VES-13-18:RR:IT:EC 116088 TLS
Chief, Vessel Repair Unit
Bureau of Customs and Border Protection
423 Canal Street, Room 303
New Orleans, Louisiana 70130
RE: Vessel Repair Entry No. C20-0056536-9; M/V APL SINGAPORE; V-71; 19 U.S.C. § 1466; 19 CFR 4.14.
Dear Mr. Seale:
This is in response to your memorandum dated November 25, 2003, forwarding an application for relief for our review filed in connection with the M/V APL SINGAPORE, as noted above. Our findings are set forth below.
FACTS:
The M/V APL SINGAPORE is a U.S.-flag vessel operated by American Ship Management, LLC, who is applying for relief. On August 29, 2003, the M/V APL SINGAPORE arrived in the United States at Los Angeles. A vessel repair entry was filed on September 4, 2003. Prior to arriving in the United States, the vessel had the following work performed: sludge removal; trash disposal; and general engine room cleaning. These activities took place in China from August 3, 2003 to August 18, 2003, and are documented in accompanying invoices, receipts, and Customs Form 226, dated September 4, 2003.
ISSUE:
Whether the costs for which the applicant seeks relief are dutiable under 19 U.S.C. § 1466.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466 (19 U.S.C. § 1466), provides in pertinent part for the payment of an ad valorem duty of 50 percent of the cost of "…equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States…"
Item No. 1 in the applicant’s November 24, 2003 letter to your office provides details about the sludge removal and subsequent sale of the sludge. This work is documented on a receipt entitled “Master’s Receipts/Disbursements” from American Ship Management, dated August 15, 2003. The applicant notes that the sludge is a combination of petroleum based liquids that come from either unburnable fuel oil in the ship’s engine, lubricant leaks from the vessel’s machinery, or waste from oil changes performed on the vessel’s machinery. The applicant states that the sludge is now sold to recycling companies for profit, reversing an industry trend where vessel companies paid recycling companies to accept sludge from the vessels.
As the applicant notes, we have previously ruled on the subject of the dutiable status of sludge removal. In Customs ruling 111039 (October 4, 1990), we held that sludge removal is analogous to a cleaning operation when unaccompanied by any repair work, and is therefore non-dutiable under section 1466. We also found in another case that sludge removal is non-dutiable when done irrespective of any dutiable repairs. See Customs ruling 114289 (June 4, 1998). In this case, the record does not show that any dutiable repairs were performed on the vessel during the time the sludge removal was done. Thus, in accordance with 111039 and 114289, we find that the sludge removal done in this case is non-dutiable. Furthermore, the subsequent sale of the removed sludge is beyond the ambit of 19 U.S.C. § 1466.
Item No. 2 in the applicant’s letter concerns the general cleaning done on the vessel, as noted on an invoice from Zong’an Marine Supply Company, Ltd., dated August 18, 2003. Item No. 3 concerns garbage disposal service performed on August 19, 2003, as indicated on a document entitled “Certificate of Garbage Disposal Service” from Shenzhen Hopeland Company, Ltd. As we noted above, we have previously ruled that cleaning operations are not subject to duty unless performed in preparation for or as an integral part of dutiable vessel repairs. See Customs ruling 111039, supra, citing C.D. 2514 (February 16, 1965). Thus, these operations are non-dutiable under section 1466.
HOLDING:
The application for relief is hereby granted in full as detailed in the LAW AND ANALYSIS section of this ruling.
Sincerely,
Glen E. Vereb
Chief
Entry Procedures and Carriers Branch