HQ 112907: Vessel Repair Entry No. H24-0014522-1; 19 U.S.C. 1466; 19 U.S.C. 1466(d)(2); Petition; ALASKA SPIRIT; Modifications; Survey

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 112907

                          November 12, 1993

VES-13-18-CO:R:IT:C   112907 GOB

CATEGORY:  Carriers

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

RE:  Vessel Repair Entry No. H24-0014522-1; 19 U.S.C. 1466; 19
     U.S.C. 1466(d)(2); Petition; ALASKA SPIRIT; Modifications;
     Survey

Dear Sir:

     This is in response to your memorandum dated October 14, 1993,
which forwarded the petition submitted on behalf of the Fishing
Company of Alaska, Inc. ("petitioner") in connection with the
above-referenced entry.

FACTS:

     The ALASKA SPIRIT (the "vessel") is a U.S.-flag vessel owned
and operated by the petitioner.  In late 1992, the vessel had
shipyard work performed in Japan.  On January 7, 1993, the vessel
arrived at the port of Dutch Harbor, Alaska.  A vessel repair entry
was filed on January 8, 1993.

     By Ruling 112740 dated July 8, 1993, Customs allowed in part
and denied in part the application for relief filed in this case. 
Certain of the work was determined to be modifications which are
nondutiable.

Petitioner's Claims

     The petitioner states that it sent the vessel to Japan in late
1992 for modifications so that it could operate as a fish
processing vessel and to improve the safety of the vessel.  The
petitioner asserts that in order to operate the vessel as a fish
processor it was required to establish a new load line.  It claims
that modifications were necessary for the vessel to meet new load
line requirements.  

     


                              - 2 -

     The petitioner contends that the following items are non-
dutiable modifications:

          I.   Hull Part

               Item 11.  Galley Fan
               Item 13.  Insulation
               Item 20.  Conveyor Bridges
               Item 22.  Hand Wash Stand
               Item 34.  Butterfly Nuts

          IV.  Belt Conveyors

               Item 3.  Bridge Conveyors
               Item 4.  Duster Chute Conveyors
               Item 5.  Duster Chute Conveyor
          
     The petitioner states that all five items under "Hull Part"
were first-time installations.   It contends that: four conveyor
bridges were installed for safety reasons; the hand wash stand was
installed for hygienic reasons; and the butterfly nuts were
installed instead of reamer bolt nuts to improve operating
efficiency.  

     The petitioner asserts that two bridge conveyors were moved
to improve operational efficiency in the reconfigured factory area. 
It maintains that it had to adjust the location of duster chute
conveyors for the same reason.  In addition, the petitioner states
that a first-time installation of an additional duster chute
conveyor was made.

     The petitioner states that the survey which was performed was
an integral and necessary element in establishing a new load line. 
It claims that the survey was required to meet U.S. Coast Guard and
classification society stability requirements.

     The petitioner contends that the cost attributable to two
employees of Trans-Marine Propulsion Systems, Inc. ("Trans-
Marine") is not dutiable because they are residents of the United
States.  It claims that this cost was incurred in the United States
since two United States residents performed the work and since 
Trans-Marine, a United States company, billed the petitioner in the
United States and was paid in the United States.  The petitioner
states that the two employees, an engineer and a service
technician, were sent to Japan "[t]o perform shipyard supervision
and necessary engineering, including work necessary to set the new
load line, and to be available to be consulted about repairs
performed on the vessel." 

     In support of its claims, the petitioner has submitted an
affidavit by Mr. Herb Roeser, who is president of Trans-Marine. 
In 

                              - 3 -

the affidavit, Mr. Roeser makes specific statements with respect
to the eight items listed supra.  In addition, Mr. Roeser states:

          2.  I regularly provide advice to the Fishing Company of
          Alaska, Inc. about modifications that can be made to the
          company's vessels to improve their operating efficiency. 
          I specifically provided advice to the company with
          respect to the modifications made to the ALASKA SPIRIT
in        late 1992 at the Tohoku shipyard.
     
          3.  I was not present at the shipyard when the
          modifications were made to the vessel.  However, I have
          reviewed the invoice of Tohoku Dock Tekko K.K., dated
          March 19, 1993 and I am familiar with the type of
          activities undertaken generally by shipyards in making
          modifications to vessels of the type described below. 
          Having been involved in the planning process before the
          vessel entered the shipyard, I also know what types of
          modifications were contemplated and when a first-time  
          installation of equipment was envisioned.  After the
          vessel returned to the United States, I confirmed that
          the modifications described below had in fact been made.

ISSUE:

     Whether the various items described supra 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.

Items 11, 13, 20, 22, 34 (Hull Part); Items 3-5 (Belt Conveyors)

     After a careful consideration of the evidence of record, we
find that these items constitute nondutiable modifications to the
vessel.

Survey

     We affirm the finding of our application ruling, 112740, that
the cost of the survey and the related shipyard survey expenses are
dutiable.   Ruling 112740 stated:

          The load line survey in question is not a required
          scheduled inspection as discussed above.  Furthermore,
          the record does not support the view that this survey  
          was associated solely with a non-dutiable modification
                              - 4 -

          inasmuch as dutiable repairs were evidenced on the     
          shipyard invoice.

We reiterate that, in the absence of documentation that the survey
was related only to nondutiable items, the survey is dutiable. 
Such is the case here, where there are numerous dutiable repair
items for the subject work.   

Trans-Marine Employees

     In the specific and limited factual setting of this issue, as
described supra, we concur with the petitioner that the cost of
$9,123 with respect to the two Trans-Marine employees is not
dutiable.  We find that the factual setting involved here is not
the normal type of factual setting in which we evaluate a request
for remission pursuant to 19 U.S.C. 1466(d)(2) because the Trans-
Marine employees do not appear to be accurately defined, pursuant
to 19 U.S.C. 1466(d)(2), as "the labor necessary to install such
equipments or to make such repairs."  The U.S. resident employees'
function appears to be more of a "consultative" function, as
opposed to the normal foreign labor function.  We emphasize that
this determination is limited to the specific facts of this case,
i.e., United States resident employees of a United States company
acting in a consultative capacity where the cost of the employees'
work was paid to a United States company, and where no part of such
cost was paid to the foreign shipyard. 

HOLDING:

     As detailed supra, the petition is granted with respect to:
items 11, 13, 20, 22, and 34 (hull part); items 3, 4, and 5 (belt
conveyors); and the costs associated with the Trans-Marine
employees.  The petition is denied with respect to the survey.





                                                                 
                              Sincerely,



                              Arthur P. Schifflin
                              Chief
                              Carrier Rulings Branch