HQ 112589: Vessel Repair; 19 U.S.C. 1466; Petition for Review; Modification; Alteration; Vessel Repair Entry No. H24-0012461-4 Date of Entry: December 30, 1991 Date of Arrival: December 30, 1991 Port of Arrival: Dutch Harbor, Alaska Vessel: F/V ALASKA PIONEER

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 112589

                           August 10, 1993

VES-13-18-CO:R:IT:C  112589 DEC

CATEGORY:  Carriers

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

RE:  Vessel Repair; 19 U.S.C. 1466; Petition for Review;
     Modification; Alteration;
     Vessel Repair Entry No. H24-0012461-4
     Date of Entry:  December 30, 1991
     Date of Arrival:  December 30, 1991
     Port of Arrival:  Dutch Harbor, Alaska
     Vessel:  F/V ALASKA PIONEER

Dear Sir:

     This letter is in response to your memorandum dated February 2,
1993, which forwards for our consideration a petition for review
filed in connection with the assessment of vessel repair duties on
the above-referenced vessel.


FACTS:
 
     The F/V ALASKA PIONEER, an American-flag vessel, underwent
various foreign shipyard operations while in Miyagi, Japan, at the
Tohoku Dock Tekko K.K. shipyard.  Subsequent to the completion of
the work performed in Miyagi, the vessel arrived in the United
States at Dutch Harbor, Alaska, on December 30, 1991.  A vessel
repair entry covering the work was filed on the day of arrival.    

     An application for relief from vessel repair duties was timely
filed.  Subsequently, a petition challenging certain determinations
from the application was, also, timely filed.  Initially, the
petitioner did not submit any supplementary documentation with
respect to the items at issue except for the petition letter itself. 
On April 14, 1993, representatives from the petitioner (Fishing
Company of Alaska, Incorporated) met with Customs officials.  At
that meeting, the petitioner's representatives indicated that they
would submit affidavits from individuals with actual knowledge of
the operations performed upon the vessel together with other
documentary evidence to supplement their petitions for review.  The
additional evidence consisted of one affidavit from Mr. Herb Roeser
of Trans-Marine Propulsion Systems, Incorporated in which Mr.Roeser

                                 -2-


stated that he did not see any of the operations performed nor was
he certain of how his recommendations were implemented. The
following items have been submitted to this office for review.

           Item  Sub-Item     Worksheet   Description

            II     2            Page 2      FW pump
            IV     1            Page 2      head cutter
            IV     2            Page 2      belt conveyor
            V      1-13         Page 3      ceiling coil
            V      1-14         Page 3      valve
            V      1-16         Page 3      water pipe
            V      2-6          Page 3      cooling coil

     Our ruling on the above-mentioned matters is set out below.

ISSUE:

     Whether the above-referenced items constitute duty-free
modifications/alterations  to the hull and fittings rather than
dutiable equipment and repairs.

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides, in
pertinent part, for payment of an ad valorem duty of 50 percent on
the cost of foreign repairs to a vessel documented under the laws of
the United States to engage in the foreign or coasting trade, or a
vessel intended to be employed in such trade..

     In United States v. Admiral Oriental Lines et al., 18 C.C.P.A.
137 (T.D. 44359 (1930)), the court distinguished equipment and
repairs (dutiable) from permanent additions to the hull and fittings
(non-dutiable).  For purposes of section 1466, Customs has adopted
the definition of dutiable equipment 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.

T.D. 34150 (1914).

     For equipment to become part of the hull and fittings of a
vessel, it must

           . . .become a permanent part of the hull, the
           installation of which caused the superstructure
           of the vessel to be changed, or where there is
           proof that at the time the change was made it
           was the intention of the owners that such


                                 -3-


           alteration or addition become a permanent part
           of the vessel.  In either case the permanency
           of such equipment should be, and in most cases is,
           evidenced by changes in conformity therewith in
           the official blue prints of the vessel.

T.D. 43585 (1929).

     Over the course of years, the identification of modification
processes has evolved from judicial and administrative precedents. 
In considering whether an operation has resulted in a modification
which is not subject to duty, the following elements may be
considered.

           (1)  Whether there is a permanent incorporation into     
                the hull or superstructure of a vessel (see United  
                States v. Admiral Oriental Line et al., T.D. 44359  
                (1930)), either in a structural sense or as
                demonstrated by the means of attachment so as to    
                be indicative of the intent to be permanently       
                incorporated.

           (2)  Whether the item under consideration would remain   
                aboard a vessel during an extended layup.

           (3)  Whether, if not a first time installation, an item
                under consideration replaces a current part,        
                fitting or structure which is not in good working   
                order.

           (4)  Whether an item under consideration provides an
                improvement or enhancement in operation or
                efficiency of the vessel.

     The appropriate inquiry is to analyze the condition of the
structures prior to being replaced.  Customs has determined that
even though an operation might, under normal circumstances, be
considered a permanent duty-free modification, the benefit of such a
finding is not extended to operations which encompass the
replacement of existing structures which are in need of repair at
that time.  If a permanent addition is a first-time installation, or
if it replaces an existing structure which is in good working order
at the time of its replacement and an enhancement in operating
efficiency is provided, the operation may be considered a bona fide
duty-free modification.  Headquarters Ruling 111224 (Feb. 19, 1991).

II.  MACHINERY PART - GENERAL WORKS

     2.    Main Engine FW Pump..............................328,500

     A critical inquiry in determining the dutiability of an item
that replaces an existing part is establishing whether the item
                                 -4-


being replaced is in good working order.  Petitioner states that the
vessel owner feared that if one of the existing pumps failed, the
vessel would lack sufficient pumping capacity to keep water flowing
through the system.  This concern for failure raises the question of
whether the changes were made to replace worn or irreparable parts. 
Nowhere in the submitted documentation is there authenticated
evidence of the condition of the replaced pump.  Absent such
authenticated evidence, this item remains a dutiable repair.

IV.  BELT CONVEYOR

     1.    Head Cutter......................................312,500

     Based on the lack of new evidence provided in the petition, the
movement of the head cutter is still considered to be a dutiable
repair.  As stated in the application for relief, the decision as to
whether an installation constitutes a non-dutiable addition to the
hull and fittings of the vessel depends to a great extent on the
detail and accuracy of the drawings and invoice descriptions of the
actual work performed.  The invoice description provided is
insufficient to determine how the head cutter was "modified." 
Consequently, this item shall remain dutiable.


IV.  BELT CONVEYOR.........................................937,500

     2.    Belt Conveyor

     The petitioner states that the newly installed conveyors can be
removed when the freezer doors are closed.  While this newly
configured conveyor system may improve efficiency, this new
characteristic triggers dutiability.  It is our position that the
removable conveyors constitute dutiable vessel equipment because
they lack the permanency requirement as discussed in United States
v. Admiral Oriental Lines, T.D. 44359 (1930).  Consequently, unless
and until evidence is submitted to establish that the belt conveyors
were modified and that they do not constitute dutiable equipment,
this item remains dutiable.

V.   REFRIGERATING PART

     1-13. CEILING COIL....................................100,000
     1-14. SUCTION VALVE...................................60,000
     1-16. WATER PIPE......................................95,000
     2-6.  COOLING COIL....................................174,000


     These items remain dutiable.  The petitioner has failed to
provide sufficient additional evidence with respect to the bait
freezer installation.  Unless and until sufficient evidence is
submitted for examination, these items shall remain dutiable.


                                 -5-


HOLDING:

     After a thorough review of the record and the additional
evidence presented, the petition for relief is denied in full as
detailed in the Law and Analysis portion of this ruling.  The
petitioner should be informed of the right to file a protest
following liquidation of this entry, as evidenced by the posting of
the bulletin notice of liquidation.

                                Sincerely,




                                Stuart P. Seidel
                                Director, International Trade
                                Compliance Division