VES-13-18 OT:RR:BSTC:CCR H184397 DAC
CBP Supervisory Import Specialist
c/o Vessel Repair Unit
U.S. Customs and Border Protection
423 Canal Street, Suite 246
New Orleans, LA 70130
RE: Application for Further Review; Protest No. 2002-11-100044; Vessel Repair Entry No. C20-0040794-3; Matson Navigation Company; M/V MAHI MAHI; V-138E; 19 U.S.C. § 1466; 19 CFR § 4.14. HQ H025902, November 21, 2012; HQ H098068, November 27, 2012.
Dear Sir:
This letter is in response to your September 2, 2011, Application for Further Review of Protest 2002-11-100044, with respect to Vessel Repair Entry No. C20-0040794-3, for the MAHI MAHI. In such letter you state that, “[a]ll protested items not listed below will be approved.” See CBP Vessel Repair Unit letter dated September 2, 2011. We note that regarding the subject items protested, the recent publication of the final judgment of court decisions concerning the HORIZON CRUSADER are particularly relevant to the instant protest for the MAHI MAHI. In particular, we point out the relevant decisions and judgments of the Court of Appeals for the Federal Circuit (“CAFC”) regarding Horizon Lines, LLC v. United States, (docket no. 2012-1163), affirming the Court of International Trade (“CIT”) judgments and decisions regarding Horizon Lines, LLC v. United States, (docket no. 08-cv-00009), concerning the HORIZON CRUSADER.
FACTS:
On November 29, 2007, Matson Navigation Company, submitted Vessel Repair Entry No. C20-0040794-3, for the subject vessel, MAHI MAHI.
U.S. Customs and Border Protection (“CBP”) issued a duty determination letter to Matson Navigation Company that was dated December 3, 2010.
On June 1, 2011, Matson Navigation Company, timely filed the subject Protest No. 2002-11-100044. See 19 U.S.C. § 1514.
The CBP Vessel Repair Unit (VRU) in New Orleans, Louisiana, submitted an Application for Further Review letter to CBP Regulations and Rulings that is dated September 2, 2011.
The CBP VRU submitted an additional letter to CBP Regulations and Rulings requesting advice that is also dated September 2, 2011. In such letter you state that, based upon additional evidence submitted by Matson Navigation Company, “[w]e are now inclined to grant relief for these modification claims because Matson has furnished third-party evidence of the prior condition and permanent incorporation of the items.” Based upon the subject protest and all of the evidence submitted, we agree with your determination to grant such relief.
In the September 2, 2011, CBP VRU Application for Further Review (AFR) of Protest No. 2002-11-100044 letter, you state that, “[a]ll protested items not listed below will be approved,” and you list the following items to be considered for relief.
858 Kyma Shaft Power Meter
Exhibits 67 & 68 KYMA Shaft Power Meter
868 Hull coating – Keel to Deep Loadline
2.1) Exhibit 2, line 6, Other Stat. Survey – Anti Fouling
Exhibit 1(g), SVDR Installation (Simplified Voyage Data Recorder System)
The subject AFR submitted identifies these items, which are labeled as 1, 2 and 3 above. We note that the items under 2 and 2.1 are all associated with the services performed for the anti-fouling system.
We note that prior litigation regarding the anti-fouling system issue has been completed, with respect to the HORIZON CRUSADER. We shall introduce the cases relevant for this issue and discuss them below. As for all of the services performed regarding the anti-fouling systems, relevant court decisions, which involve the HORIZON CRUSADER, include: Horizon Lines, LLC v. United States, (Ct. Int’l Trade), Slip Op. 11-141, 08-cv-00009, November 18, 2011; and Horizon Lines, LLC v. United States, (Fed. Cir.) 2012-1163, November 9, 2012. See also HQ H025902, November 21, 2012; and HQ H098068, November 27, 2012.
ISSUE:
Whether, based upon relevant court judgments, prior CBP rulings, and the evidence submitted, the subject protested items shall be granted.
LAW AND ANALYSIS:
In accordance with CBP Regulations at 19 CFR § 177.12(d)(1)(iv), which provides, in pertinent part:
(d) Exceptions to notice requirements —(1) Publication and issuance not required. The publication and issuance requirements set forth in paragraphs (b) and (c) of this section are inapplicable in circumstances in which a Customs position is modified, revoked or otherwise materially affected by operation of law or by publication pursuant to other legal authority or by other appropriate action taken by Customs in furtherance of an order, instruction or other policy decision of another governmental agency or entity pursuant to statutory or delegated authority. Such circumstances include, but are not limited to, the following:
* * *
(ii) Promulgation of a treaty or other international agreement under the foreign affairs function of the United States;
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(iv) Subject to the provisions of § 152.16 of this chapter, the rendering of a judicial decision which has the effect of overturning the Customs position;
19 CFR § 177.12(d)(1)(ii),(iv). (emphasis added.)
The CBP VRU determined for Vessel Repair Entry No. C20-0040784-3, regarding the MAHI MAHI, that some of the services performed on the MAHI MAHI were dutiable repairs and not modifications.
In regards to items 2 and 2.1, which are the vessel anti-fouling systems, in Horizon Lines v. United States, the Court of International Trade held that all the services performed were modifications, stating the following:
The work performed on the Horizon Crusader was solely undertaken to comply with the Convention, and as a matter of law, any repairs effected were incidental and irrelevant to the nature of the work. Horizon Lines, LLC v. United States, (Ct. Int’l Trade), Slip Op. 11-141, 08-cv-00009, p. 5, November 18, 2011.
Additionally, the Court of International Trade entered judgments including the following:
ORDERED, ADJUDGED and DECREED…
…that judgment be, and hereby is, entered in favor of the Plaintiff [Horizon Lines, LLC];
…that the vessel expenses at issue in this case are non-dutiable;
…that the appropriate United States Customs and Border Protection officials shall reassess the duties at issue in accordance with the judgment of the court;
…that the appropriate United States Customs and Border Protection officials shall refund to Plaintiff all excess duties together with interest as provided by law.
Horizon Lines, LLC v. United States, (Ct. Int’l Trade), Slip Op. 11-141, 08-cv-00009, pp. 5-6, November 18, 2011.
Subsequently, the Court of Appeals for the Federal Circuit affirmed the judgment of the CIT. See Horizon Lines, LLC v. United States, (Fed. Cir.) 2012-1163, November 9, 2012.
Based upon examination and review of the subject entry and protest submitted, the facts and circumstances regarding the modifications required for compliance with the anti-fouling agreement for the HORIZON CRUSADER and the MAHI MAHI are similar and not significantly distinguishable. Therefore, we find the Court’s findings for the HORIZON CRUSADER are applicable to the subject entry and protest for the MAHI MAHI. See also 33 U.S.C. §§ 3801 et seq.; HQ H025902, November 21, 2012; HQ H098068, November 27, 2012. Accordingly, we determine that with respect to the anti-fouling systems, items 2 and 2.1, all of the subject services performed were modifications and not repairs.
In regards to item 1 and 1.1, the Kyma Shaft Power Meter, Matson Navigation Company has submitted a valid protest, evidence and an additional sworn statement from Mr. Olson, an engineering consultant with Albion Marine Engineering, Inc. In such statement, the marine engineering consultant describes his qualifications and experience, as well as explicitly describing the services performed with regards to the Kyma Shaft Power Meter as vessel modifications and not repairs. See Supplement to Protest, May 31, 2011, Exhibit F, and Exhibits 67, 68. Based upon the complete record submitted, we agree with the submitted statement from the marine engineering consultant that all the services performed on the MAHI MAHI regarding the Kyma Shaft Power Meter, items 1 and 1.1, constitute modifications and not repairs.
In regards to item 3, the Simplified Voyage Data Recorder (“SVDR”) installation, Matson Navigation Company has submitted a valid protest, evidence and an additional sworn statement from Mr. Olson, an engineering consultant with Albion Marine Engineering, Inc. In such statement, the marine engineering consultant again describes his qualifications and experience, as well as explicitly describing the services performed with regards to the SVDR as vessel modifications and not repairs. Additionally, the marine engineering consultant states that such installation is required to comply with the SOLAS regulations, (International Convention for the Safety of Life at Sea (SOLAS), Chapter V, on the Safety of Navigation.) See Supplement to Protest, May 31, 2011, Exhibit R, and Exhibit 1(g). See also 19 CFR § 177.12(d)(1)(ii). Based upon the complete record submitted, we agree with the submitted statement from the marine engineering consultant that all the services performed to the MAHI MAHI regarding the SVDR installation, item 3, constitute modifications and not repairs.
Therefore, in accordance with the decisions and judgments of the Courts, by operation of law, the prior CBP decision for Vessel Repair Entry No. C20-0040794-3, for the MAHI MAHI, is modified. See 19 CFR § 177.12. Additionally, any other decisions or rulings inconsistent with these Horizon Lines decisions and judgments are modified by operation of law. See Horizon Lines, LLC v. United States, (Ct. Int’l Trade) Slip Op. 11-141, 08-cv-00009, November 18, 2011. Horizon Lines, LLC v. United States, (Fed. Cir.) 2012-1163, November 9, 2012. See also 33 U.S.C. §§ 3801 et seq.; HQ H025902, November 21, 2012; HQ H098068, November 27, 2012.
Accordingly, we determine that Customs and Border Protection officials shall expedite compliance with the aforementioned published judgments of the Courts and prior CBP rulings. Additionally, we determine that with respect to the subject items protested, sufficient evidence has been submitted to show that all of the subject services performed were modifications and not repairs. Therefore, we determine that the protested items shall be granted in full.
HOLDING:
In conclusion, in accordance with the decisions and judgments of the Courts, 19 CFR § 177.12, and by operation of law, the prior CBP decision for Vessel Repair Entry No. C20-0040794-3, for the MAHI MAHI, is modified. See 19 CFR § 177.12. Additionally, any other decisions or rulings inconsistent with Horizon Lines are modified by operation of law. See Horizon Lines, LLC v. United States, (Ct. Int’l Trade) Slip Op. 11-141, 08-cv-00009, November 18, 2011. Horizon Lines, LLC v. United States, (Fed. Cir.) 2012-1163, November 9, 2012. See also 33 U.S.C. §§ 3801 et seq.; HQ H025902, November 21, 2012; and HQ H098068, November 27, 2012. In sum, the protested items shall be granted in full. Finally, CBP shall expedite complete compliance with the aforementioned published judgments of the Courts and prior CBP rulings.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection