VES-13-18-RR:IT:EC 113585 PH
Chief, Liquidation Section
U. S. Customs Service
P. O. Box 2450
San Francisco, California 94126
RE: Vessel Repair; Application for relief; S/S ARCO JUNEAU,
Voyage CF491; Entry No. C31-0015284-3; Modifications;
Inspection; Cleaning; Parts; Anchor chain; Texaco Marine
Services, Inc. v. United States; T.D. 44359; T.D. 44886;
T.D. 44913; T.D. 45453; 19 CFR 4.14; 19 U.S.C. 1466; 19
U.S.C. 1466(h)(3)
Dear Sir:
This letter is in response to your memorandum dated September 14,
1995, which forwarded for our review an application for relief
from duties relating to the above-referenced vessel repair entry.
Our ruling follows.
FACTS:
The vessel ARCO JUNEAU, a United States-flag vessel owned by
Metaric Corporation and operated by Arco Marine, Inc., arrived at
the port of Valdez, Alaska, on April 12, 1995. A vessel repair
entry was timely filed (April 12, 1995, according to Customs
records). According to the vessel repair entry and other
documents in the file, the vessel underwent certain work at the
Hyundai Mipo Shipyard in Ulsan, Korea.
On July 10, 1995, the vessel operator submitted an application
for relief from duty (dated June 29, 1995) for certain items of
the work done abroad. You request us to review certain items in
the entry and provide you with our determination as to the
dutiability of those items. Those items, with descriptions and
other information from the invoice and other materials in the
file, are listed below:
Item no. Invoice description, etc.
002 Services and Facilities. This item consists
of expenses related to a Gas free certificate,
expenses related to docking and shifting the
vessel, facilities (shore power, shore steam,
fresh water, compressed air, fire main,
refrigeration, fire watches, air conditioning
units cooling water, communications, garbage
and trash removal, crane services, stores,
heat lamps or straps, protective covers (for
bridge electronic equipment) (conceded to be
dutiable), covering passageways and furniture
(conceded to be dutiable), security guard
services, and furnishing a portable
generator), engine room and pump room bilge
cleaning, and transportation.
108 Rudder. The portions of this item in
controversy are stated to consist of the
modification of the rudder by removing the
side shell plating from both sides of the
rudder, machining the area of the forging
which supports the pintle pin, and welding in
a new section of plate with improved geometry.
A drawing, with an approval letter from the
Coast Guard, is submitted in regard to this
item. According to the invoice for this item,
the work included "[g]ouged up and welded on
crack area" and "[d]ismantled rudder and laid
down to dock bottom for repair in sert plate
as necessary". Staging is included in this
item, and the cost of the staging is
segregated from other costs. The cost of
inspection relating to this item is also
segregated. The part of the ABS survey (No.
UL 5475 I) appearing to relate to this item is
not included in the file (i.e., the "Summary
Report of Class Surveys" refers to a number of
suffixes and states that the total pages
(including checksheets) is 44, but the
checksheet for this item is not included in
the file).
329 Engine room bilge. This item is stated to
consist of the permanent mounting of two 100
gallon vertical FRP storage tanks in addition
to the two existing tanks. The item includes
the fabrication and installation of straps and
angle iron support, fabrication of foundation,
fabrication of new piping, hose and tubing,
and hydro testing upon completion of
installation. According to the application
for relief, the additional tanks allow for
storage of bilge water when the vessel is in
restricted waters.
330 Machinery space clean drain overboard pumping
system. This item is stated to consist of
installing owner-furnished piping from
discharge of existing overboard pump to
existing fitting installed in overboard piping
for the fire pump. According to the
application, this system permits the pumping
directly overboard of clean water, rather than
allowing it to drain to the bilge where it
must be processed through the oil/water
strainer.
401 IGS inspection and repairs. The portion of
this item in controversy is stated to consist
of installing level alarm sensors and two
stainless steel bosses on the deck steel "U-lopp" cover for the installation of the level
alarms, as well as the installation of pipe
conduit and mounting brackets, and armored
cable. According to the application, the
purpose of this item was to allow monitoring
the water seal level, which results in a
higher level of safety.
403 IGS piping inspection and repairs. The
portion of this item in controversy is stated
to consist of disconnecting one 20 inch blind
flange on the forward end of the IGS main,
providing adequate ventilation, furnishing
labor to crawl inside the pipe, inspecting and
cleaning the interior of the IGS main deck 20
inch line, 500 feet long, and removing
approximately one ton of deposit (there is a
notation in the invoice indicating that the
total deposit removed was 3 tons). Temporary
ventilation costs are segregated in this item.
According to the application, this cleaning
was not in preparation for coating, it
consisted of cleaning and inspection only.
414 Fire station No. 5. This item is stated to
consist of releasing four angle iron supports
for the fire station hose rack, moving the
hose rack forward 10 feet, reattaching the
angle iron supports to the deck, grinding the
locations affected, and touch-up painting.
According to the application, this work
involved permanent welding. The reason given
for the relocation was to make the hose rack
more accessible (previously, personnel had to
climb over pipe lines while avoiding cross
braces of the accommodation ladder storage
rack).
415 Fire station No. 6. This item is stated to
consist of the installation of straight run
piping with one flanged offsticker, fitting
flanged fire station hydrants at both ends of
crossover, and attaching a new section of
piping to the existing offsticker on the 10
inch fire main. After welding, the
fabrication of the piping section was to be
hot-dip galvanized. The item included the
fabrication and installation of piping
brackets. According to the application, this
work was to allow for laying out fire hoses at
the port and starboard manifold while the
vessel is engaged in cargo operations.
