HQ 112726: Vessel Repair; 19 U.S.C. 1466; Application for Relief; Modification; Survey; Vessel Repair Entry No. H24-0014521-3 Date of Entry: January 7, 1993 Date of Arrival: January 7, 1993 Port of Arrival: Dutch Harbor, Alaska Vessel: ALASKA VICTORY

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 112726

                          October 20, 1993

VES-13-18-CO:R:IT:C  112726 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; Application for Relief;
     Modification; Survey;
     Vessel Repair Entry No. H24-0014521-3
     Date of Entry:  January 7, 1993
     Date of Arrival:  January 7, 1993
     Port of Arrival:  Dutch Harbor, Alaska
     Vessel:  ALASKA VICTORY

Dear Sir:

     This letter is in response to your memorandum dated May 4,
1993, which forwards for our consideration an application for relief
filed in connection with the assessment of vessel repair duties on
the above-referenced vessel.


FACTS:

     The ALASKA VICTORY, an American-flag vessel, underwent various
foreign shipyard operations while in Miyagi, Japan, at the Yamanishi
Shipbuilding & Iron Works, Ltd. shipyard.  Subsequent to the
completion of the work performed in Miyagi, the vessel arrived in
the United States at Dutch Harbor, Alaska, on January 7, 1993.  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.  The following items have been submitted to this office for
review.

           Item    Sub-Item      Description

             I        5         inclining test
                      6         survey mark verifications
                     11         Number 3 boom
                     12         increased antenna height
                     13         fish hatch
                     14         inner bulwark
                     17         enlarge tool store
                                 -2-

                     26         processing lines
                     29         enlarged bilge well
                     32         hot water piping
                     33         inspection bucket

           II         5         sea water valves
                     21         thermometers

           III        3         jack bolts
                      5         outlet
                      7         power source
                      8         socket
                      9         starters

           IV         1         tail roller
                      2         bottom board
                      3         dust chutes
                      4         tail roller
                      5         pump unit

           Miscellaneous        DNV survey
                                certification work

     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.


Inclining Test (Item I, Number 5)

Clean, Inspect, and Reseal Sea Water Valves (Item II, Number 5)

     The "inclining test" referred to in the Yamanishi invoice (Item
I, Number 5) contains seventeen sub-parts which itemize the expenses
incurred in conducting the test.  With the exception of sub-part (g)
and (p), Customs is satisfied that these operations are not
associated with repairs and are not subject to duty.  However, sub-
parts (g) and (p) make reference to the cleaning of the singe and
bilge tanks and the disposal of bilge, oil, and oily water.  Absent
evidence to the contrary, Customs finds that these operations refer
                                 -3-


to cleaning.  Similarly, the operations performed on the sea water
valves involve cleaning.  Headquarters Ruling 109429 July 21, 1988). 
Absent a segregation of the cost associated with the United States
Coast Guard Survey, the entire invoice item is dutiable.  Customs
Memorandum 108567 (Sept. 10, 1986).  Customs has held that cleaning
operations which remove rust and deterioration of worn parts, and
which are a necessary factor in the effective restoration of a
vessel to its former state of preservation, constitute vessel
repair.  C.I.E. 429/61 (April 28, 1993).  Accordingly, sub-parts (g)
and (p) referred to above and the operations performed on the sea
water valves are dutiable.


Survey Mark Verifications (Item I, Number 6)

     The applicant contends that no duty should be assessed on the
cost of regulatory-required surveys.  Accordingly, the applicant has
submitted a shipyard invoice detailing various operations under the
heading of load line survey.  In C.S.D. 79-277, the Customs Service
addressed the dutiability of surveys/inspections stating that "[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."  Only the cost of a required
scheduled survey by a qualifying entity (such as the United States
Coast Guard or the American Bureau of Shipping) has been held to be
exempt from duty.

