HQ 112140: Vessel Repair Entry No. 718-0000393-2; Protest No. 2904-92- 100014; M/V LIBERTY SPIRIT V-009-A; Casualty; Fishing Net

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 112140

                          April 7, 1992

VES-13-18-CO:R:IT:C  112140 GEV

CATEGORY:  Carriers

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

RE:  Vessel Repair Entry No. 718-0000393-2; Protest No. 2904-92-
     100014; M/V LIBERTY SPIRIT V-009-A; Casualty; Fishing Net

Dear Sir:

     This is in response to your memorandum dated March 10, 1992,
forwarding a protest on the above-referenced vessel repair entry.
Our ruling on this is set forth below.

FACTS:

     The M/V LIBERTY SPIRIT is a U.S.-flag vessel owned by
Liberty Shipping Group of Lake Success, New York.  The subject
vessel underwent foreign repairs at several different shipyards
in The Netherlands during the period of February 7-13, 1990.
Subsequent to the completion of the repairs the vessel arrived in
the United States at Portland, Oregon, on March 12, 1990.  A
vessel repair entry was filed on March 19, 1990.

     An application for relief was timely filed on April 20,
1990.  By letter dated October 25, 1990, the applicant was
notified of our decision on the application contained in
Headquarters Ruling 111038 KVS, dated October 2, 1990, which
denied relief on the grounds that the applicant had submitted
insufficient information to support its claims that the repairs
to the stern tube oil seals were necessitated by a casualty and
that the installation of navigation equipment was a non-dutiable
modification.

     A petition for review of Customs ruling on the application
was timely filed on October 31, 1990.   By Headquarters Ruling
111401 KVS, dated September 24, 1991, the petition was granted in
part and denied in part.  The entry was subsequently forwarded
for liquidation which took place on November 22, 1991.  The
ensuing protest was filed on January 23, 1992.
                              - 2 -

     At issue is the dutiability of the repair work covered by
Verolme Botlek Shipyard invoice no. 200123.  This work covers the
cost of replacing damaged stern tube oil seals.  The protestant
contends that the damage was caused while the vessel was en
route from New Orleans to Rotterdam (in a laden condition) by
stress of weather coupled with the entanglement of fishing net
around the propeller shaft.  It is claimed that these combined
factors created so much pressure inside the seals that they
exploded causing excessive oil leakage and allowing the ingress
of sea water into the lube oil system.  The protestant requests
remission of the cost of these repairs pursuant to 19 U.S.C.
1466(d)(1).

     In conjunction with the dutiability of the above repair work
during consideration of the petition Customs discovered a cost
discrepancy between the amount which appears on the shipyard
invoice (91,899 DFL) and a much lower amount (49,500 DFL) which
the vessel owner claims to be the price agreed upon with the
shipyard.  Customs ruling on the petition held the evidence
insufficient to justify using the lower amount therefore the
repairs were liquidated at 91,899 DFL.  The protestant reiterates
his claim that the cost of the repairs was 49,500 DFL.

     The record includes the following documentary evidence in
support of the protestant's claim:  (1) the shipyard invoice
describing the work done including the removal of the entangled
fishing net; (2) photographs of the damage in question including
the fish net entangled around the propeller shaft; (3) a copy of
a payment check from the protestant to the former vessel agent in
the amount of $26,202.95 (49,500 DFL); (4) a copy of a letter
from the protestant to the former vessel agent attached to the
aforementioned check; (5) a copy of a fax from the shipyard to
the protestant predating the invoice but confirming the lump sum
agreement of 49,500 DFL; (6) an American Bureau of Shipping (ABS)
invoice and accompanying survey report of the damage in question;
and (7) copies of the vessel's logs from January 30, 1990 to
February 13, 1990.

ISSUE:

     Whether evidence is presented sufficient to prove that the
repairs to the subject vessel involving the stern tube oil seals
were necessitated by a casualty thus warranting remission
pursuant to 19 U.S.C. 1466(d)(1).

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides in part
for payment of an ad valorem duty of 50 percent of the cost of
foreign repairs to vessels documented under the laws of the
United States to engage in the foreign or coastwise trade, or
vessels intended to engage in such trade.  Section 1466(d)(1)
                              - 3 -

provides that the Secretary of the Treasury is authorized to
remit or refund such duties if the owner or master of the vessel
was compelled by stress of weather or other casualty to put into
such foreign port to make repairs to secure the safety and
seaworthiness of the vessel to enable her to reach her port of
destination.

     The term "casualty", as it is used in the vessel repair
statute (19 U.S.C.1466) has been interpreted as something which,
like stress of weather, comes with unexpected force or violence,
such as fire, or spontaneous explosion of such dimensions as to
be immediately obvious to ship's personnel, or collision (see
Dollar Steamship Lines, Inc., v. United States, 5 Cust. Ct. 28-
29, C.D. 362 (1940)).  In the absence of evidence of such a
casualty event, we must consider the repair to have been
necessitated by normal wear and tear (ruling 106159, September 8,
1983).

     It is noted that section 4.14(c)(3)(i), Customs Regulations
(19 CFR 4.14(c)(3)(i), provides that "port of destination" means
such port in the United States.  This point is not in dispute,
however, it is an embellishment upon section 1466(d)(1) which, as
stated above, sets forth the following three-part test which must
be met in order to qualify for remission:

     1.  The establishment of a casualty occurrence.

     2.  The establishment of unsafe and unseaworthy conditions.

     3.  The inability to reach the port of destination without
         obtaining foreign repairs.

     In addition, if the above requirements are satisfied by
evidence, the remission is restricted to the cost of the minimal
repairs necessary to enable the vessel to reach her port of
destination.  Repair costs beyond that minimal amount are not
subject to remission.

     Turning to the protest under consideration, the record
supports the protestant's claim that the vessel did in fact
encounter heavy weather during the course of its voyage from New
Orleans to Rotterdam, a finding set forth in our decision on the
petition (ruling 111401, cited above).  This decision further
held that, "...A.B.S. report no. RO 34991 indicates that the
stern tube seal leaking was 'first noted on January 19, 1990,'
eleven days before the onset of heavy weather."  It was
determined that there was an insufficient nexus between stress of
weather and the repairs described on Verolme Botlek Shipyard
invoice no. 200123 to constitute a casualty therefore remission
pursuant to 19 U.S.C. 1466(d)(1) was denied.

                              - 4 -

     However, upon further review of the record in its entirety,
it is apparent that the request for remission was not based
solely on stress of weather but also on the fact that a fishing
net became entangled around the propeller shaft, a fact evidenced
by the shipyard invoice and photographs.  In this regard it
should be noted that Customs has previously addressed the issue
of repairs to stern tube after seals due to fishing line fouling
the propeller shaft which caused oil leakage.  (ruling 108514
GV, dated November 17, 1986)

     In ruling 108514 we noted that the documentation submitted
which evidenced the entanglement described above satisfied the
first criterion in establishing a casualty occurrence (i.e., that
the apparatus was damaged to a specifically stated extent) but
did not appear to satisfy the second two criteria for a casualty
occurrence (i.e., that the damage occurred in a specifically
described fashion, and at a named place on a certain date).
However, it was further noted that the damage occurred to
underwater parts of the vessel.  In C.I.E. 1202/59, we held that
damage to underwater parts of vessels is usually not easily
detectable or susceptible of definite proof respecting date and
place of occurrence.  We held that relief under 19 U.S.C.
1466(d)(1) is therefore warranted for such damage in the absence
of evidence showing that the vessel concerned was grounded,
struck bottom, or her propeller contacted some floating object
capable of causing damage prior to the commencement of the
voyage.  However, in C.I.E. 1202/59 and in ruling 106240 JM,
dated July 20, 1983, which applied C.I.E. 1202/59 in a case of
underwater damage, there was some evidence, or at least an
inference could reasonably be made based upon the damage which
had occurred, that the damage resulted from striking an unknown
underwater object rather than from normal wear and tear (see
C.I.E. 1243/60, in which a leak in a vessel's hull was held to be
due to normal wear and tear and therefore remission of duty was
denied).  The lack of evidence, or at least an inference based on
the damage sustained, was the very reason relief was denied in
ruling 106369 PH, dated February 13, 1984, which applied C.I.E.
1202/59 in a similar case where an oil leak occurred in the
vessel's stern tube after seal.

     In the case under consideration, the record establishes that
the damage to the stern tube seals was caused by the vessel
striking an underwater object which was unknown at the time
rather than from normal wear and tear.  The heavy weather, rather
than being the sole cause of the damage, appears to have
exacerbated an existing condition caused by the fouling of the
fishing net.  (see also rulings 109202 LLB, dated April 14, 1988;
109625 GV, dated August 15, 1988; and 110027 LLB/110130 KMF/
110138 KMF; all of which determined that the entanglement of a
mooring line around a vessel's port tailshaft and strut
constituted a casualty occurrence)

                              - 5 -

     Accordingly, the record supports not only the establishment
of a casualty occurrence as discussed above, but also unsafe and
unseaworthy conditions in the vessel's damaged state, and its
inability to reach its port of destination without obtaining
foreign repairs.  Therefore, remission of the duty assessed on
the repairs listed on Verolme Botlek Shipyard invoice no. 200123
is granted pursuant to 19 U.S.C. 1466(d)(1).  Our grant of
remission renders moot any discussion as to the aforementioned
invoice discrepancy.

HOLDING:

     Evidence is presented sufficient to prove that the repairs
to the subject vessel involving the stern tube oil seals were
necessitated by a casualty thus warranting remission pursuant to
19 U.S.C. 1466(d)(1).

     Accordingly, the protest is granted.

                                   Sincerely,




                                   B. James Fritz
                                   Chief
                                   Carrier Rulings Branch