VES-13-18-OT:RR:BSTC:CCI H186595 DAC
CBP Supervisory Import Specialist
c/o Vessel Repair Unit
Attn: Carlos Bogran
423 Canal Street, Suite 246
New Orleans, LA 70130
RE: Vessel Repair Entry No. C20-0040623-4; Protest 2002-11-100037; Marine Casualty; M/V MARY ANN HUDSON; Arrival May 14, 2009; 19 U.S.C. § 1466(d)(1); 19 CFR 4.14; 46 CFR § 4.03-1.
Dear Sir:
This is in response to your memorandum dated September 22, 2011, forwarding an Application for Further Review of Protest No. 2002-11-100037, dated April 6, 2011. Our determination is set forth below.
FACTS:
The M/V MARY ANN HUDSON, IMO No. 7821154, is a U.S.-flag vessel operated by US United Ocean Service, LLC, of Tampa, Florida. The vessel underwent foreign shipyard work during March and April 2009. Subsequent to the completion of the work the vessel arrived in the United States at the port of Houston, Texas, on May 14, 2009. A vessel repair entry was timely filed. An application for relief dated August 12, 2009, with supporting documentation was received by your office claiming remission due to a casualty pursuant to 19 U.S.C. § 1466(d).
On March 9, 2009, the matter giving rise to the casualty claim was discovered during testing of the steering gear in Beira, Mozambique, by the Master and First Engineer of the vessel. It is reported that during testing, the Master and First Engineer heard an unusual noise coming from the steering gear. The First Engineer called the Chief Engineer to listen to and observe the noise, and the decision was made to delay sailing and further investigate the cause of the noise. The Master, Chief Engineer, First Engineer, and the vessel’s shore management consulted together and decided it would be necessary to obtain outside assistance for repairs. Thereafter, notice was sent to the American Bureau of Shipping (ABS) and the United States Coast Guard (USCG).
The M/V MARY ANN HUDSON is enrolled in the Alternative Compliance Program (ACP), and in regards to the ACP the USCG Navigation and Vessel Inspection Circular (NVIC) No. 02-95 Change-2, 3.7, provides in pertinent part:
* * *
“The Coast Guard will conduct marine casualty investigations as authorized and required by federal law. Notwithstanding requirements imposed by the classification society to report damage of classed vessels; owners, agents, masters or persons in charge of an ACP vessel involved in a marine casualty are required to report and shall provide that report directly to the Coast Guard as required by Title 46 CFR Part 4.05-1. Following any marine casualty, enrolled vessel owners may have the ACS assess the materiel condition of the affected vessel and approve repairs. The OCMI [Officer in Charge, Marine Inspection] in whose zone the reportable casualty occurred may take into account the classification society’s repair recommendations. However, the OCMI retains final authority to review and approve temporary repair proposals in cases in which damage to the vessel involves or is likely to result in a pollution incident, or poses a hazard to the safety of a U.S. navigable waterway. Generally, OCMIs should accept the classification society’s approval of recommended permanent repairs when the vessel no longer poses an immediate pollution or navigation safety threat.”
NVIC No. 02-95 Change-2, 3.7, May 5, 2006. (emphasis added.)
On March 10, 2009, an ABS Senior Surveyor from Durban, South Africa and a Dormac shipyard project manager arrived in Beira, Mozambique to attend to the vessel. After they inspected the vessel and following their recommendations, the vessel’s crew made temporary repairs to the steering gear so the vessel could safely transit to Dormac shipyard in Durban, South Africa. On March 12, 2009, the vessel departed Beira, Mozambique, with approval of ABS for Durban, South Africa. On March 14, 2009, the vessel arrived off Durban and anchored while awaiting clearance to enter the port. On March 17, 2009, the vessel proceeded into port and was moored alongside Dormac shipyard.
The vessel was ballasted to allow access to the rudder and rudderstock for examination and removal. The rudderstock was moved to the shipyard machine shop for inspection. The rudderstock was found to be bent in the lower taper area. The proposed procedures for repairs were submitted to the Engineering department of the ABS office in Houston, Texas for approval. After the approvals of the repair procedures were received from ABS, the repairs commenced. ABS required that the parts to be used to repair the damage be approved by ABS. Accordingly, such “ABS approved” parts were obtained by Dormac. After completion of the damage repair work, the steering gear was tested and found to be in good working order. The agent issued a Notice of Readiness on April 20, 2009.
