HQ 112911: Vessel Repair Entry No. C31-0005027-8; ARCO TEXAS; 19 U.S.C. 1466; Modification;

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 112911

                                March 14, 1995

VES-13-18-CO:R:IT:C 112911 GOB

CATEGORY:    Carriers

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

RE:  Vessel Repair Entry No. C31-0005027-8;  ARCO TEXAS;  19 U.S.C. 1466;
     Modification;  

Dear Sir:

     This is in response to your memorandum dated September 27, 1993,  which
forwarded the application for relief submitted by Arco Marine Inc. ("applicant") with
respect to the above-referenced vessel repair entry.

FACTS:

     The record reflects that the ARCO TEXAS ("the vessel") arrived at the port of
Valdez, Alaska on July 4, 1993 and filed the subject vessel repair entry.

     You request our determination with respect to the following items:

          Item No.            Description
     
          108B                rudder nut
          201                 boilers firesides cleaning
          202B                preparation for ABS
          302B                main turbine
          501                 preparation for ABS
          504                 preparation for ABS
          507                 pump room light
          808                 c.o.w. drain
          816                 stripping line

                              - 2 -

          Item No.            Description

          901                 gyro compass installation
          901A                gyro compass stand
          902                 tank coating - access openings
          902                 environmental controls
          903                 pump room
          904                 pump room
          904A                bearing sensors
          908                 forward wing access
          908                 forward wing - env. controls
          910                 igs cooler connection
          910A                igs cooler piping
          910B                igs cooler foundation
          913                 towing system
          913                 towing system installation
          913A                towing system installation
          915                 bilge drain
          916                 deadweight survey
          misc. inv. 9             overhead charges

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 


                              - 3 -

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.

     After a consideration of the evidence of record, we make the following
determinations.

     The costs of the following items are nondutiable because such items are
modifications to the hull and fittings of the vessel:  108B, 507, 808, 816, 901, 901A,
903, 904, 904A, 910, 910A, 910B, 913 (both items listed supra), 913A, and 915.

     The costs of the following items are nondutiable because the items are or they
relate to nondutiable surveys or inspections:  201, 202B, 302B, and 916.

     The costs of the following items are dutiable because the items are incident to
dutiable repairs:  902 (both items listed supra), 908 (both items listed supra), and
miscellaneous invoice no. nine.

     With respect to item 501, the cost of the preparation for the ABS inspection is
nondutiable.

     The cost of item 504 is dutiable because that item is a maintenance item. 
Maintenance items are dutiable under 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