HQ 112438: Vessel Repair Entry No. C27-0067829-8; S.S. CHESTNUT HILL, Voyage 157; Application; modifications; 19 U.S.C. 1466; 19 C.F.R. 4.14(d)(1)(iv)

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 112438

                          April 9, 1993

VES-13-18 CO:R:IT:C  112438 BEW

CATEGORY:  Carriers

Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90831-0700

RE:  Vessel Repair Entry No. C27-0067829-8; S.S. CHESTNUT HILL,
     Voyage 157; Application; modifications; 19 U.S.C.  1466; 19
     C.F.R.  4.14(d)(1)(iv) 

Dear Sir:

     This letter is in response to your memorandum which forwards
an application for review filed in conjunction with the above-
referenced vessel repair entry.

FACTS:

     The record reflects that the subject vessel, the S.S. CHESTNUT
HILL, arrived at the port of Los Angeles, California, on May 5,
1992.  Vessel repair entry No. C27-0067829-8 was filed on May 8,
1992.  The entry indicates that the vessel underwent a foreign
repairs in Chittagong, Bangladesh, during November 11, 1991, and
in Rotterdam, Netherlands, during January 15 through 21, 1992.  We
are requested to consider the dutiable character of the following
items:

          ITEM           DESCRIPTION

          1.             Rewind mooring winch motor,
          2.             Removal of auxiliary diesel generator and
                         installation of portable diesel generator,
          5.             Services of Aggreko International 
          6.             Services of Aggreko International
          7.             Services of Geveke Motoren
          8.             Services of Geveke Motoren
          9.             Repairs to anchor windless and mooring
                         winch clutch,
         10.             Repairs entitled Exciter,
         11.             Repairs entitled ARPA; and
         11a.            Rewinding steer gear motor. 
 ISSUE:

     (1)  Whether the removal of an auxiliary diesel generator and
the installation of portable diesel generator constitutes a
modification, the cost of which is not subject to duty under 19
U.S.C.  1466.

     (2)  Whether relief may be granted under the provisions of 19
U.S.C.  1466 for costs for foreign repairs associated with the
rewinding of winch and steering gear motors. 

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.

     In its application of the vessel repair statute, the Customs
Service has held that modifications, alterations, or additions to
the hull and fittings of a vessel are not subject to vessel repair
duties.  Over the course of years, the identification of work
constituting modifications on the one hand and repairs on the other
has evolved from judicial and administrative precedent.  In
considering whether an operation has resulted in a modification
that 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, 18 C.C.P.A. 137 (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 constitutes a new design feature and does
          not merely replace a part, fitting, or structure that is
          performing a similar function.

     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.

T.D. 34150, 26 Treas. Dec. 183, 184 (1914)(quoted with approval in
Admiral Oriental).

     The Customs Service has 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.  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.  

     With regard to items 2, 5 through 8, we find that these
invoices relate to the removal of the auxiliary diesel generator
and the installation of the portable diesel generator.   We find
this work to be a non-dutiable modification to the vessels hull
and fitting.

     Customs has held pursuant to C.I.E.'s 518/63, 2045/66, and
478/67 that the coating of a vessel's tanks with substances having
protective and preservative qualities which maintain or preserve
a vessel's tanks in a good condition is analogous to painting and
is therefore considered a repair which is dutiable.      
     With regard to items 1 - rewinding of the mooring winch motor,
we find that repairs were performed in that the motor was heated
up, varnished, heated up again and dried.  Accordingly, the cost
incurred for the rewinding and the internal coating of the motor
is dutiable. 
     Pursuant to CD 1836 charges for drydocking, for furnishing
electricity, air and water, fees paid for the use of tugs and
pilots in drydocking and undocking a vessel, staging, and crane
expenses are not dutiable repairs if segregated on the invoice. 

     With regard to items 9 through 11a, we find that the costs
associated with these invoices were for repairs made to the vessels
equipment.  Accordingly, all costs associated with these invoices,
except transportation and crane charges are dutiable.

HOLDINGS:

     Following a thorough review of the law and analysis of the
evidence, we recommend that the application be granted with the
exception of the items enumerated above.

                                     Sincerely,



                                     Acting Chief
                                     Carier Rulings Branch