          i.   Reinforce hatch coamings and box girders in way of
               new stools and relocated guide fittings as shown
               on drawing 265.501.

          j.   The liner pads shall be levelled and aligned so
               that contact is made simultaneously over the
               entire surface of all bearing surfaces.

          k.   The contractor shall assure that the above
               modifications do not compromise the jaw engagement
               at the connection between stacking frames and
               buttress towers as a result of possibly raising
               the hatch covers.

          l.   Inboard dog bolts and securing brackets shall be
               relocated as shown on drawing 265.501.

          m.   Hatch cover positioning guides shall be relocated
               and modified as shown on drawing 265.501.

          n.   Hatch coaming stacking fittings and positioning
               guide block shall be relocated as shown on drawing
               265.501.

          o.   The positioning guides and guide block shall be
               installed with dimensional tolerances as shown on
               drawing 265.501 when the covers are aligned as
               described in 1(c) and 1(j) above.

     2.   Hatch Group 6

          a - j. Work will be the same as (a - j) above.

          k.   Install new dog bolts and securing brackets
               similar to arrangement on hatch groups 5 & 7 at
               locations as shown on drawing 265.501.

          l.   Same as (m) above.

          m.   Guide stoppers, guide stopper blocks and doubler
               plates shall be modified and relocated as shown on
               drawing 265.501.  Their placement shall be such as
               to assure that dimensional tolerances shown on
               drawing 265.501 are met when the covers are
               aligned as described in 2c and 2j above.

Drawings entitled "Sea-Land Consumer/Producer Hatch Cover &
Coaming Modifications," (Exhibit 3), are also attached.

ISSUE:

     Whether the changes to the hatch groups on the subject
vessels are considered non-dutiable modifications/alternations/
additions or dutiable repairs pursuant to 19 U.S.C. 1466.

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides in
pertinent part for payment of duty in the amount of 50 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 engage in such trade.

     Sea-Land states that the modifications it proposes are new
features which will be incorporated into the vessels and will
result in more efficient and effective use of the subject
vessels.  The modifications will not cure any defect or repair
any damage, and will be permanently incorporated or permanently
attached to the vessels.  Further, Sea-Land states that the
modifications are not consumables nor are they "portable
articles" since they would remain on board the vessel were it to
be laid up for any period of time.  Accordingly, under the
principles enunciated in United States v. Admiral Oriental Line,
et al., T.D. 44359 (1930) and related rulings, the proposed
modifications should not be dutiable under 19 U.S.C. 1466.

     In its application of the vessel repair statute, Customs has
held that modifications/alterations/additions 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 layup.

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.

     For purposes of section 1466, dutiable equipment has been
defined to include:

          ...portable articles necessary or appropriate
          for the navigation, operation, or maintenance
          of a vessel, but 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)}.
     Sea-Land acknowledges that certain work described in
Exhibit 2 above, specifically 1(d) and (e), and 2(d) and (e),
represent work in the nature of repairs.  Sea-Land states that
although these items are necessary to the completion of the
modification work, it intends to invoice these items separately
so that there will be no intermingling of the non-dutiable
modification costs with any dutiable repair costs.

     Upon reviewing the evidence submitted, the work appears to
be akin to procedures we have previously found to be non-dutiable
(see ruling 110741, 111844, and 112225).  Accordingly, we
determine that the work to change the support structure of the
hatch groups under consideration on the SEA-LAND CONSUMER and
SEA-LAND PRODUCER would constitute non-dutiable modifications to
the subject vessels, with the exception of 1(d) and (e), and 2(d)
and (e), described above.  It also appears that 1(a) and 2(a) are
in the nature of dutiable repairs.  In all cases, modification
costs must be fully segregated from other charges, since mixed
repair/modification charges are assessed duty.

HOLDING:

     The foreign work for which relief is sought constitutes a
modification/alteration/addition so as to render it non-dutiable
under 19 U.S.C. 1466.

     It is noted, however, that this ruling is merely advisory
and does not eliminate the requirement to declare work done
abroad at the subject vessel's first United States port of
arrival, nor does it eliminate the requirement of filing the
entry showing this work (see sections 4.14(b)(1)(2), Customs
Regulations {19 CFR 4.14(b)(1)(2)}.  Furthermore, any final
ruling on this matter is contingent on Customs review of the
evidence submitted pursuant to section 4.14(d)(1), Customs
Regulations {19 CFR 4.14(d)(1)}.

                              Sincerely,




                              B. James Fritz
                              Chief
                              Carrier Rulings Branch