The petitioner has submitted documents in support of their claims, to include the following:
Statement of the Master, which describes the events and the required repairs;
Statement of the Chief Engineer, which describes the events and the notifications to ABS and the USCG;
Report of Marine Accident, form CG-2692;
Vessel engine log and vessel deck log;
ABS survey reports from Beira, Mozambique and Durban, South Africa;
Drawings showing the damaged areas;
Statement of Stephen Seal, Manager, Major Maintenance, United Ocean Services, which describes the damage.
Petitioner has claimed that five categories of invoice expenses are not dutiable, to include the following:
1. Total Dormac Costs for Damage Repairs
2. Costs for ABS Review & Damage Surveys
3. Costs for required ABS Surveys
4. Agency Fees in Durban
5. U.S. Residents services
Petitioner claims that the expenses detailed in those invoice items were related to addressing a casualty incurred by the vessel and that such expenses should be granted remission from duties. In a submission dated August 11, 2009, the petitioner claims that “the Rudder and Steering Gear damage was caused by unknown underwater source and only the necessary damage repairs were performed which were for the safety and seaworthiness of the vessel.” Petitioner further claims that “we believe the costs incurred to repair the casualty damage are subject to remission pursuant to 19 U.S.C. 1466(d).”
ISSUE:
Whether the documentary evidence submitted is sufficient to find that the foreign costs for which the petitioner 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(a), 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..."
Section 1466(d)(1) provides that the Secretary of the Treasury is authorized to remit or refund such duties imposed under § 1466(a) 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 CBP’s position that “port of destination” means a port in the United States. 19 CFR § 4.14(h)(2)(i).
The relevant statute, 19 USC § 1466(d), provides that to qualify for remission the petitioner must show a casualty occurrence and that the foreign repairs are necessary to secure the safety and seaworthiness of the vessel to reach the port of destination.
The term “marine casualty” is explicitly provided for and defined in the Code of Federal Regulations, at 46 CFR § 4.03-1, which provides, in pertinent part:
“Marine casualty or accident means —
(a) Any casualty or accident involving any vessel other than a public vessel that—
(1) Occurs upon the navigable waters of the United States, its territories or possessions;
(2) Involves any United States vessel wherever such casualty or accident occurs
* * *
(b) The term “marine casualty or accident” applies to events caused by or involving a vessel and includes, but is not limited to, the following:
* * *
(2) Any occurrence involving a vessel that results in—
* * *
(ix) Reduction or loss of a vessel's electrical power, propulsion, or steering capabilities;
(x) Failures or occurrences, regardless of cause, which impair any aspect of a vessel's operation, components, or cargo;
(xi) Any other circumstance that might affect or impair a vessel's seaworthiness, efficiency, or fitness for service or route; or
(xii) Any incident involving significant harm to the environment.
* * *
46 CFR § 4.03-1. 70 Fed. Reg. 74669, Vol. 70, No. 241, December 16, 2005.
Damage to the underwater parts of vessels is normally not readily detectable or susceptible of definite proof respecting the date and place of occurrence. Therefore, relief under § 1466(d)(1) may be granted in the absence of proof that the vessel concerned was grounded, struck bottom or her propeller contacted some floating object capable of causing damage. (See C.I.E. 1202/59) Additionally, we note there is no evidence that the subject damage occurred prior to the relevant voyage of the subject vessel in this instance.
The United States Coast Guard (USCG) is the controlling agency that determines questions of a vessel’s fitness to proceed from a foreign port once damage has been noted. The procedure by which the USCG renders such a determination is set forth in §§ 2.01-15 and 31.10-25, USCG Regulations (46 CFR §§ 2.01-15, 31.10-25). The former 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 states that with respect to tank vessels, “No extensive repairs shall be made without the knowledge of the Officer-In-Charge, Marine Inspection.”
Notwithstanding the clear wording of the above USCG Regulations, specifically 46 CFR § 2.01-15, which does not distinguish between foreign or domestic locations, it is the practice of the USCG not to issue a formal permit-to-proceed to a vessel transiting foreign waters because its certificate of inspection would have to be removed resulting in problems in transiting foreign waters. (See Customs ruling HQ 112060, dated May 21, 1992). Furthermore, the USCG acknowledges that vessel operators may submit verbal casualty reports for U.S.-flag vessels damaged overseas to the proper USCG Marine Inspection Office, which are followed by the required written report. Since the USCG cannot always send a marine inspector to a damaged vessel overseas they often consider the classification society report and the report of the vessel’s master to determine the required temporary repairs and voyage restrictions. (See Customs ruling HQ 112060, dated May 21, 1992).
CBP has previously addressed the sufficiency of evidence in casualty claims such as this where a vessel that has been damaged while overseas proceeds in a state of disrepair between foreign locations prior to its being repaired in a foreign port and subsequently sails to its U.S. port of destination. (See Customs rulings HQ 112060, dated May 21, 1992; HQ 112061, dated June 10, 1992; HQ 112063, dated June 8, 1992; HQ 112229, dated June 11, 1992, and HQ 113501, dated October 24, 1995). It is CBP’s position, as stated in the cited rulings, that notwithstanding any practice of verbally reporting foreign casualties to the USCG 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 an authorized 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).
We note that the Petitioner has submitted all of the documentary as required by 19 CFR § 4.14(i)(1)(i-vi), which provides, in pertinent part:
“Each Application for Relief must include copies of:
(i) Itemized bills, receipts, and invoices for items shown in paragraph (e) of this section. The cost of items for which a request for relief is made must be segregated from the cost of the other items listed in the vessel repair entry;
(ii) Photocopies of relevant parts of vessel logs, as well as of any classification society reports which detail damage and remedies;
(iii) A certification by the senior officer with personal knowledge of all relevant circumstances relating to casualty damage (time, place, cause, and nature of damage);
(iv) A certification by the senior officer with personal knowledge of all relevant circumstances relating to foreign repair expenditures (time, place, and nature of purchases and work performed);
(v) A certification by the master that casualty-related expenditures were necessary to ensure the safety and seaworthiness of the vessel in reaching its United States port of destination; and
(vi) Any permits or other documents filed with or issued by any United States Government agency other than CBP regarding the operation of the vessel that are relevant to the request for relief.
* * *
19 CFR § 4.14(i)(1)(i-vi).
Moreover, we note that the Petitioner has elected to submit additional information and documentation in accordance with 19 CFR § 4.14(i)(2).
Upon reviewing the record in its entirety, we have determined that documentation submitted in accordance with the “justifications for relief from duty” and the “general procedures for seeking relief” at 19 CFR § 4.14(h) and (i) are sufficient to support petitioner’s claim. This evidence establishes that the American Bureau of Shipping (ABS), a marine surveyor authorized to act on behalf of the USCG pursuant to the Alternative Compliance Program (ACP), permitted the subject vessel to proceed from Beira, Mozambique, to Durban, South Africa, for repairs required to secure the vessel’s safety and seaworthiness. Moreover, the definition provided by the regulations issued in 2005, at 46 CFR § 4.03-1, define “marine casualty” as “any occurrence involving a vessel that results in – (ix) Reduction or loss of a vessel’s … steering capabilities.” In this instance, the Petitioner has submitted the documentary evidence required by the regulations and has presented sufficient evidence to show the vessel experienced such a “casualty.” The Petitioner has also provided evidence to show the subject repairs were required for the safety and seaworthiness of the vessel to reach her port of destination. Therefore, the petitioner’s request for remission pursuant to 19 U.S.C. § 1466(d)(1) should be granted.
HOLDING:
The Petitioner has submitted documentary evidence in accordance with 19 CFR § 4.14(i)(1), that is sufficient to prove that the foreign costs for which the petitioner seeks relief were necessitated by a casualty occurrence, thus warranting remission pursuant to 19 U.S.C. § 1466(d)(1). Therefore, the petition is granted in its entirety.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Immigration Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection