HQ 112591: Vessel Repair; 19 U.S.C. 1466; Petition for Review; Modification; Alteration; Vessel Repair Entry No. H24-0012499-4 Date of Entry: January 7, 1992 Date of Arrival: January 7, 1992 Port of Arrival: Anchorage, Alaska Vessel: F/V ALASKA RANGER

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 112591

                           August 10, 1993

VES-13-18-CO:R:IT:C  112591 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. H24-0012499-4
     Date of Entry:  January 7, 1992
     Date of Arrival:  January 7, 1992
     Port of Arrival:  Anchorage, Alaska
     Vessel:  F/V ALASKA RANGER

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 RANGER, an American-flag vessel, underwent
various foreign shipyard operations while in Tokyo, Japan, at the
NKK Corporation Shimizu Works.  Subsequent to the completion of the
work performed in Tokyo, the vessel arrived in the United States at
Anchorage, Alaska, on January 7, 1992.  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

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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

            I      4-1          Page 1      Hull
           III      10          Page 4      Wiring
            I        5          Page 1      Nozzles
            I        6          Page 1      Bilge pumps
            I      15-2         Page 2      Chain pipes
            I      15-3         Page 2      Installation
            I       11          Page 3      Pan Racks
           IV      1,2,3,       Page 8      Belt conveyors
                   4 & 5

     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


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           proof that at the time the change was made it
           was the intention of the owners that such
           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.

Before an item is to be construed as a part of the vessel, it must
be (1) a permanent attachment and (2) essential to the successful
operation of the vessel.   Otte v. United States, 7 C.C.P.A. 166,
169 (1916).

      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).


                                 -4-


I.   HULL PART
     4-1.  Bottom Keel Ballast.........................3,827,000
     4-2   Water Thermometer and Speed Log...............786,000
III. ELECTRIC PART
     10.   Wiring.......................................194,000

     Based on the additional evidence that the petitioner has
submitted, we find that item 4-1 (bottom keel ballast) is a duty-
free modification.  The submitted drawings and the ABS survey that
were submitted with the petition when read in conjunction with the
invoices satisfies Customs that this item is a permanent
incorporation into the vessel's superstructure.  Accordingly, no
duty is owed with respect to item 4-1.

      Upon further review, Customs is satisfied that the evidence
initially presented regarding items 4-2 (water thermometer) and 10
(wiring) is sufficient to establish that these items are permanently
incorporated into the hull and fittings of the vessel and,
accordingly, meet the standards for being classified as a
modification.  As such, items 4-2 and 10 are not subject to duty.


I.   HULL PART
     4-3   Related Work for Keel Ballast................750,000

     Our review of this item combined with the fact that no new
evidence was introduced leads us to the same conclusion as expressed
in the application.  Absent an item-by-item cost for each item
listed in the invoices as well as a more detailed description of the
work performed, the cleaning, painting, and restoration referred to
in the invoice make this entire amount dutiable.  Accordingly,
relief with respect to this item is denied. 


I.   HULL PART
     5.    Kort Nozzles.................................1,813,000
     6.    Bilge Pumps (accessory work)..................611,400

     In Headquarters Ruling 112366 (Oct. 8, 1992), the application
that preceded this petition, Customs determined that absent certain
drawings which would assist in the determination of the dutiability
of these items, they would remain dutiable.  The petitioner has not
submitted the referenced drawings that pertain to these items nor
has the petitioner presented additional authenticated evidence to
assist Customs in altering its initial determination.  While the
narrative of the petitioner's attorney is a welcomed complement to
the submission, it, alone, is not determinative.  Unless and until
such evidence is presented, these items shall remain dutiable. 





                                 -5-


I.   HULL PART
     15-2  Washing Chain Pipes..........................130,000
     15-3  Related Installation.........................692,100

     These items were initially deemed to be dutiable because the
documentation provided to Customs did not sufficiently detail the
nature of the work performed with respect to these two items.  The
petitioner seeks a reversal of our initial determination, but
provides no authenticated evidence which further details the work
performed for our review.  Until additional evidence is submitted
for our consideration, these items shall remain dutiable. 


I.   HULL PART
     11.   Pan Racks....................................259,700

     Initially, these items were deemed dutiable because there was
some confusion as to how the separate items listed in the relevant
invoice related to one another.  Absent a breakdown of the costs
associated with each item in the invoice, the entire amount was held
dutiable.  Specifically, Customs determined that items 11-a and
11-b were modifications involving the pan racks.  However, items
11-c and 11-d, which detailed work done to the fluish pump and the
installation of a switchboard guard were found to be unrelated to
the pan racks modification.  While the explanation provided in the
petition assists our understanding of the work performed to some
extent, it is not wholly satisfactory.  Unless a bona fide breakdown
of the costs of each item can be ascertained from the shipyard or an
authenticated elaboration of the work performed provided, this item
shall remain dutiable.  Accordingly, relief is denied with respect
to this item.
  

IV.  BELT CONVEYORS...................................2,017,700

     Relief from duty was initially denied because Customs was not
provided with sufficient information for the items associated with
the belt conveyors.  The invoices provided are vague and do not
describe in any detail the nature of the work performed.  While
Customs appreciates the petitioner's narrative offering an
elaboration of the work performed on the belt conveyors and the 
reasons for it, this information unaccompanied by additional
authenticated evidence of a modification does not justify remission
of duty.  Unless and until Customs receives sufficient evidence that
the work performed on the belt conveyors is a modification, this
item shall remain dutiable.
  






                                 -6-

 
HOLDING:

     After a thorough review of the record and the additional
evidence presented, the petition for relief is granted in part and
denied in part 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