HQ 112590: Vessel Repair; 19 U.S.C. 1466; Petition for Review; Modification; Alteration; Vessel Repair Entry No. H24-0012573-6 Date of Entry: January 23, 1992 Date of Arrival: January 23, 1992 Port of Arrival: Anchorage, Alaska Vessel: F/V ALASKA VOYAGER

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 112590

                           August 10, 1993

VES-13-18-CO:R:IT:C  112590 DEC

CATEGORY:  Carriers

Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California  90831

RE:  Vessel Repair; 19 U.S.C. 1466; Petition for Review;
     Modification; Alteration;
     Vessel Repair Entry No. H24-0012573-6
     Date of Entry:  January 23, 1992
     Date of Arrival:  January 23, 1992
     Port of Arrival:  Anchorage, Alaska
     Vessel:  F/V ALASKA VOYAGER

Dear Sir:

     This letter is in response to your memorandum dated February 2,
1993, which forwards for our consideration a petition for review
filed in connection with the assessment of vessel repair duties on
the above-referenced vessel.


FACTS:
 
     The F/V ALASKA VOYAGER, an American-flag vessel, underwent
various foreign shipyard operations while in Tokyo, Japan, at the
NKK Corporation Shimizu Works.  Subsequent to the completion of the
work performed in Tokyo, the vessel arrived in the United States at
Anchorage, Alaska, on January 23, 1992.  A vessel repair entry
covering the work was filed on the day of arrival.    

     An application for relief from vessel repair duties was timely
filed.  Subsequently, a petition challenging certain determinations
from the application was, also, timely filed.  Initially, the
petitioner did not submit any supplementary documentation with
respect to the items at issue except for the petition letter itself. 
On April 14, 1993, representatives from the petitioner (Fishing
Company of Alaska, Incorporated) met with Customs officials.  At
that meeting, the petitioner's representatives indicated that they
would submit affidavits from individuals with actual knowledge of
the operations performed upon the vessel together with other
documentary evidence to supplement their petitions for review.  The
additional evidence consisted of one affidavit from Mr. Herb Roeser
of Trans-Marine Propulsion Systems, Incorporated in which Mr.Roeser

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stated that he did not see any of the operations performed nor was
he certain of how his recommendations were implemented.  The
following items have been submitted to this office for review.

           Item  Sub-Item     Worksheet   Description

            I      11           Page 1      launch system
            I    13, 14         Page 1      chute
            I      18           Page 1      packing table
            I      21           Page 2      valve/packing table
            I      20           Page 2      angle bar
            II      6           Page 2      coupling
            III     2           Page 3      alarm
            III     3           Page 3      alarm
            IV     1, 2         Page 3      belt conveyor

     Our ruling on the above-mentioned matters is set out below.

ISSUE:

     Whether the above-referenced items constitute duty-free
modifications/alterations  to the hull and fittings rather than
dutiable equipment and repairs.

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides, in
pertinent part, for payment of an ad valorem duty of 50 percent on
the cost of foreign repairs to a vessel documented under the laws of
the United States to engage in the foreign or coasting trade, or a
vessel intended to be employed in such trade.

     In United States v. Admiral Oriental Lines et al., 18 C.C.P.A.
137 (T.D. 44359 (1930)), the court distinguished equipment and
repairs (dutiable) from permanent additions to the hull and fittings
(non-dutiable).  For purposes of section 1466, Customs has adopted
the definition of dutiable equipment as

           . . . 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.

T.D. 34150 (1914).

     For equipment to become part of the hull and fittings of a
vessel, it must

           . . .become a permanent part of the hull, the
           installation of which caused the superstructure
           of the vessel to be changed, or where there is

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           proof that at the time the change was made it
           was the intention of the owners that such
           alteration or addition become a permanent part
           of the vessel.  In either case the permanency
           of such equipment should be, and in most cases is,
           evidenced by changes in conformity therewith in
           the official blue prints of the vessel.

T.D. 43585 (1929).

     Over the course of years, the identification of modification
processes has evolved from judicial and administrative precedents. 
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.

           (2)  Whether the 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.

Before an item is to be construed as a part of the vessel, it must
be (1) a permanent attachment and (2) essential to the successful
operation of the vessel.   Otte v. United States, 7 C.C.P.A. 166,
169 (1916).

      Customs has determined that even though an operation might,
under normal circumstances, be considered a permanent duty-free
modification, the benefit of such a finding is not extended to
operations which encompass the replacement of existing structures
which are in need of repair at that time.  If a permanent addition
is a first-time installation, or if it replaces an existing
structure which is in good working order at the time of its
replacement and an enhancement in operating efficiency is provided,
the operation may be considered a bona fide duty-free modification. 
Headquarters Ruling 111224 (Feb. 19, 1991).


                                 -4-

I.   HULL PART
     11    Skiff Launch System........................   345,000

     The work performed on the skiff launch system was deemed
dutiable because the evidence submitted with the application did not
lead Customs to a decisive conclusion that this item constituted a
modification to the vessel.  Keeping in mind that the burden to
establish that an operation is a modification rests with the vessel
operator, this item was held dutiable.  The supplementary
explanation provided in the petition clarifies our understanding of
the work performed as described in the invoice.  Consequently, this
item is deemed to be a modification of the vessel and, as such, it
is duty-free.  Accordingly, relief with respect to this duty-free
modification is granted.
     

