HQ 111455: Vessel repair; modification; steel plate installation Vessel: GREEN BAY V-25 Vessel Repair Entry No. 718-0000408-8 Date of Arrival: September 6, 1990 Port of Arrival: Portland, Oregon

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 111455


                          July 1, 1991


VES-13-18-CO:R:P:C  111455 KVS

CATEGORY:  Carriers

Chief, Technical Branch
Commercial Operations Division
1 World Trade Center
Long Beach, CA  90831

RE:  Vessel repair; modification; steel plate installation
     Vessel:  GREEN BAY V-25
     Vessel Repair Entry No. 718-0000408-8
     Date of Arrival:  September 6, 1990
     Port of Arrival:  Portland, Oregon

Dear Sir:

     This is in response to your memorandum dated December 19,
1990, which forwards for our consideration an application for
relief filed in connection with the GREEN BAY V-25, vessel
repair entry no. 718-0000408-8.  Our findings are set forth
below.

FACTS:

     The GREEN BAY V-25, an American-flag vessel, underwent
certain foreign shipyard operations in the Japan between August
22-24, 1990.  Shortly thereafter, the vessel arrived in the
United States at Portland, Oregon, on September 6, 1990, and
made formal entry.

     In a letter dated November 2, 1990, the vessel agent
requested a 30-day extension which was granted by the appropriate
vessel repair liquidation unit.  Subsequently, an application for
relief from vessel repair duties was timely filed on December 5,
1990.

ISSUE:

     Whether certain foreign shipyard work performed on the
subject vessel involving the installation of a new steel plates
is dutiable under 19 U.S.C. 1466.




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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.

Over the course of years, the identification of modification
processes has evolved from judicial and administrative precedent.
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, 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, in all likelihood, an 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 Customs Service has held that for an item to be
characterized as a nondutiable modification, it must encompass
the installation of an item as a new design feature, not as a
replacement for, or restoration of, parts now performing a
similar function (Customs Memorandum 108871 (dated April 16,
1987)).  Customs has also held that the decision in each case as
to whether an installation constitutes a nondutiable 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 (Customs Memorandum 108871 (dated
April 16, 1987), citing C.S.D. 83-35).  Even if an article is
considered to be part of the hull and fittings of a vessel, the
repair of that article, or the replacement of a worn part of the
hull and fittings, is subject to vessel repair duties (see,
C.I.E. 233/60.

     The installation of new steel plates and brackets has
previously been considered by the Customs Service.  Headquarters
Rulings 111042 (dated October 11, 1990) and 110897 (dated June 5,
1991) determined that similar reinforcements completed by means
of the installation of steel plates and brackets were undertaken
                              - 3 -


to correct the stress problems created by the defective nature of
the current structure, as evidenced by the existence of cracks in
the hull.

     Examination of the supporting documentation indicates that
the subject vessel was experiencing similar problems.  Maritime
Engineering invoice IB-1526, submitted in support of the
application, describes the work undertaken as "reinforcement
works in hull cracks."

     The applicant has submitted no other documentation (i.e.
drawings, blue prints, A.B.S. report, etc.) which would disprove
our conclusion that the installation was a replacement for, or
restoration of parts currently performing a similar function,
albeit improperly.  Therefore, we find the costs incurred in the
installation of the steel plates to be dutiable.  Accordingly,
the application for relief is denied in full.

HOLDING:

     Where installations are made to a vessel for the purpose of
replacing malfunctioning parts currently performing the same or
similar function, the costs incurred in the installation cannot
be characterized as a non-dutiable modification and are held to
be dutiable.

                                Sincerely,




                                B. James Fritz
                                Chief
                                Carrier Rulings Branch