HQ 112942: Vessel Repair; 19 U.S.C. 1466; 19 U.S.C. 1466(d)(2); 19 U.S.C. 1466(h)(2); Entry No. C15-0019391-2; Application; S.S. ROVER, V-83

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 112942

                           November 29, 1993

VES-13-18-CO:R:IT:C   112942 GOB

CATEGORY:  Carriers

Deputy Assistant Regional Commissioner
Commercial Operations Division
Attn: Regional Vessel Repair Liquidation Unit
New Orleans, Louisiana 70130

RE:  Vessel Repair; 19 U.S.C. 1466; 19 U.S.C. 1466(d)(2); 19 U.S.C.
     1466(h)(2); Entry No. C15-0019391-2; Application; S.S. ROVER,
     V-83

Dear Sir:

     This is in response to your memorandum dated November 5, 1993,
which forwarded the application for relief submitted by Central
Gulf Lines, Inc. ("applicant") with respect to the above-referenced
vessel repair entry.

FACTS:

     The S.S. Rover (the "vessel") is a U.S.-flag vessel owned and
operated by the applicant.  Certain foreign shipyard work was
performed on the vessel in Nordenham, Germany between November 30,
1992 and December 7, 1992.  The vessel arrived at the port of Sunny
Point, North Carolina on December 18, 1992.  A vessel repair entry
was filed on December 21, 1992.

Applicant's Claims

     The applicant claims that duty on the cost of United States
labor is remissible pursuant to 19 CFR 4.14(c)(3)(ii).  It has
submitted the names, dates of birth, social security numbers, and
passport numbers of three United States technicians who boarded the
vessel in Bermuda in order to perform boiler repairs while the
vessel was en route to Germany.  The technicians also performed
repairs on the vessel while it was in Germany.

     The applicant contends that the duty on certain consumables
is remissible pursuant to 19 CFR 4.14(c)(3).  The consumables are
invoiced as "bwt conditioner and alkaline trmt liquid."





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ISSUES:

     Whether the subject items are subject to duty under 19 U.S.C.
1466.  Whether, if the items are dutiable, the duty is subject to
remission.

LAW AND ANALYSIS:

     19 U.S.C. 1466(a) 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.

Cost of United States labor

     19 U.S.C. 1466(d) provides in part that:

     (d) If the owner or master of such vessel furnishes good and
sufficient evidence that -
          ...
          (2) such equipments or parts thereof or repair parts or
          materials, were manufactured or produced in the United
          States, and the labor necessary to install such
          equipments or to make such repairs was performed by
          residents of the United States, or by members of the
          regular crew of such vessel; or
          ...  
          then the Secretary of the Treasury is authorized to remit
          or refund such duties... (Emphasis supplied.)

     19 CFR 4.14(c)(3)(ii) states that remission or refund of duty
is authorized if good and sufficient evidence shows:

     (ii) United States parts and equipment installed with American
     labor.  The equipment, equipment parts, repair parts or
     materials used on the vessel were manufactured or produced in
     the United States and purchased by the owner of the vessel in
     the United States, and the labor necessary to install such
     equipment or to make such repairs was performed by residents
     of the United States or by members of the regular crew of the
     vessel. (Emphasis supplied.)

     The above-quoted statute and regulation provide for the
remission of duty in the case of U.S. equipment or parts and U.S.
labor.

     In Ruling 112728 dated October 8, 1993, we stated:

     ...it is Customs position that the cost of U.S.-resident labor
     is not subject to duty under 19 U.S.C. 1466 when no    


                              - 3 -

     equipments, parts, or materials are used in conjunction with
     the expertise of U.S. labor.

     In Ruling 112728, the two-pronged test of 19 U.S.C. 1466(d)(2)
was deemed to be satisfied because U.S. labor was used and there
were no equipment, parts, or materials used.

     The facts in the case at issue differ from the facts in Ruling
112728 in that the record indicates that equipment, parts, or
materials were used in conjunction with the expertise of U.S. labor
in the case at issue.  In addition to the "consumables" which were
mentioned supra and which will be discussed infra, the vessel
repair entry reflects non-U.S. equipment, materials, or parts in
the form of "10 meta flex gaskets for boiler manhole covers" and
"measuring tape."  

     We find that the cost of the U.S. labor is dutiable pursuant
to 19 U.S.C. 1466(a).  Because the two-pronged test of 19 U.S.C.
1466(d)(2) is not satisfied, the duty on the cost of the U.S. labor
is not remitted.

Other Materials

     The other items for which the applicant has requested relief
are invoiced as "bwt conditioner and alkaline trmt liquid."

     19 U.S.C. 1466(h)(2), which applies to vessel repair entries
filed between August 20, 1990 and December 31, 1992, provides that
the duty imposed by 19 U.S.C. 1466(a) shall not apply to:

     the cost of spare parts or materials (other than nets or
     nettings) which the owner or master of the vessel certifies
     are intended for use aboard a cargo vessel, documented under
     the laws of the United States and engaged in the foreign or
     coasting trade, for installation or use on such vessel, as
     needed, in the United States, at sea, or in a foreign country,
     but only if duty is paid under appropriate commodity
     classifications of the Harmonized Tariff Schedule of the
     United States upon first entry into the United States of each
     such spare part purchased in, or imported from, a foreign
     country.
     
     Administratively, Customs has interpreted 19 U.S.C. 1466(h)(2)
to apply to spare repair parts or materials that have been
manufactured in the United States.  In Ruling 112223 dated December
30, 1992, we stated:

     The vessel repair statute exempts from duty spare repair parts
     or materials that have been manufactured in the United States
     or entered the United States duty-paid and are used aboard a
     cargo vessel engaged in foreign or coasting trade.  19 U.S.C.
     1466(h).  For purposes of this section, where a part is     

                              - 4 -

     purchased from a party unrelated to the vessel owner, a United
     States bill of sale constitutes sufficient evidence to
     demonstrate that the part was either manufactured in the
     United States or entered in the United States, duty-paid. 

     Inasmuch as the applicant has submitted invoices reflecting
the sale of the subject merchandise to the applicant in the United
States, we find that, pursuant to 19 U.S.C. 1466(h)(2), these items
are not subject to duty.      
     
HOLDING:

     As detailed supra, the application is denied with respect to
the cost of the U.S. labor and it is granted with respect to the
bwt conditioner and the alkaline treatment liquid.



                              Sincerely,



                              Arthur P. Schifflin
                              Chief
                              Carrier Rulings Branch