VES-13-18-RR:IT:EC 114288 GOB
Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 415
P.O. Box 2450
San Francisco, CA 94126
RE: Vessel Repair Entry No. 110-7995632-9; SEA-LAND KODIAK, V-346; 19 U.S.C. 1466; Application
Dear Madam:
This is in response to your memorandum of March 12, 1998,
which forwarded the application for relief submitted by Sea-Land
Service, Inc. ("applicant") with respect to the above-referenced
vessel repair entry.
FACTS:
The evidence of record indicates the following. The SEA-LAND KODIAK (the "vessel"), a U.S.-flag vessel, arrived at the
port of Tacoma, Washington on December 9, 1997. The subject
vessel repair entry was subsequently filed. The vessel underwent
certain foreign shipyard work in Canada.
ISSUE:
Whether the subject items are dutiable pursuant to 19 U.S.C.
1466(a).
LAW AND ANALYSIS:
19 U.S.C. 1466 provides for the payment of duty at a rate 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 be employed
in such trades.
You request our determinations with respect to the items
discussed below.
Kawasaki invoice no. 3145033-5 and Victoria Shipyards
invoice no. 9733. The applicant states, with respect to these
items: "We also seek relief from duty for the [e]mergency work
performed pertaining to the Controllable Pitch Propeller casualty
and final repairs completion." In support of its claim, the
applicant has provided a sheet from the master's log book and a
sheet from the deck log book. The master's log for August 11,
1997 reflects that the "chief engineer notified [the] bridge of
low pressure to the CPP system." Immediately afterwards, the
"main engine tripped due to low CPP pressure" and the "vessel
[was] drifting with no propulsion." Subsequently on the same
day, the "CPP failed to respond in any mode" and "checks and
tests were carried out ... with negative results." The sheet
from the deck log book, which is undated, reflects the same
situation, in virtually the same language. One of the documents
submitted with the application, entitled "Summary of Pertinent
Issues," states: "The motor Vessel Sea-Land Kodiak lost the
function of the controllable pitch propeller (CPP) on Monday
August 11, 1997, while at sea 400 miles off the coast of
Vancouver Island, BC. Attempts to engage the emergency pitch
setting and locking mechanism were unsuccessful, implying that
the problem was in the actual hub of the propeller and not in any
control apparatus."
19 U.S.C. 1466(d)(1) provides in part that the Secretary of
the Treasury is authorized to remit or refund such duties if the
owner or master of the vessel furnishes good and sufficient
evidence that the vessel was compelled by stress of weather or
other casualty to put into a foreign port and make repairs to
secure the safety and seaworthiness of the vessel to enable her
to reach her port of destination. 19 CFR 4.14(c)(3)(i) provides
that "port of destination" means such port in the United States
and "...only the duty on the cost of the minimal repairs needed
for the safety and seaworthiness of the vessel is subject to
remission or refund."
19 U.S.C. 1466 and 19 CFR 4.14 essentially set forth a
three-part test, each of the elements of which must be
established by good and sufficient evidence to qualify for
remission:
1. a casualty occurrence;
2. an unsafe and unseaworthy condition;
3. the inability to reach the port of destination
without foreign repair
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 such a casualty event, we
must consider the repair to have been necessitated by normal wear
and tear or some other non-casualty situation..
In Dollar Steamship Lines, the court stated in pertinent
part:
We are of the opinion that a casualty similar to
"stress of weather" should be of necessity a happening
that comes with the violence of the turbulent forces of
nature.
Black's Law Dictionary (Fifth Edition, 1979) defines
casualty as follows:
A serious or fatal accident. A person or thing
injured, lost or destroyed. A disastrous occurrence
due to sudden, unexpected or unusual cause. Accident;
misfortune or mishap; that which comes by chance or
without design. A loss from such an event or cause; as
by fire, shipwreck, lightning, etc.
After a consideration of the record, we find that the
applicant has not established that a casualty occurred. The
documentation submitted by the applicant indicates simply that
the main engine "tripped" or failed. The mere occurrence of
engine failure, by itself, is not a casualty.
Accordingly, the applicant's casualty claim is denied.
ABS Surveys - invoice nos. 5550001815 (drydocking survey),
5550001816 (tailshaft survey), and 5550001817 (damage repair
survey). In the document entitled "Summary of Pertinent Issues,"
the applicant states: "The SL Kodiak was originally scheduled to
go to drydock for a credited drydocking and to complete special
survey by American Bureau of Shipping in Nov/Dec, 1997. The
drydock, continuous survey of machinery, hull survey and
tailshaft survey were performed instead at this [e]mergency
drydocking in August."
We find that the cost of the damage repair survey (invoice
no. 5550001817) is dutiable as a cost of repairs.
We find that the drydocking survey and tailshaft survey are
nondutiable.
Victoria Shipyards invoice no. 12-11A(97). This invoice is
entitled "Modifications to Cargo Support Structure." In
pertinent part, it provides:
Hatch No. 10 Conversion to Cell Guides and Raising of
Second Tier Hinge Frames ... The upper and lower hinged
frames are now set for 40 ft. Containers.
Modifications to the hatch will allow 45 ft.
container[s] and combination of 40 ft. And 45 ft.
Containers to be stowed. The modifications consist of
the following general items: removal of existing hinged
frames, modification of a hinged frame tower at one
end, installation of above deck cell guides,
modification/reinforcing of hatch covers and relocation
of outboard pedestals...The second tier hinge frames at
... 8,5,4 and 3 hatches will be raised up by one foot.
In its application of 19 U.S.C. 1466, Customs has held that
modifications, alterations, or additions to the hull of a vessel
are not subject to duty
We find that the cost of this work is nondutiable because
the work represents a modification to the hull of the vessel.
Electrocatalytic, Inc. ("Elcat") invoice no. 5v7401 and
Roland Marine Inc. invoice no. 1374/97. With each of these
invoices the applicant has submitted a letter (each letter is
stated to be an "affidavit," but the letters are not "sworn to"
or notarized) from the vendor stating that the vendor dispatched
a service representative who is a U.S. resident (in the case of
the Roland Marine service representative, a U.S. resident and
citizen). The underlying invoices reflect the costs of providing
the representative.
We find that the cost of the Elcat representative is
nondutiable.
However, we find that the cost of the Roland Marine
representative is dutiable because the Roland Marine letter
states that the service representative was provided with respect
to two vessels other than the vessel involved in this entry,
i.e., the letter cites the SEA-LAND TACOMA and the SEA-LAND
ANCHORAGE. Accordingly, the Roland Marine letter is not relevant
to the subject entry. Accordingly, the cost of the Roland Marine
invoice is dutiable.
HOLDING:
As detailed above, the application is granted in part and
denied in part.
Sincerely,
Jerry Laderberg
Chief,
Entry Procedures and Carriers
Branch