HQ 110894: Temporary modification is dutiable; late entry penalty Vessel: JOHN LYKES V-120 Vessel Repair Entry no. C36-0002147-2

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 110894

                          July 27, 1990

VES-13-18-CO:R:P:C  110894 KVS

CATEGORY:  Carriers

Chief
Residual Liquidation and Protest Branch
6 World Trade Center
New York, NY  10048-0954

RE:  Temporary modification is dutiable; late entry penalty
     Vessel:  JOHN LYKES V-120
     Vessel Repair Entry no. C36-0002147-2

Dear Sir:

     This is in response to your memorandum of March 6, 1990,
which forwards for our consideration an application for relief
filed in connection with the JOHN LYKES V-120, vessel repair
entry no. C36-0002147-2.  Our findings are set forth below.

FACTS:

     The JOHN LYKES, an American-flag vessel, underwent foreign
shipyard repairs to the starboard boiler on August 18-21, 1989,
at Casablanca, Morocco.  The subject vessel also underwent
foreign shipyard operations on September 1-2, 1989, at Montreal,
Canada, to fit the vessel with equipment to allow the vessel to
transit the St. Lawrence Seaway and to repair radar equipment.

     The vessel arrived in the United States at Duluth,
Minnesota, on September 6, 1989.  The vessel made untimely entry
on October 2, 1989.  The applicant filed one application for
relief dated October 12, 1989.  This application was superseded
by a second application for relief, also dated October 12, 1989,
which contained the instruction that the revised application was
"to supercede and replace the original application."

LAW AND ANALYSIS:

          Title 19, United States Code, section 1466(a) provides,
in pertinent part, for payment of duty in the amount of 50
percent ad valorem on the cost of foreign repairs to vessels
engaged, intended to engage, or documented under the laws of the
United States to engage in the foreign or coastwise trade.

     The regulations pertaining to the filing of an application
for relief from duties assessed pursuant to 19 U.S.C. 1466 are
found in section 4.14(d)(1), Customs Regulations (19 CFR
4.14(d)(1).  Although the application need not be in any
particular form, the application must identify the items for
                              - 2 -

which relief from payment of duty is sought, as well as the bases
for Customs not to assess duty.

     The application for relief currently under consideration, in
addressing the repairs made to the boiler, does not provide any
grounds upon which relief can be granted.  Specifically, the
application states, "temporary repairs to stbd. boiler after
massive tube rupture.  Minimum repair necessary for vessel's safe
return to the United States."  Although these are factors that
Customs requires upon granting relief by reason of casualty
(pursuant to 19 U.S.C. 1466(d)(1)), the applicant does not
request relief on this basis.  Nor does the applicant provide any
evidence indicating the occurrence of a casualty within the
meaning of 19 U.S.C.1466(d)(1).  In the absence of a request for
relief upon which relief can be granted, we find the cost of the
boiler repairs to be dutiable.

     Likewise, the application for relief is brief in making a
claim for relief for the equipment fitted to the vessel to allow
it to transit the St. Lawrence Seaway.  Specifically, the
application states, "alterations - fitting vessel with temporary
required equipment for St. Lawrence Seaway Transit."  With this
statement, we presume that the applicant seeks relief on the
basis that the installation of the equipment was a non-dutiable
modification to the hull and fittings.

     In its application of the vessel repair statute (19 U.S.C.
1466), Customs has held that modifications/alterations/additions
to the hull and fittings of a vessel are not subject to vessel
repair duties.  A leading case in the interpretation and
application of section 1466 is United States v. Admiral Oriental
Line et al., T.D. 44359 (1930) where the Court considered the
issue of whether steel swimming tanks installed on a U.S.-flag
vessel in a foreign port constituted equipment or repairs within
the meaning of section 1466.  In holding that the installation of
these tanks did not constitute either equipment or repairs and
therefore was not dutiable, the Court in Admiral Oriental cited
earlier court decisions which define equipment, promulgations by
the Board of Naval Construction, and regulations of the Treasury
Department, as well as opinions of the Attorney General.

     Accordingly, for purposes of section 1466, dutiable
equipment has been defined as:

          ...portable articles necessary or appropriate
          for the navigation, operation, or maintenance
          of a vessel, but not permanently
          incorporated in or permanently attached to
          its hull or propelling machinery, and not
          constituting consumable supplies.  Admiral
          Oriental, supra., (quoting T.D. 34150,
          (1914)).
                              - 3 -

     By defining what articles are considered to be equipment,
the authority cited above formulated criteria which distinguish
those items deemed to be modifications/alterations/additions to
the hull and fittings and therefore not dutiable under section
1466.  These items include:

          ...those applications which are permanently
          attached to the vessel, and which would
          remain on board were the vessel to be laid up
          for a long period... Admiral Oriental,
          supra., (quoting 27 Op. Atty. Gen. 228).

     In requesting relief for alterations made to the vessel to
allow transportation on the St. Lawrence Seaway, the application
for relief characterizes the work done as "temporary required
equipment" rather than falling within the standards elucidated in
Admiral Oriental, supra.  In the absence of evidence indicating
that the work performed involved the installation of permanent
new design features to the vessel's hull and fittings rather than
temporary fixtures, we decline to find that the work was a
modification.  Accordingly, we find the cost to be dutiable.

     Lastly, the first application for relief submitted requested
relief for "Repairs to 3 CM radar and VHF."  The revised
application, intended to "supersede and replace the original"
does not contain any such request for relief.  Therefore, in the
absence of a request for relief and the identification of a basis
upon which relief can be granted, we decline to consider this
item on the merits.  Accordingly, we find the cost for radar and
VHF repairs to be dutiable.

     Additionally, since the vessel repair entry was not filed in
accordance with the time limitations prescribed by the Customs
egulations, we refer this matter to your office for
consideration regarding appropriate penalty action.

HOLDING:

     After thorough review of the evidence submitted and as
detailed in the Law and Analysis section of this ruling, the
application for relief is denied.

                                Sincerely,




                                B. James Fritz
                                Chief
                                Carrier Rulings Branch