HQ 113057: Vessel Repair Entry No. C53-0028097-7; Casualty; Parts; M/V PAUL BUCK; V-145; 19 U.S.C. 1466

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 113057

                          July 26, 1994

VES-13-18-CO:R:IT:C 113057 GEV

CATEGORY:  Carriers

Regional Director
Commercial Operations Division
U.S. Customs Service
423 Canal Street
New Orleans, Louisiana 70130-2341

RE:  Vessel Repair Entry No. C53-0028097-7; Casualty; Parts;     
M/V PAUL BUCK; V-145; 19 U.S.C.   1466

Dear Sir:

     This is in response to your memorandum dated March 18, 1994,
forwarding an application for relief from duties assessed pursuant
to 19 U.S.C.   1466.  Our findings on this matter are set forth
below.

FACTS:

     The M/V PAUL BUCK is a U.S.-flag vessel operated by Ocean
Ships, Inc. of Houston, Texas.  The subject vessel had foreign
shipyard work performed in Falmouth, U.K., during August of 1993.
Subsequent to the completion of the work the vessel arrived in the
United States at Houston on September 4, 1993.  A vessel repair
entry covering the work in question was filed on the date of
arrival.

     An application for relief with supporting documentation was
timely filed on November 3, 1994.  The applicant bases its claims
for relief in part on a casualty and on the fact that various
vessel parts and materials were U.S.-manufactured and/or purchased.

ISSUES:

     1.  Whether evidence is presented sufficient to prove that
the foreign repairs and related survey warrant remission pursuant
to 19 U.S.C.   1466(d)(1).

     2.  Whether evidence is presented sufficient to prove that
certain parts and materials are non-dutiable under 19 U.S.C. 
  1466.

                              - 2 -

LAW AND ANALYSIS:

     Title 19, United States Code,   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) 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.  It is Customs
position that "port of destination" means a port in the United
States. (19 CFR   4.14(c)(3)(i))

     The statute thus sets forth the following three-part test that
must be met in order to qualify for remission under the subsection:

     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. 

     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, spontaneous explosion
of such dimensions as to be immediately obvious to ship's
personnel, 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 casualty event, we must consider the
repair to have been necessitated by normal wear and tear (ruling
letter 106159, dated September 8, 1983).  

     In addition, if the above requirements are satisfied by
evidence, 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.

     The applicant states that the damage in question, claimed to
be casualty-related, occurred at some time during the vessel's
passage through thick pack ice while en route to Thule Air Force
Base in Greenland and thereafter when it again passed through pack
ice in transit to its next destination.  The applicant has
submitted the following documentation to support a casualty claim: 
(1) American Bureau of Shipping (ABS) Invoice #UK 351309 (Exhibit
1); (2) ABS Survey Report #LD 4706 (Exhibit 1(a)); A&P Appledore
Damage Account Invoice covering the cost of repairing 

                              - 3 -

the damage (Exhibit 16(b)); U.S. Coast Guard (USCG) Form 2692 -
Report of Marine Accident (Exhibit 17); the Master's Statement of
Facts (Exhibit 18); the Master's Statement (Exhibit 19); the
vessel's logs from July 12 - July 31, 1994 (Exhibit 20); and
Customs Headquarters Ruling Letter 111324.
     Upon reviewing the above evidence, we note that in Exhibit 18
the Master states that "...there was no specific moment or
incident...which would indicate that damage had occurred."  He also
states that after mooring at Thule, an "...initial tour of the
waterline in a small boat did not turn up anything unusual." 
However, he then goes on to state that the structural damage was
later observed to be "...5-6 feet below the waterline and extending
down 8-10 feet."  (emphasis added)  He further states that the
damage was discovered through an internal and external inspection
of the hull and ballast tanks "...upon arrival in port..." which
he characterizes as "...normal procedure following special
operations of this sort."  In Exhibit 19, the Master also described
this inspection procedure as a "routine examination." In addition,
it is counsel's statement on p. 6 of the application that before
the vessel left the United States routine ABS and USCG inspections
revealed none of the contact damage subsequently discovered.

     It is therefore apparent that the damage in question occurred
to an underwater part of the vessel at some unknown time while it
was en route to Thule and was not discovered until after its
arrival at that port.  Furthermore, it is apparent that the vessel
proceeded in a damaged condition from Thule to Falmouth where it
was repaired.  

     In C.I.E. 1202/59, Customs 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 damage in
question occurred prior to the commencement of the voyage provided
other necessary factors are established.  
     
     Accordingly, pursuant to C.I.E. 1202/59, the record supports
the establishment of a casualty occurrence (i.e., striking ice) as
discussed above.  However, in regard to the remaining criteria
requisite for obtaining remission under 19 U.S.C.   1466(d)(1)
(i.e., unsafe and unseaworthy conditions in the vessel's damaged
state, and its inability to reach its United States port of
destination without obtaining foreign repairs), the only supporting
evidence contained within the record is the statement of the Master
in Exhibit 19.  
                              - 4 -

     Further in regard to the above-referenced criteria, we note
that the USCG is the controlling agency that determines questions
of a vessel's fitness to proceed.  The procedure by which the USCG
renders such a determination is set forth in    2.01-15 and 31.10-
25, USCG Regulations (46 CFR    2.01-15, 31.10-25).  The 
former states that a vessel may not proceed from one port to
another for repairs unless prior authorization is obtained from
the USCG Officer-In-Charge, Marine Inspection, either through the
issuance of a USCG "Permit to Proceed to Another Port for Repairs"
(CG-948) or a CG-835 which would specify the restrictions on, and
duration of, any voyage undertaken prior to obtaining permanent
repairs.  The latter states that with respect to tank vessels, "No
extensive repairs to the hull or machinery which affect the safety
of a vessel shall be made without the knowledge of the Officer-
In-Charge, Marine Inspection."  

     Notwithstanding the clear wording of the above USCG
Regulations, specifically 46 CFR   2.01-15 which does not
distinguish between foreign or domestic locations, the OCMI, New
York, N.Y., in a letter dated November 7, 1991, has informed us
that "A formal Permit to Proceed is not normally issued to a vessel
transiting foreign waters because the Certificate of Inspection
(COI) would have to be removed from the vessel which would cause
problems in transiting foreign waters."   

     In addition, we have subsequently learned from the Chief,
Merchant Vessel Inspection and Documentation Division, USCG
Headquarters, in a letter dated April 14, 1992, that "Vessel
operators often make casualty reports for U.S. flag vessels damaged
overseas verbally to the proper Coast Guard Marine Inspection
Office, followed by the required written report.  The Coast Guard
cannot always send a marine inspector to a damaged vessel overseas
on short notice.  In such cases, the Coast Guard may consider the
classification society report and the report of the vessel's master
to determine the required temporary repairs and voyage
restrictions."

     Customs has previously addressed the sufficiency of evidence
in casualty claims such as this where a vessel that has been
damaged foreign proceeds in a state of disrepair between two
foreign locations prior to its being repaired in a foreign port,
and subsequently sails to its U.S. port of destination.  (See
Customs Rulings 112060, dated May 21, 1992; 112061, dated June 10,
1992; 112063, dated June 8, 1992; and 112229, dated June 11, 1992;
all of which are distinguished from Customs Ruling 111324 cited by
counsel in that the latter did not address a vessel proceeding
between two foreign ports in a damaged condition)  It is Customs
position as so stated in the aforementioned rulings that
notwithstanding any practice of verbally reporting foreign
casualties to the USCG and that agency's subsequent verbal
instructions, remission pursuant to 19 U.S.C. 1466(d)(1) will not
be granted in the absence of documentary evidence that the 

                              - 5 -

casualty occurrence was timely reported to the USCG and that
agency, directly or through the medium of a marine surveyor,
permitted the vessel to proceed between two foreign locations in
a damaged condition.  The mere submission of a USCG Report of 
Marine Accident, Injury or Death (CG-2692), without accompanying
documentation from the appropriate USCG OCMI (New York or Honolulu)
authorizing the vessel to proceed in a damaged condition, will not
suffice for granting remission pursuant to 19 U.S.C.   1466(d)(1). 

     Accordingly, in view of the fact that the record contains no
correspondence from the USCG regarding this casualty claim other
than the aforementioned CG - 2692, we are of the opinion that the
evidence presented is insufficient to prove that the costs of the
foreign repairs and associated survey (Exhibits 1, 1a and 16(b))
were necessary for the vessel's safety and seaworthiness thereby
warranting remission pursuant to 19 U.S.C.   1466(d)(1).

     In addition to the casualty claim discussed above, we are
asked to review the applicant's claim for relief regarding various
vessel parts and materials.  It is Customs position that the
dutiability of vessel parts and materials installed on U.S.-
flagged vessels is controlled by Treasury Decision (T.D.) 75-257. 
Accordingly, the costs of parts and materials covered by Items 2,
3, 5, 7, 8, 12 and 14 of the application which contain
documentation evidencing U.S. purchase by the vessel owner and
U.S.-manufacture are not dutiable.  The costs of the remaining
parts in issue, covered by Items 4, 6, 9, 10 and 11 of the
application are dutiable. 
     
HOLDINGS:

     1.  The evidence presented is insufficient to prove that the
foreign repairs and related survey warrant remission pursuant to
19 U.S.C.   1466(d)(1).

     2.  The evidence presented is sufficient to prove that the
parts and materials covered by Items 2, 3, 5, 7, 8, 12 and 14 of
the application are not subject to duty under 19 U.S.C.   1466. 

                                   Sincerely,




                                   Arthur P. Schifflin
                                   Chief
                                   Carrier Rulings Branch