I.   HULL PART
     13    Factory Trash Chute........................   200,000
     14    Closure of Chute Opening...................   180,000

     Initially, these items were deemed dutiable because there was
some concern that they represented restoration work to the trash
chutes which appeared, to the best that Customs could determine, to
be in need of repair.  The petitioner states that the work performed
on the trash chutes was performed to comply with various Coast Guard
and classification society requirements.

     Customs has held that the fact that a change or addition of
equipment is made to conform with a new design scheme, or for the
purpose of complying with the requirements of statute or code, is
not a relevant consideration.  Therefore, any change accomplished
solely for these reasons, and which do not constitute a permanent
addition to the hull and fittings of the vessel, would be dutiable
under 19 U.S.C.  1466.

     In our initial ruling on this item, Customs indicated an
ambivalence in classifying this item as a modification because the
submitted invoices referred to a renewal of parts that had
deteriorated and to evidence involving the removal of cement which
was deemed to be a cleaning operation.  Absent additional
documentary evidence that convinces Customs that these items are
modifications rather than repairs to ensure the chutes are
watertight, these items remain dutiable.


I.   HULL PART
     18    Packing Table...............................   539,000
     21    Establish Washing Pipe Valve................   295,000

     Our initial determination that these items were dutiable was
based upon the concern that the vessel undertook a similar operation
during the winter of 1990 and that a satisfactory explanation of how
the items currently at issue differ from the previous operation was 

                                 -5-


lacking.  The petition does address the competitive nature of the
fisheries trade and the Alaskan regulatory motivation for performing
these operations.  However, it does not detail nor does it provide
documentation distinguishing the items currently under consideration
from the similar operations of 1990.  Unless and until a more
detailed description of this item distinguishing it from the earlier
operations and an authenticated showing that the items on which the
work was performed was not in need of repair is submitted, this item
shall remain dutiable.  Accordingly, relief with respect to this
item is denied.


I.   HULL PART
     20    Angle Bar Installation.....................   272,000

     Upon reconsideration, Customs is satisfied that this item
qualifies as a modification.  It appears that the angle bar is a
permanent addition to the superstructure of the vessel and is
essential to the successful operation of the vessel.  Otte v. United
States, 7 C.C.P.A. 166, 169 (1916).  Accordingly, this item is not
subject to duty.


II.  MACHINERY PART
     6     Installation of Coupling...................   205,000  

     This item represents a switch from one type of coupling used in
conjunction with the main engine to a newer and more flexible
coupling.  While this item may represent a first-time installation
of this type of coupling, the crucial evidence that should be
offered, but was not, is the condition of the item being replaced. 
Customs has consistently held that the replacement of an item that
is in need of repair is dutiable.  Unless and until more detailed
and authenticated evidence is submitted establishing the condition
of the coupling that was replaced, this item shall remain dutiable. 
Accordingly, relief with respect to this item shall be denied.


III. ELECTRIC PART
     2     General Alarm Modifications................   379,000

     Upon further review of this item and the related documents on
file with Customs (Headquarters Ruling 110178 (Apr. 14, 1989)), this
item remains dutiable.  In light of the fact that similar work was
performed on the vessel in 1989, it must be established that the
recent work is not a repair operation related to this earlier entry
before it may be given duty-free modification status.  The
petitioner claims that the work completed was to ensure that the
crew could hear the alarm throughout the vessel.  Our comparison of
the invoice associated with the current item with the invoice from
1989 reveals that some of the alarm-related work was performed in
the same location.  Since the record is devoid of any evidence
establishing whether these operations were repairs of existing
                                 -6-


structures or bona fide modifications, the petitioner has failed to
meet its burden of proof to establish that the item represents a
repair.  Thus, this item shall remain dutiable.  Accordingly, relief
with respect to this item is denied.

III. ELECTRIC PART
     3     Switchboard Alarm Modifications............   101,000

     Our initial determination finding this item dutiable was based
on the fact that the invoice lacked sufficient information upon
which to make a determination of dutiability.  The petition does not
address this concern, but does indicate that the alarm was a first-
time installation.  This additional evidence serves to confuse the
situation because the shipyard invoice refers to modifications to an
existing alarm system and not to a first-time installation of a
switchboard.  Unless and until Customs receives authenticated
supplementary evidence detailing the installation or, alternatively,
the work performed on the alarm system, this item shall remain
dutiable.  Relief with respect to this item is denied.

IV.  BELT CONVEYOR
     1/2   Modification of Belt Conveyor..............   480,000

     Relief from duty was initially denied because Customs was not
provided with sufficient information for the work performed in
connection with the belt conveyors.  The invoice provided for is
vague and states only that the belt conveyor was modified.  No
details of the work performed are provided.  While Customs
appreciates the petitioner's narrative offering an elaboration of
the work performed on the belt conveyors and the reasons for it, 
this information unaccompanied by additional authenticated evidence
of a modification does not justify relief from duty.  Unless and
until Customs receives sufficient evidence that the work performed
on the belt conveyors is a modification, this item remains dutiable.


HOLDING:

     After a thorough review of the record and the additional
evidence presented, the petition for relief is granted, in part, and
denied, in part, as detailed in the Law and Analysis portion of this
ruling.  The petitioner should be informed of the right to file a
protest following liquidation of this entry, as evidenced by the
posting of the bulletin notice of liquidation.  

                                Sincerely,




                                Stuart P. Seidel
                                Director, International Trade