HQ 112833: Vessel Repair Entry No. C27-0082390-2; 19 U.S.C. 1466; SEA-LAND EXPLORER, V-130-132; Modification; Cleaning

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 112833

                                March 14, 1995

VES-13-18-CO:R:IT:C 112833 GOB

CATEGORY:    Carriers

Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90831-0700

RE:  Vessel Repair Entry No. C27-0082390-2;  19 U.S.C. 1466;  SEA-LAND     EXPLORER, V-130-132;  Modification;  Cleaning

Dear Sir:

     This is in response to your memorandum dated August 3, 1993,  which
forwarded  the application for relief submitted by Sea-Land Service, Inc. ("applicant")
with respect to the above-referenced entry.  

FACTS:

     The record reflect that the SEA-LAND EXPLORER ("the vessel") arrived at the
port of Los Angeles, California on April 19, 1993 and filed the subject vessel repair
entry on April 21, 1993.

     You request our determination with respect to the following items:  

     Item No.            Description

     1-1-4                    cleaning
     5-1-29A             #1 hold aft cell guide
     H1                  hatch cover liner
     H2                  foremast foam modification
     H3                  #1 and #2 web frame
     H9                  #10 faceplate
     H10                 #8 faceplate
     H11                 #8 hinge frame
                              - 2 -

     Item No.            Description

     H12                 remove 35 foot frames
     H14A                ultra sonic inspection of hatch covers
     H15A                video of hull
     H16A                #7 faceplate
     M7                  piston alignment inspection
     M9                  valve inspection

ISSUE:

     Whether the subject items are dutiable pursuant to 19 U.S.C. 1466.

LAW AND ANALYSIS:

     19 U.S.C. 1466 provides for the payment of duty at a rate 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 be
employed 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.  The identification of work constituting modifications vis-a-vis
work constituting repairs has evolved from judicial and administrative precedent.  In
considering whether an operation has resulted in a nondutiable modification, the
following factors have been considered:

     1.  Whether there is a permanent incorporation into the hull or superstructure of
a vessel, either in a structural sense or as demonstrated by means of attachment so as
to be indicative of a permanent incorporation.  See United States v. Admiral Oriental
Line, 18 C.C.P.A. 137 (1930).  However, we note that a permanent incorporation or
attachment does not necessarily involve a modification; it may involve a dutiable repair.

     2.  Whether in all likelihood an item would remain aboard a vessel during an
extended lay-up. 

     3.  Whether an item 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 provides an improvement or enhancement in operation or
efficiency of the vessel.

     

                              - 3 -

     After a consideration of the record, we find that, with the exception of item 1-1-4
(cleaning), all of the subject items constitute nondutiable modifications to the vessel
rather than dutiable repairs.

     We find that item 1-1-4 (cleaning) is dutiable because it appears to pertain to
certain dutiable repairs (which are not the subject of this ruling) as well to as
nondutiable modification items.    In Texaco Marine Services, Inc. v. United States,
Case No. 93-1354, decided on December 29, 1994, the Court of Appeals for the
Federal Circuit affirmed the "but for" test adopted by the Court of International Trade in
the Texaco case, 815 F. Supp. 1484 (1993).  That test provides that if certain expenses
would not have been incurred but for dutiable repairs, such expenses are dutiable. 
The Court of Appeals specifically found that post-repair cleaning was dutiable pursuant
to 19 U.S.C. 1466.  

HOLDING:

     As detailed supra, the application is granted in part and denied in part.


                         Sincerely,



                         Arthur P. Schifflin
                         Chief
                         Carrier Rulings Branch