HQ 112358: Vessel Repair; Warranty; Modification; 19 U.S.C. 1466; Protest No. 30014-000554; PRESIDENT TYLER V-32.

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 112358

                         January 6, 1993

VES-13-18  CO:R:IT:C  112358  JBW

CATEGORY:  Carriers

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

RE:  Vessel Repair; Warranty; Modification; 19 U.S.C.  1466;
     Protest No. 30014-000554; PRESIDENT TYLER V-32.

Dear Sir:

     This letter is in response to your memorandum of June 23,
1992, which forwards for our review and ruling the above-
referenced protest against the assessment of vessel repair
duties.

FACTS:

     The record reflects that the subject vessel, the PRESIDENT
TYLER, arrived at the port of Seattle, Washington, on May 20,
1983.  Vessel repair entry, number 83-904761, was filed on the
same day as arrival and indicates that shipyard work was
performed in Yokohama and Kobe, Japan.  An application for relief
and a petition for review were filed in which the protestant
claimed that work to repair the number 5 line shaft bearings was
not dutiable because this work was performed pursuant to a
warranty on modifications made on a previous voyage to the vessel
by Mitsubishi Heavy Industries.  This office denied this claim. 
Headquarters Ruling Letter 106361, dated October 4, 1983.  The
entry was liquidated on June 8, 1984, and the protest was timely
filed on August 1, 1984.

ISSUE:

     Whether the cost of foreign repairs performed pursuant to a
warranty on a contract with a foreign shipyard for vessel
modification is dutiable under 19 U.S.C.  1466 (1988).

 LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides in
pertinent part for payment of duty in the amount 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 engage in such trade.

     The Customs Service has consistently held that duty
allowance will not be made for foreign shipyard warranties. 
Headquarters Ruling Letter 110658, dated April 9, 1990.  The
Court of International Trade recognized one narrow category of
foreign shipyard warranties as potentially eligible for duty
refund.  Sea-Land Service, Inc. v. United States, 683 F. Supp.
1404 (CIT 1988).  The Court in that case found that, under
certain conditions, warranties issued pursuant to new vessel
construction contracts should be honored for duty refund
purposes.  Id. at 1409.  This decision did not disturb, however,
our long-standing position that disallows other classes of
foreign warranty work.

     The repair work performed by Mitsubishi Heavy Industries was
not performed pursuant to a new vessel construction contract
warranty.  It does not, therefore, qualify under the exception
established in the Sea-Land decision discussed in the previous
paragraph.  Failing qualification for this exception, we conclude
that the work performed under warranty to repair the number 5
line shaft bearing is dutiable.

HOLDING:

     The cost of repair work performed pursuant to a warranty on
a vessel modification contract for which the vessel owner seeks
relief is dutiable under 19 U.S.C.  1466.


                              Sincerely,




                              Stuart P. Seidel
                              Director, International
                              Trade Compliance Division