HQ 112180: Vessel repair; Repairs; Modifications; Survey; Application for Relief; Vessel OVERSEAS ALICE; Entry number T99- 0045990-8

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 112180

                          May 20, 1992


VES-13-18-CO:R:IT:C  112180 LLB

CATEGORY:  Carriers

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

RE:  Vessel repair; Repairs; Modifications; Survey; Application
     for Relief; Vessel OVERSEAS ALICE; Entry number T99-
     0045990-8

Dear Sir:

     Reference is made to your memorandum of March 19, 1992,
which forwards for our consideration the Application for Relief
from the assessment of vessel repair duties filed by counsel on
behalf of the operators of the vessel OVERSEAS ALICE.  Duties
were assessed in connection with the above-referenced vessel
repair entry.

FACTS:

     The record reflects that the OVERSEAS ALICE arrived in the
port of San Francisco, California, on August 17, 1991, filed a
timely vessel repair entry, and supplemented that entry as
required by the Customs Regulations.  While in Greece the vessel
underwent drydocking, repair, survey, and modification
operations.  Headquarters recommendations have been sought on a
total of five (5) invoice items, which are:

Worksheet page 2  - Item  1   - Ballast pump installation

Worksheet page 2  - Item  2   - Pumproom blind flanges

Worksheet page 2  - Item  3   - Walkway over cargo lines

Worksheet page 2  - Item  4   - Containment tray installation

Worksheet page 9  - Items 1-7 - Refueling-at-sea system


Additionally, beyond the items regarding which we were requested
to provide advice, we reviewed all invoiced purchases and are in
agreement with the proposed liquidation as reflected on the
accompanying worksheets, with the following exceptions:

Worksheet page 1  - Item  9   - Main and atmospheric condenser

Worksheet page 2  - Item 18.01- Hull anodes

Worksheet page 9  - Item 77   - Swivel block port king post

Worksheet page 9  - Item 80   - Anchor windlass

ISSUE:

     Whether the items under review constitute non-dutiable
operations due to association with modification or inspectional
operations rather than repair services.

LAW AND ANALYSIS:

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

     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.  Over the course of years, the
identification of work constituting modifications on the one hand
and repairs on the other has evolved from judicial and
administrative precedent.  In considering whether an operation
has resulted in a modification that 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, 18 C.C.P.A. 137 (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.

     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 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.

     With specific reference to the items for which our review
was requested, we find that worksheet items 2 (1), 2 (2), 2 (3),
and 9 (1-7) represent charges for modification procedures.  These
items all represent first time installations, permanently
installed.  No repair elements are present and, given the
prevailing circumstances, the items are considered duty-free
modifications.  Worksheet item 2 (4) (containment tray
installation), also the subject of a specific request for review,
is a dutiable item.  The invoice covering the operation indicates
that the tray is portable, thus revealing it to be vessel
equipment.  As such, it is specifically dutiable under subsection
(a) of the vessel repair statute.

     With regard to those additional items which we identified
above, we find that they are dutiable because of information
gleaned from the accompanying invoices.  The invoices show,
"wasted zinc anodes renewed" ( worksheet item 1 (9)), hull anodes
"renewed" (worksheet item 2 (18.01)), "swivel block freed up and
all grease connections and lines cleared" (worksheet item 9
(77)), and "cleaning in way of to [sic] carrying out hot work"
(worksheet item 9 (80)).

HOLDING:

     Following a thorough review of the evidence as well as
analysis of the applicable law and precedents, we have determined
that, for the reasons set forth in the Law and Analysis portion
of this ruling, the Application for Relief is allowed in part and
denied in part.

                              Sincerely,




                              B. James Fritz
                              Chief
                              Carrier Rulings Branch