VES-13-18-RR:IT:EC 114494 LLB
Chief, Residual Liquidation and Protest Branch
U.S. Customs Service
6 World Trade Center
New York, New York 10048-0945
RE: Vessel Repair Entry No. 514-3005695-5; MV NEWARK BAY; V-522;
Casualty; Seaworthiness; Collision; 19
U.S.C. 1466(d)(1)
Dear Sir:
This is in response to your memorandum dated November 18,
1998, forwarding an Application for Relief from duties assessed
pursuant to the vessel repair statute, 19 U.S.C. 1466. Our
findings are set forth below.
FACTS:
The NEWARK BAY is a U.S.-flag vessel operated by Sea-Land
Service, Inc. The vessel underwent foreign shipyard work in
January of 1998. Subsequent to the completion of the work the
vessel arrived in the United States at the port of Elizabeth, New
Jersey, on January 29, 1998. A vessel repair entry was timely
filed.
An application for relief dated April 28, 1998, was received
by your office claiming remission due to a casualty. The claim
is made that while attempting to berth with the assistance of tow
vessels at the port of Felixstowe, England, on January 4, 1998,
the vessel was forced into another berthed vessel by sustained
winds of 50 knots, gusting to 60 knots. Damage was sustained to
the port bow of the vessel which required immediate attention.
The vessel underwent temporary repairs at Felixstowe and was
surveyed by the American Bureau of Shipping. In addition, a
Report of Marine Accident, Injury, or Death (Coast Guard Form
2692) was filed with that agency. Thereafter, the vessel was
taken to shipyard facilities in Rotterdam, Holland, in order to
receive permanent repairs.
ISSUE:
Whether evidence is presented sufficient to prove that
foreign costs for which the applicant seeks relief were
necessitated by a casualty occurrence thus warranting remission
pursuant to 19 U.S.C. 1466(d)(1).
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. (see 19 CFR
4.14(c)(3)(i))
The statute sets forth the following three-part test which
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. (Customs ruling letter 106159, dated September 8, 1983; see
also C.S.D. 79-32 wherein Customs
held that a breakdown or failure of machinery may not be regarded
as a casualty within the meaning of 1466(d)(1) in that absence
of evidence that is was caused by some extrinsic force)
In addition, if the above requirements are satisfied by
evidence, the remission is restricted to the cost of the minimal
repairs necessary to "...secure the safety and seaworthiness of
the vessel to enable her to reach her port of destination." (19
U.S.C. 1466(d)(1)). Repair costs beyond that minimal amount
are not subject to remission. In the case under consideration,
the evidence supports the claim that the subject vessel suffered
a marine casualty.
The United States Coast Guard renders determinations as set
forth in 2.01-15 and 31.10-25, USCG Regulations (46 CFR
2.10-15, 31.10-25), as to whether a vessel which has suffered a
casualty may proceed from one port to another prior to full
repairs having been effected. The former regulation 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 (OCMI) 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 regulation 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 Coast Guard
Regulations, specifically 46 CFR
2.10-15 which does not distinguish between foreign or domestic
locations, it is the practice of that agency not to issue a
formal permit-to-proceed to a vessel transiting foreign waters
because in such cases its certificate of inspection would have to
be removed resulting in problems in transiting foreign waters
(Customs ruling 112060). Furthermore, the Coast Guard
acknowledges that vessel operators often make casualty reports
for U.S.-flag vessels damaged overseas verbally to the proper
Marine Inspection Office, followed by the required written
report. Since the Coast Guard cannot always send a marine
inspector to a damaged vessel overseas they oftentimes consider
the classification society report and the report of the vessel's
master to determine the required temporary repairs and voyage
restrictions. Id.
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 or partial
repair between foreign locations (e.g., Naples and Haifa) prior
to its being fully repaired in a foreign port and subsequently
sailing to its U.S. port of destination (Customs Rulings 112060,
dated May 21, 1992; 112061, dated June 10, 1992; 112063, dated
June 8, 1992; 112229, dated June 11, 1992, and 113501, dated
October 24, 1995). It is Customs position, as stated in the
aforementioned rulings, that notwithstanding any practice of
verbally reporting foreign casualties to the Coast Guard 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 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 foreign locations in a damaged condition. The mere
submission of a CG-2692 (Report of Marine Accident, Injury or
Death), without accompanying documentation from the appropriate
USCG OCMI authorizing the vessel to proceed in a damaged
condition and specifying what, if any, restrictions apply, will
not suffice for granting remission pursuant to 19 U.S.C.
1466(d)(1).
In regard to the casualty claim under consideration, we note
that The American Bureau of Shipping did survey the vessel in
England and, further, did issue a separate "Certificate of
Fitness to Proceed", thus satisfying the requirements of the
United States Coast Guard in such circumstances. We further find
that the invoiced expenses dedicated to addressing the casualty-related operations are segregated and separately presented.
Accordingly, we find that the claim for remission should be
allowed and the Application for Relief granted.
HOLDING:
Evidence is presented which is sufficient to prove that the
foreign costs for which the applicant seeks relief were
necessitated by a casualty occurrence, thus warranting remission
pursuant to 19 U.S.C. 1466(d)(1).
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch