HQ 112893: Vessel Repair; 19 U.S.C. 1466; M.V. GALVESTON BAY, V-039; Entry No. 559- 1237244-2; Application; Modification; Repairs;Cleaning; Inspection and Testing

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 112893

                                March 14, 1995

VES-13-18   CO:R:IT:C    112893 GOB

CATEGORY:  Carriers

Chief, Residual Liquidation and Protest Branch
New York Region
Six World Trade Center
New York, New York 10048-0945

RE:  Vessel Repair; 19 U.S.C. 1466; M.V. GALVESTON BAY, V-039;   Entry No. 559- 1237244-2; Application; Modification; Repairs;
Cleaning; Inspection and Testing 

Dear Sir:

     This is in response to your memorandum dated September 17,
1993, which forwarded the application for relief submitted by Sea-Land Service, Inc. ("applicant") with respect to the above-referenced entry.

FACTS:

     The M.V. GALVESTON BAY (the "vessel") is a U.S.-flag vessel
owned and operated by the applicant.  On September 10, 1991, it
arrived at the port of Boston, Massachusetts.  A vessel repair
entry was filed on September 12, 1991.

     Your memorandum references WB Arnold Co. Inc. ("Arnold")
invoice no. 21196 dated November 5, 1991 and the following items on
Wilton Fijenoord ("WF") b.v. invoice no. 6956/10818 dated September
6, 1991: 20b, 20d, 34a, 34f, 35a, 35f, 36a, 36f, 37a, 37f, 38a,
38f, 39a, 39f, 49b, 85, 96a, and 96f.

ISSUE:

     Whether the items at issue are repairs which are subject to
duty under 19 U.S.C. 1466.





                              - 2 -

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.  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.

     In Ruling 110993 dated May 2, 1990, which was merely advisory
in nature, certain of the work at  issue here was considered.  That
ruling pertained to twelve of the applicant's vessels, including
the subject vessel.  The shipyard work was described Ruling 110993
as follows:

     Upgrade the existing 7 Bar service compressor to a 30 Bar   topping-up air      compressor...

     Install an additional topping-up air compressor as a back-up
to the upgraded     service compressor.

     Install an automated control system interfacing the main air
     compressor and the  new topping-up air compressor.

     

                              - 3 -

     Ruling 110993 stated:

     The proposed shipyard work described herein would constitute
modifications  to the hull and fittings so as to render the work
nondutiable under 19 U.S.C.   1466.

     It is noted, however, that this ruling is merely advisory in
nature and does not      eliminate the requirement to declare
work done abroad...Furthermore, any final    ruling on this
matter is contingent on Customs review of the evidence submitted      pursuant to section 4.14(d)(1), Customs Regulations (19 CFR
4.14(d)(1)).

     After a consideration of the evidence of record in this
case, we make the following findings.

     The costs associated with Arnold invoice no. 21196,
described in part as "Charges for Hamworthy Engineer to uprate
2TM6 Compressor" are nondutiable because they relate to a
modification.

     The costs of all other items referenced on page one of this
ruling are dutiable.  

     The following items on WF invoice no. 6956/10818 are
dutiable as inspection/testing items relating to repairs: 20b,
34f, 35f, 36f, 37f, 38f, 39f, 49b, and 96f. 

     The following items on WF invoice no. 6956/10818 are
dutiable as cleaning items relating to repairs: 34a, 35a, 36a,
37a, 38a, 39a, and 96a.  Item 34a involves post-repair cleaning. 
Such work was found to be dutiable in Texaco Marine Services,
Inc. and Texaco Refining and Marketing, Inc. v.  United States,
815 F. Supp. 1484 (U.S. Court of International Trade 1993),
affirmed by the Court of Appeals for the Federal Circuit  in Case
No. 93-1354, decided December 29, 1994.

     Item 20d on WF invoice no. 6956/10818, which is described as
"rain and seal protection", is dutiable as an item incident to
repair.

     Item 85 on WF invoice no 6956/10818, which is described on
the invoice as "Ship's Service air compressor modification (Make:
Hamworthy)" is dutiable because the invoice includes certain
repair items which are not itemized separately from modification
work.  Accordingly, the entire item is dutiable.  In this regard,
we cite Ruling 112731 dated July 8, 1993, which stated in
pertinent part:

     While the applicant contends that this item represents a
modification, the   Customs Service finds that this item
contains, in part, repair operations as      evidenced in the
invoice description indicating that various items were being                              - 4 -

     renewed or overhauled.  Customs has consistently held that
where the charges   for dutiable and non-dutiable items are not
segregated within an invoice item, all  of the charges in that
invoice item must be deemed dutiable.

HOLDING:

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



                              Sincerely,



                              Arthur P. Schifflin
                              Chief
                              Carrier Rulings Branch