HQ 112863: Vessel Repair; Petition for Review; Modification; Documentation; Evidence; 19 U.S.C. 1466; ALASKA I; Vessel Repair Entry No. H24-0013047-0.

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 112863

                          November 16, 1993

VES-13-18-CO:R:IT:C  112863

CATEGORY:  Carriers

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

RE:  Vessel Repair; Petition for Review; Modification;
     Documentation; Evidence; 19 U.S.C.  1466; ALASKA I; Vessel
     Repair Entry No. H24-0013047-0.

Dear Sir:

     This letter is in response to your memorandum dated August 12,
1993, which forwards for our consideration a petition for review
filed in connection with the above-referenced vessel.


FACTS:

     The ALASKA I arrived at the port of Anchorage, Alaska on April
9, 1992, and filed a timely vessel repair entry.  The entry
indicates that the vessel underwent foreign shipyard work in Tokyo,
Japan.  This timely-filed petition for review is in response to
Headquarters Ruling 112513 (Mar. 30, 1993) and is challenging the
dutiability of the following items.

                     Application
                     Item Number          Invoice/Description

     Machinery Part       1               propeller
                          3               reduction gear
     Hull Part            10              hull piping works
     Electric Part        5               general alarm
     Belt Conveyor        1-5             conveyor works
     Refrigeration Part   2               contact freezers
                          3               baiting store cooling coil


ISSUE:

     Whether the cost of the foreign shipyard work completed aboard
the ALASKA I is dutiable pursuant to 19 U.S.C.  1466.


                                 -2-


LAW AND ANALYSIS:

     Title 19, United States Code, section 1466(a) provides, in
pertinent part, for payment of a fifty percent ad valorem duty on
the cost of foreign repairs to a vessel documented under United
States law to engage in the foreign or coastwise trade, or to a
vessel intended to be employed in such trade.


Machinery Part

     1.  Propeller (2,970,000)

     This invoice is associated with the conversion of the
propulsion system from a fixed-pitch to a variable-pitch propeller
system.  In addressing the dutiability of this invoice at the
application stage, Customs held this invoice dutiable based on
precedent holding that work performed to restore a part to good
condition following deterioration or decay to be a maintenance
operation within the meaning of the term repair as used in the
vessel repair statute.  While a substantial amount of work may have
been necessary to alter the propulsion system, the fact remains that
the invoice submitted contains some dutiable cleaning operations as
well as some replacement operations which, in the absence of
evidence to the contrary, constitute dutiable repairs.  Customs has
held that where an invoice contains dutiable and non-dutiable items
the entire invoice is dutiable in the absence of a more specific
apportionment.  Headquarters Decision 108567 (Sept. 10, 1986).


     3.  Reduction Gear (2,420,000)

     The petitioner claims that to install the variable-pitch
propeller system, the shipyard was required to modify the vessel's
reduction gear.  As was stated previously, the fact that substantial
work was needed to outfit the vessel with its new propulsion system
does not translate the entire operation into a duty-free
modification.  As above, the fact remains that the invoice submitted
contains some dutiable cleaning operations as well as some
replacement and overhauling operations which, in the absence of
evidence to the contrary, constitute dutiable repairs.  The entire
invoice remains dutiable until the petitioner can document the
segregated non-dutiable costs.  Headquarters Decision 108567 (Sept.
10, 1986).


Hull Part

     10.  Hull Piping Works (11,450,000)

     This invoice was initially deemed dutiable because the
information provided at the application stage did not provide a
sufficient description of the operation which precluded Customs from

                                 -3-


making a determination of dutiability.  The invoice lists the
replacement pipe used as part of the conversion of the vessel from a
trawler into a long-liner, but does not present any information
regarding the pipes that were replaced.

     Customs has long held that for an item to be characterized as a
non-dutiable modification, it must encompass the installation of an
item as a new design feature, not as a replacement for, or
restoration of, parts now performing a similar function. 
Headquarters Decision 108871.  Even though an operation might under
normal circumstances be considered to be a permanent, duty-free
modification, the benefit of such a finding is not extended to
operations which encompass the replacement of existing structures in
need of repair at that time.  Absent more detailed evidence
explaining why the various piping was replaced, this item shall
remain dutiable.


Electric Part

     5.  General Alarm (1,500,000)

     At the application stage, relief from the assessment of vessel
repair duty was denied because the applicant failed to provide a
sufficient description of the work performed with respect to the
general alarm.  Customs is satisfied that the general alarm system
is permanently incorporated into the vessel's superstructure and
that it would remain aboard the vessel during an extended layup.
Furthermore, Customs finds that this operation is not a repair of
existing items aboard the vessel.  Upon reconsideration of the
evidence submitted, Customs finds the installation of the new
general alarm system to be a non-dutiable modification.  


Belt Conveyor

     1-5.  Conveyor Works (3,580,000)

     Relief from duty was initially denied because Customs was not
provided with sufficient information regarding the work performed in
connection with the belt conveyors.  The invoice provided for is
vague and states only that the belt conveyor was modified.  No
details of the work performed are provided.  While Customs
appreciates the petitioner's narrative offering an elaboration of
the work performed on the belt conveyors and the reasons for it, 
this information unaccompanied by additional authenticated evidence
of a modification does not justify relief from duty.  Unless and
until Customs receives sufficient evidence that the work performed
on the belt conveyors is a modification, this item remains dutiable.




                                 -4-


Refrigeration Part

     2.  Contact Freezers (2,685,000)
     3.  Baiting Store Cooling Coil (1,533,000)

     These items were initially deemed dutiable because the
information provided at the application stage did not provide
sufficient descriptions of the operations which precluded Customs
from making a determination of dutiability.  Upon reconsideration of
the evidence previously submitted together with the petitioner's
statement that these invoices represent first-time installations,
Customs finds that these items are non-dutiable modifications which
are a part of the vessel's conversion from a stern trawler into a
long-liner.


HOLDING:

     After a thorough review of the record and the additional
evidence presented, the petition for relief is granted in part and
denied in part as detailed in the Law and Analysis portion of this
ruling.  The petitioner should be informed of the right to file a
protest following liquidation of this entry, as evidenced by the
posting of the bulletin notice of liquidation.

                                     Sincerely,




                                     Arthur P. Schifflin
                                     Chief
                                     Carrier Rulings Branch