     The invoice that the applicant has presented with respect to
the load line markings contains items that, on their face, do not
relate to the survey.  Specifically, Item I, Number 6, sub-parts
(4)(a), (4)(d), and (4)(i) provide that various modifications were
performed.  These items are dutiable absent evidence detailing the
work associated with the "modifications."  The remaining items are
not subject to duty since they do not contain operations involving
repairs or are related charges for the survey.


Extension of Number 3 Boom (Item I, Number 11)
Increased Antenna Height (Item I, Number 12)
Raise Inner Bulwark (Item I, Number 14)
Modification of Tool Stores (Item I, Number 17)
Enlarge Bilge Well (Item I, Number 29)

Installation of Thermometers (Item II, Number 21)

Fabrication and Installation of Jack Bolts (Item III, Number 3)
Installation of Power Source (Item III, Number 7)
Installation of Plug Socket (Item III, Number 8)
Installation of Starter Sets (Item III, Number 9)
Modification of Belt Conveyor (Item III, Number 5)

Extend Duster Chutes (Item IV, Number 3)
                                 -4-


     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 is satisfied that these operations (Item I, Numbers 11,
12, 14, 17, 29; Item II, Number 21; Item III, Numbers 3, 5, 7, 8,
and 9; and Item IV, Number 3) improve the efficiency of the vessel
and represent a permanent incorporation into the vessel's structure. 
Accordingly, no duty shall be assessed on these items.


Modification of Fish Hatch (Item I, Number 13)
Remove and Install Processing Lines (Item I, Number 26)
Modification of Inspection Bucket (Item I, Number 33)

Modification of Tail Roller (Item IV, Number 1)
Reinforce Conveyor (Item IV, Number 2)
Modification of Belt Conveyor (Item IV, Number 4)
Overhaul Pump Unit (Item IV, Number 5)

     Applying the standards set forth above, it is Customs position
that the applicant has not provided sufficient evidence supporting a
finding that these items (Item I, Numbers 13, 26, and 33; Item III,
Number 5; and Item IV, Numbers 1, 2, 4, and 5) are modifications. 
The Customs Service has held that the decision in each case as to
whether an installation constitutes a non-dutiable addition to the
                                 -5-


hull and fittings of the vessel depends to a great extent on the
detail and accuracy of the drawings and invoice descriptions of the
actual work performed.  No drawings were submitted and the invoice
descriptions provided an insufficient amount of detail precluding
the Customs Service to make a decision.  Accordingly, these items
shall remain dutiable unless and until evidence detailing the work
performed is provided and found to be a bona fide modification.


DNV Survey (certification work)

     This invoice is for the load line certification and survey. 
Since this invoice separately itemizes the costs associated with the
load line certification and is not associated with any other repair
items, it is not subject to duty.


Trans Marine Propulsion (Year End Repairs)
Elliott Bay Design Group

     Three invoices from Trans Marine Propulsion and one invoice
from Elliott Bay Design Group were submitted.  Trans Marine
Propulsion Invoices 003980 (Nov. 30, 1992), 004094 (Jan. 19, 1993),
and Elliott Bay Design Group (Apr. 6, 1993, facsimile) are dutiable
because the applicant has not demonstrated that the work invoiced is
non-dutiable.  Based on the brief descriptions contained in the
invoices, it is apparent that the work performed relates to repair
operations.  The Elliott Bay Design Group facsimile offers no
explanation of the work performed.  Customs cannot grant relief
absent a description of the work performed.

     Transportation charges are non-dutiable.  Accordingly, the $230
air freight charge on Trans Marine Propulsion invoice 003980 (Nov.
30, 1993) is not dutiable.  Similarly, the air and travel expenses
noted on the Elliott Bay Design facsimile is not dutiable.


HOLDING:

     After a thorough review of the record, this application for
relief is granted in part and denied in part as detailed in the Law
and Analysis portion of this ruling.

                                Sincerely,




                                Arthur P. Schifflin
                                Chief