HQ 112004: Vessel repair; Repair; Vessel PRESIDENT JACKSON, V-31; entry number C27-0061025-9; Port of arrival Los Angeles, California; Modifications

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 112004

                         March 27, 1992

VES-13-18-CO:R:IT:C  112004 BEW

CATEGORY:  Carriers

Chief, Technical Branch
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90731

RE:  Vessel repair; Repair; Vessel PRESIDENT JACKSON, V-31;
     entry number C27-0061025-9; Port of arrival Los Angeles,
     California;  Modifications

Dear Sir:

     Reference is made to your memorandum of November 26, 1991,
which forwards for our review and recommendation the Application
for Relief filed by American President Lines, Ltd., in regard to
the above-captioned vessel repair entry.

FACTS:

     The vessel PRESIDENT JACKSON arrived in the United States
after having had foreign repair work performed on the ship while
abroad.  Customs and the vessel operator are in substantial
agreement on the issue of dutiability, and only one item is
offered for our review.  The item listed below by shipyard
invoice number is as follows:

     Marine Service Machinery Co. Ltd. JAO30-128 - Strainer in
     piston cooling system.

ISSUE:

     Whether foreign shipyard operations undergone by the subject
vessel may be considered non-dutiable modifications under the
vessel repair statute.

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 documented

under the laws of the United States to engage in the foreign or
coastwise trade, or intended to be employed in such trade.

    A question exists as to whether certain of the items under
consideration might be considered non-dutiable modifications.  In
its application of the vessel repair statute, Customs has held
that modifications/alterations/additions to the hull and fittings
of a vessel are not subject to vessel repair duties.   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 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.  This element should not be given
     undue weight in view of the fact that vessel components must
     be welded or otherwise "permanently attached" to the ship as
     a result of constant pitching and rolling.  In addition,
     some items, the cost of which is clearly dutiable, interact
     with other vessel components resulting in the need,
     possibly for that purpose alone, for a fixed and stable
     juxtaposition of vessel parts.  It follows that a "permanent
     attachment" takes place that does not necessarily involve a
     modification to the hull and fittings.

     2.  Whether in all likelihood, an item under consideration
     would remain aboard a vessel during an extended lay up.

     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.

    For purposes of section 1466, dutiable equipment has been
defined to include:

          ...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.  Admiral Oriental,
          supra., (quoting T.D. 34150, (1914)).

     We have thoroughly reviewed the entry documentation
submitted in this matter.  It is our conclusion that the entered
costs are clearly for a non-dutiable modification.

HOLDING:

     Following a thorough review of the evidence as well as an
analysis of the law and applicable precedents, we have
determined that the Application for relief should be allowed as
specified in the Law and Analysis portion of this ruling.

                              Sincerely,




                              B. James Fritz
                              Chief
                              Carrier Rulings Branch