HQ 110849: Protest No. 1401-90-000026: Vessel Repair Entry No. C14-0016679-4: Date of Arrival December 24, 1988, Norfolk, Virginia: Vessel, RAINBOW HOPE

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 110849
                       June 26, 1990

VES-13-18-CO:R:P:C 110849 LLB

CATEGORY:  Carriers

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

RE:  Protest No. 1401-90-000026:  Vessel Repair Entry No.
     C14-0016679-4:  Date of Arrival December 24, 1988,
     Norfolk, Virginia:  Vessel, RAINBOW HOPE

Dear Madam:

     Reference is made to the above-captioned protest of the
refusal by Customs to consider on its merits, an untimely
filed Application for Relief from the assessment of vessel
repair duties.

FACTS:

     The subject vessel arrived at Norfolk, Virginia, from
St. Johns, Newfoundland, on December 24, 1988.  A timely but
incomplete vessel repair entry was filed on December 29,
1988.  A request for extension of time to file evidence of
cost for a complete entry was filed on February 21, 1989
(four days prior to the deadline for submitting such
evidence) and was denied February 23, 1989.  The vessel
owner failed to cure the incomplete entry on or before
February 25, 1989.  Meridian Ship Agency of Virginia, Agent
for the vessel owner, submitted a request for further
extension of time dated March 8, 1989.  That request was
denied on May 8, 1989, for the reason that no acceptable
reason for reversing the initial denial was offered.  No
document purporting to be an Application for Relief from
duties was submitted until April 5, 1989.

     When it was determined that Customs would not consider
the tardy "Application", the operator (through counsel)
submitted a petition seeking reversal of the decision
dismissing the untimely initial submission.  This petition
was denied in an October 4, 1989, ruling letter.  The
protest currently before us presents two distinct matters
for consideration.  One of these involves a review of the
facts and evidence in order to determine whether there is
merit to the protest per se, which would require
reliquidation of the vessel repair entry.  The other issue
concerns the validity of the time limitations provided for
submission of an Application for Relief as set forth in
section 4.14(d)(1)(ii) of the Customs Regulations (19 CFR
4.14(d)(1) (ii)).

     The charges underlying the protest in this case are
stated to have resulted from an incident occurring during a
voyage from Iceland.  While proceeding southbound from
Iceland, toward Norfolk, Virginia, the deck log abstracts in
evidence substantiate that the main engine was shut down as
a result of a fire in the engine room.  The vessel had been
encountering heavy weather at the time with the vessel
rolling and pitching in heavy swells.  It is alleged that
the agitated motion of the vessel caused the port side fuel
oil return line to be chafed through, resulting in bunkers
having been sprayed on the exhaust manifold which led to
combustion.  A report prepared by the American Bureau of
Shipping confirms that the copper fuel line was found
chafed through and leaking upon examination.

     Section 466, Tariff Act of 1930, as amended (19 U.S.C.
1466) provides, in pertinent part, for payment of duty in
the amount of 50 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 engage in such trade.

     Paragraph (1), subsection (d) of 1466 provides that
duty may be remitted if good and sufficient evidence is
furnished establishing that the vessel was compelled by
stress of weather or other casualty to put into a foreign
port to make repairs to secure the safety and seaworthiness
of the vessel to enable her to reach her port of
destination.  Thus, it is necessary that in order to qualify
for duty remission, the party seeking relief must show both
the occurrence of a casualty, and that repair was necessary
for safety and seaworthiness.

     The term "casualty" as it is used in the statute, has
been interpreted as something which, like stress of weather,
comes with unexpected force or violence, such as fire,
explosion or collision (Dollar Steamship Lines, Inc. v.
United States, 5 Cust. Ct. 28-29, C.D. 362 (1940)).  In this
sense, a "casualty" arises from an identifiable event of
some sort.  In the absence of evidence of such a casualty,
we must consider the repair to have been necessitated by
normal wear and tear (ruling letter 105159, September 8,
1983).

     The right to protest the liquidation of an entry is
provided in section 514, Tariff Act of 1930, as amended (19
U.S.C. 1514).  Even though no pre-liquidation prayer for
relief might be submitted, there is a statutory right to
seek refund of duties assessed under subsection (a) of the
vessel repair statute (19 U.S.C. 1466(a)), and a section
1514 protest seeking such refund must be considered on its
merits.  The failure to submit a timely Application for
Relief under the Customs Regulations is tantamount to the
failure to seek pre-liquidation relief from duties.
Therefore, this protest will be considered on its merits.

     The record reveals that repairs were made to the air
cooler and that an electric motor was rewound while the
vessel was in Iceland before the fire damage at issue had
occurred.  These items are clearly dutiable repairs under
section 1466(a) of the vessel repair statute.

     The remainder of the reported repairs were accomplished
in St. John's, Newfoundland, Canada.  These repairs were
limited to the engine room where the fire had been
contained.  Survey reports, a Coast Guard report, invoices,
log extracts, and numerous written statements by ship's
officers and crewmembers document the circumstances of the
casualty and repairs.  There is no doubt that the damage
reported resulted from a bona fide casualty, and that the
repairs were limited to addressing the casualty-related
damage.

     The submission by the vessel operator's counsel
launches an assault of broad scope against the validity of
the Customs Regulations through which the vessel repair
statute is administered.  The consequences of our findings
on this point have effect far beyond the confines of the
present case.

     In summary, counsel argues that section 4.14(d)(1)(ii),
which limits the time within which an Application for Relief
may be filed, is invalid.  It is stated that the regulation
in question is promulgated under sections 66 and 1624 of
title 19, United States Code (19 U.S.C. 66 and 1624) which
provide general authority to promulgate such regulations as
may be necessary to administer various provisions of the
Customs and Tariff laws, of which section 1466 is one.

     Since these statutory provisions are of a general
nature, the regulatory time limits set forth in section 4.14
are said to be directory in nature rather than mandatory.
It is stated that this distinction was overlooked in our
October 4, 1989, decision on the Petition for Review, and
the implication is that reliance upon the case of Socony
Vacuum Oil Co., v. United States, 44 CCPA 83, C.A.D. 641
(1957) was misplaced.  Only when regulations are mandatory,
is compliance therewith a condition precedent to the right
accorded by statute.

     We are compelled to point out that reliance upon
Socony, supra., was correct, unlike counsel's reliance upon
the belief that the Customs vessel repair regulations are
promulgated pursuant to 19 U.S.C. 66 and 1624.  This error
is compounded by counsel's repeated reference to these
statutes as the authority underlying promulgation of section
4.14 (see page 2 of counsel's cover letter and pages, 4,7,
and 9 of counsel's enclosure to the protest).

     Reference to the citations of authority preceding Part
4 of the Customs Regulations (19 CFR Part 4), reveals the
specific authority for section 4.14 to repose in sections
1466 and 1498 of  title 19, United States Code (19 U.S.C.
1466, 1498).  The provisions of section 1466 are well known
to all parties herein concerned.  Of more specific relevance
is section 1498 which in pertinent part provides:

     (a)  The Secretary of the Treasury is
          authorized to prescribe rules and
          regulations for the declaration and of
          entry of ...

     (10) Merchandise within the provisions of
          sections 257, 258 and 1465 of this title
          (relating to supplies, repairs, and
          equipment on vessels and railway cars)
          at the first port of arrival; ...

Sections 257 and 258 of title 19 are, of course, the
predecessor provisions to section 1466(a) and (d).
"Merchandise" under section 1498 (a)(10), while perhaps a
misnomer, must for lack of an alternative definition include
vessel repair and equipment (see International Navigation
Co. v. United States, 148 F. Supp 448, C.D. 1836 (1957)).

     To summarize our findings in this matter, the right to
protest a vessel repair liquidation under section 1514 in
cases where an Application for Relief is not considered on
its merits due to procedural defects (or, indeed, where none
has been submitted) is not in question.  In this case, the
facts under review support the finding that the vessel
suffered damage as the result of a remissible casualty, and
the entry should be reliquidated, the charges for shipyard
services performed in Canada being remissible.  The
reliquidation should not include the charges related to work
done in Iceland because there is no proof that the
operations were related to an "emergency" as related on the
vessel repair entry.

     The regulations under which Customs administers the
vessel repair statute (including all time limits specified
therein) appearing in 19 CFR 4.14 are promulgated, inter
alia pursuant to the specific authority conferred by 19
U.S.C. 1498(a)(10).  The regulatory time limits are
mandatory and compliance therewith is a condition precedent
to the right to remission upon administrative review of
Applications for Relief and Petitions for Review.  (See
Socony Vacuum, supra.).  Denial of review on the merits for
the subject Application for Relief was therefore a valid
exercise of authority conferred pursuant to statute.

HOLDING:

     1.   The evidence considered substantiates the
occurrence of a bona fide casualty and the protest is
granted as specified in the Law and Analysis portion of this
ruling letter.

     2.   The time limits set forth in section 4.14, Customs
Regulations (19 CFR 4.14) are promulgated pursuant to the
specific authority of 19 U.S.C. 1498(a)(10), and are
mandatory in nature.

     3.   Nothing in this ruling affects, in any way, any
penalty matters which may be ongoing in relation to this
case, such penalties having been properly assessed.

                                     Sincerely,




                                     Stuart P. Seidel
                                     Director, Regulatory
                                     Procedures and
                                     Penalties Division