HQ 113276: Vessel Repair Entry No. 603-1012987-3; AMERICAN DYNASTY; Casualty; 19 U.S.C. 1466

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 113276

                         February 6, 1995

VES-13-18-CO:R:IT:C 113276 GEV

CATEGORY:  Carriers

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

RE:     Vessel Repair Entry No. 603-1012987-3; AMERICAN DYNASTY; Casualty; 
     19 U.S.C.  1466

Dear Sir:

     This is in response to your memorandum dated November 10, 1994, forwarding a petition
for review of Headquarters ruling 113049.  Our opinion on this matter is set forth below.

FACTS:

     The AMERICAN DYNASTY is a U.S.-flag vessel owned and operated by American
Dynasty Limited Partnership.  The vessel, which has both registry and fisheries endorsements,
underwent foreign shipyard work in the second half of 1993.  Subsequent to the work, the vessel
arrived in the United States at Seattle, Washington on December 23, 1993.  A vessel repair entry
was filed on December 30, 1993.

     An application for relief  was timely filed on February 22, 1994.  The applicant sought
remission of duties assessed for repairs to the rudder and sonar.  It is alleged that the damage
giving rise to repairs to the rudder was caused by extremely heavy weather the vessel encountered
on June 24, 1993, while operating in the South Pacific off the coast of Chile.  The damage is
claimed to have disabled the vessel's steering function.  The vessel diverted to Punta Arenas,
Chile, where temporary repairs on the rudder were performed.  These repairs subsequently proved
to be ineffective and after the vessel went back to sea and again encountered heavy weather, it
proceeded to Talcahuano, Chile, for permanent repairs to the rudder.  After these repairs were
performed, the vessel left Talcahuano on July 24, 1993.
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     In regard to the sonar damage, it is alleged that it was shattered during heavy weather the
vessel encountered on September 24, 1993, thereby causing the vessel to take on excessive water. 
The vessel subsequently proceeded to Punta Arenas for repairs.   

     In support of the above claims for remission, the applicant submitted copies of the vessel
log and statements of the master.  By Headquarters Ruling 113049, dated August 11, 1994,
Customs denied the application for relief due to the insufficiency of the evidence submitted to
prove that the damage in question was pursuant to a "casualty" within the meaning of the vessel
repair statute.

     A petition for review, dated October 28, 1994, was timely filed.  The petitioner reiterates
its claims for remission and submits additional documentation including:  (1) a letter from Det
Norske Veritas in Talcahuano, Chile; (2) a letter from the Port Engineer in charge of all
engineering repairs on vessels owned by the petitioner; and (3) excerpts from the vessel's bridge
log and engine room log.

ISSUE:

     Whether evidence is presented sufficient to prove that the foreign repairs performed on the
vessel for which relief is sought were necessitated by a casualty occurrence thus warranting
remission pursuant to 19 U.S.C.  1466(d)(1).

LAW AND ANALYSIS:

     Title 19, United States Code,  1466, provides in part for payment of an ad valorem duty
of 50 percent of the cost of foreign repairs to vessels documented under the laws of the United
States to engage in the foreign or coastwise trade, or vessels intended to engage in such trade. 
Section 1466(d)(1) provides that the Secretary of the Treasury is authorized to remit or refund
such duties if the owner or master of the vessel was compelled by stress of weather or other
casualty to put into such foreign port to make repairs to secure the safety and seaworthiness of
the vessel to enable her to reach her port of destination.

     The term "casualty", as it is used in the vessel repair statute (19 U.S.C.  1466) has been
interpreted as something which, like stress of weather, comes with unexpected force or violence,
such as fire, or spontaneous explosion of such dimensions as to be immediately obvious to ship's
personnel, or collision (see Dollar Steamship Lines, Inc., v. United States, 5 Cust. Ct. 28-29, C.D.
362 (1940)). In the absence of evidence of such a casualty event, we must consider the repair to
have been necessitated by normal wear and tear (ruling 106159, September 8, 1983).

     It is noted that  4.14(c)(3)(i), Customs Regulations (19 CFR  4.14(c)(3)(i)), provides
that "port of destination" means such port in the United States.  This point is not in dispute,
however, it is an embellishment upon  1466(d)(1) which, as stated above, sets forth the following
three-part test which must be met in order to qualify for remission: 

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     1.  The establishment of a casualty occurrence.

     2.  The establishment of unsafe and unseaworthy conditions.

     3.  The inability to reach the port of destination without obtaining foreign repairs.

     In addition, if the above requirements are satisfied by evidence, the remission is restricted
to the cost of the minimal repairs necessary to enable the vessel to reach her port of destination. 
Repair costs beyond that minimal amount are not subject to remission.  

     We note that in the subject case, the damage in both instances (i.e., rudder and sonar
dome) occurred to underwater parts of the vessel.   In C.I.E. 1202/59, we held that damage to
underwater parts of vessels is usually not easily detectable or susceptible of definite proof
respecting date and place of occurrence.  We held that relief under 19 U.S.C. 1466(d)(1) is
therefore warranted for such damage in the absence of evidence showing that the vessel
concerned was grounded, struck bottom, or her propeller contacted some floating object capable
of causing damage prior to the commencement of the voyage.  However, in C.I.E. 1202/59 and in
ruling 106240 JM, dated July 20, 1983, which applied C.I.E. 1202/59 in a case of underwater
damage, there was some evidence, or at least an inference could reasonably be made based upon
the damage which had occurred, that the damage resulted from striking an unknown underwater
object rather than from normal wear and tear (see C.I.E. 1243/60, in which a leak in a vessel's hull
was held to be due to normal wear and tear and therefore remission of duty was denied).  The
lack of evidence, or at least an inference based on the damage sustained, was the very reason
relief was denied in ruling 106369 PH, dated February 13, 1984, which applied C.I.E. 1202/59.

     Upon reviewing the record of the case under consideration in its entirety, we believe the
evidence submitted is sufficient to establish the requisite criterion for a casualty within the
meaning of 19 U.S.C.  1466(d)(1) for the damage to both the rudder and the sonar. 
                              - 4 -

HOLDING:

     Evidence is presented sufficient to prove that the foreign repairs performed on the vessel
for which relief is sought were necessitated by a casualty occurrence thus warranting remission
pursuant to 19 U.S.C.  1466(d)(1).

     Accordingly, the petition is granted.     

                              Sincerely,




                              Arthur P. Schifflin
                              Chief
                              Carrier Rulings Branch