HQ 112398: Vessel Repair; Application; Consumables; Freight Charges; Survey; Transportation; Modification; Parts; Inspections; 19 U.S.C. 1466; M/V STRONG TEXAN; Entry #: C15-0012674-8.

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 112398


                         March 30, 1993

VES-13-18 CO:R:IT:C  112398 GFM

CATEGORY:  Carriers

Deputy Assistant Regional Commissioner
Commercial Operations
423 Canal Street
New Orleans, Louisiana 70130-2341

RE:  Vessel Repair; Application; Consumables; Freight Charges;
     Survey; Transportation; Modification; Parts; Inspections;
     19 U.S.C.   1466; M/V STRONG TEXAN; Entry #: C15-0012674-8.

Dear Sir:

     This letter is in response to your memorandum dated 
July 6, 1992, which forwards for our review the application for
relief filed in conjunction with the above-referenced vessel
repair entry.

FACTS:

     The vessel STRONG TEXAN arrived at the port of Wilmington, 
North Carolina, on March 4, 1992, and filed a timely vessel
repair entry.  The entry indicates that the vessel underwent
foreign shipyard work at various foreign facilities in Italy,
Germany, Israel, the United Kingdom, and the United Arab Emirates
from November, 1990 to January, 1992.  This application seeks
relief from duty for various charges incurred during the 
vessel's dockage at said foreign ports.

ISSUE:

     Whether the cost of foreign shipyard work completed aboard
the subject vessel is dutiable pursuant to 19 U.S.C.   1466. 
LAW AND ANALYSIS:

     Title 19, United States Code, section 1466(a), 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 the foreign or
coastwise trade, or vessels intended to be employed in such
trade.

ITEM 4 INHAM REFRIGERATION..........................$    1,035.20

     Applicant has submitted an invoice for repair parts
purchased foreign.  Included in this invoice is a freight charge
for said items.  In accordance with well-established precedent,
the foreign-purchased parts are dutiable; freight charges,
however, have traditionally been held non-dutiable.  Accordingly,
the cost attributable to non-freight charges for this item 
($ 815.20) is dutiable.

ITEM 17 INSPECTIONS.................................$    2,712.40
     
     This item represents charges for various surveys conducted
by the ship's insurer.  Customs Service Decision 79-277 stated,
"[i]f the survey was undertaken to meet the specific requirements
of a governmental entity, classification society, insurance
carrier, etc., the cost is not dutiable even if dutiable repairs
were effected as a result of the survey."  

     In order to obtain relief, an applicant must submit
documentation evidencing that surveys did in fact occur.
Typically, copies of the inspection reports will satisfy this
requirement.  With regard to the item at hand, no such
documentation was provided.  Accordingly, unless and until such
evidence is submitted, the cost of this item ($ 2,712.40) is
dutiable.

ITEM 19 BULKHEAD INSULATION.........................$    3,287.67

     This item involves charges for providing A-60 Bulkhead
Insulation which applicant claims constitutes a non-dutiable
modification.  According to a letter dated March 6, 1991, signed
by Mr. David Bengtsson, this item was "originally intended to
[be] a permanent installation, * * * [but] [b]ecause we are
installing this insulation to carry a limited number of cargoes
of containerized explosives and because we will probably have to
remove parts * * * [w]e now would like to install the insulation
using speed clips * * * and chicken wire covering."



     It is the position of the Customs Service that neither
modifications, alterations, or additions to the hull and fittings
of a vessel are 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.

     With respect to the item at hand, it is clear from the
aforementioned letter that a "permanent incorporation" was not
intended.  Accordingly, the cost of the item ($ 3,287.67) is
dutiable.

ITEM 25 CONSUMABLES.................................$    2,423.89

     This item represents charges for filters which applicant
claims should be classified as non-dutiable consumables.

     "Consumable Supplies" are generally defined as supplies for
the consumption, sustenance, and medical needs of the crew and
passengers during the voyage.  H.E. Warner, Trustee v. United
States, 28 CCPA 143, and Customs Memorandum 107323 of May 21,
1985.  Consumable supplies generally are not subject to vessel
repair duty, unless used in effecting dutiable repairs (C.I.E.
196/60).  Likewise, the expense of transporting materials and
parts (freight charges) to foreign repair sites has long been
held to be non-dutiable, regardless of whether the operation
accomplished with the use of the transported articles is
dutiable.

     With regard to this item, however, no documentation has been
submitted to prove that the filters in question were fully
consumed during the voyage in question.  In fact, owing greatly
the nature of the articles, there is a strong presumption that
they were not entirely consumed during the voyage in question. 
Accordingly, in absence of evidence to the contrary, the cost of
this item ($ 2,423.90) is dutiable.

ITEM 43(a) FREIGHT CHARGES..........................DFL    5,380.

     Applicant has submitted an invoice which lists purchase
costs and freight charges for an oil cooler.  The invoice clearly
shows that the price of the oil cooler was DFL 5,380.  The
accompanying freight charge was DFL 475.  As stated previously,
in accordance with well-established precedent, the foreign-
purchased parts are dutiable; freight charges, however, have
traditionally been held non-dutiable.  Accordingly, the cost
attributable to non-freight charges for this item (DFL 5,380.) 
is dutiable.
     
HOLDING:

     After thorough review of the evidence presented, and as
detailed in the Law and Analysis portion of this ruling, the
application for relief is denied.

                                        Sincerely,






                                        Acting Chief
                                        Carrier Rulings Branch