419 Pump room access platform. This item is
stated to consist of extending the existing
walkway approximately four feet toward the
centerline of the vessel. Involved in the
item is the installation of an angle support
and handrail, cutting part of the edge of the
existing walkway, welding the new platform
deck to existing walkway, and coating welded
fabrication and deck plating. According to
the application, the reason for this extension
of the ladder platform was to allow the sensor
for the combustible gas detector to be
serviced (previously no access to the sensor
was readily available).
420 King posts, radar mast, foremast, and IGS mast
riser. The portion of this item in
controversy (C., Forward mast) is stated to
consist of the installation of one padeye at
the top of the forward mast. Staging costs
are segregated in this item. According to the
application, this padeye was installed for the
hook-up of a personnel safety line for people
going aloft for the purpose of maintaining the
whistle and flood lights.
425 Rigging cleats. This item is stated to
consist of installing four owner-furnished
deck cleats at locations on the top of the
forward breakwater, and touching up of the
welded attachments. According to the
application, the purpose of the addition of
the cleats was to allow for safer handling of
the booms during the setup period (when
rigging the booms for handling hoses).
605 Room heaters. This item is stated to consist
of the installation of owner-furnished steam
heaters in oiler #1 staterooms. The item
includes removal of overhauled panels in each
stateroom and one panel in each water closet
space, insulation of tubing, and installation
of stainless steel sheet metal covers over
lines mounted on bulkheads and new entrance
door hold-back hooks and cushions in way of
the new tubing runs. According to the
application, the existing forced air heating
system which provided heat to these rooms was
insufficient to meet heating requirements.
The steam heating system was changed to
incorporate steam heaters in these rooms.
901 Vapor recovery system. This item is stated to
consist of modifying the existing inert gas
system to include a vapor recovery manifold.
According to the application, under the new
system, "[a]s the vessel loads cargo the
vapors will collect in the shipboard piping
system and will flow through a dedicated
manifold connection to a shoreside facility
where the vapors will be incinerated." This
"is soon to be a requirement at the Valdez
Marine Terminal for all tank vessels loading
out of the port of Valdez, and is a
requirement at Pacific Coast ports such as San
Francisco and Long Beach."
Cheung Hae Slop removal. This item is stated to consist
03/15/95 of the receipt and disposal of slop wash
Invoice water, sludge removal and disposal, and
mucking out from No. 5 cargo tank center and
starboard slop tank.
Halla Marine Anchor chain. This item is for the cost of
03/13/95 anchor chain. In the file is a copy of an
Invoice Entry Summary Continuation sheet for "stud
link chain" and "chain & parts, other parts",
with an invoice and entry value the same as
the value of the anchor chain listed in the
referenced invoice.
ISSUES:
Whether the work described in the FACTS portion of this ruling is
dutiable under the vessel repair statute (19 U.S.C. 1466).
LAW AND ANALYSIS:
Initially we note that the vessel repair entry and the
application for relief in this matter were timely filed (see 19
CFR 4.14(b)(2) and 4.14(d)(1)(ii)).
Under 19 U.S.C. 1466:
The equipments, or any part thereof ... 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 to engage in the foreign
or coasting trade, or a vessel intended to be employed in
such trade, shall, on the first arrival of such vessel in
any port of the United States, be liable to entry and the
payment of an ad valorem duty of 50 per centum on the cost
thereof in such foreign country. ...
Section 1466 also provides, generally, for remission or refund of
such duties if it is established that the purchases or repairs
were compelled by stress of weather or other casualty, that the
equipments or repairs were manufactured or produced in the United
States and the labor necessary to install them or make the
repairs was performed by United States residents or members of
the regular crew of the vessel, or that the equipments or
materials or labor were used as dunnage for cargo, or similar
purposes. In addition, section 1466 provides for the exemption
from vessel repair duties for certain materials with respect to a
vessel which arrives in a United States port two years or more
after its last departure from a United States port, and for
certain materials for LASH (Lighter Aboard Ship) barges, or
certain spare parts or materials subject to various specified
conditions. The Customs Regulations issued under section 1466
are found in 19 CFR 4.14.
The Customs Service has issued many rulings applying and
interpreting 19 U.S.C. 1466. See, e.g., ruling 112851, dated
March 22, 1996, copy enclosed. Ruling 112851, describes the
general rules for the determination of what are modifications to
the hull and fittings of a vessel (held not to be dutiable under
section 1466). Generally, qualifying modifications to the hull
and fittings of a vessel involve a permanent incorporation into
the hull or superstructure of a vessel, provide an improvement or
enhancement in operation or efficiency of the vessel, and may not
involve the replacement of a current part, fitting, or structure
which is not in good working order. The LAW AND ANALYSIS portion
of ruling HQ 112851 is incorporated by reference into this
ruling, in regard to its description of the interpretation of
this issue.
Insofar as cleaning operations are concerned, Customs has held
that cleaning operations which remove rust and deterioration or
worn parts, and which are a necessary factor in the effective
restoration of a vessel to its former state of preservation,
constitute vessel repairs. Analogous to Customs position
regarding the dutiability of surveys (described in ruling 112851,
referred to above), Customs has long held that the cost of
cleaning is not dutiable unless it is performed as part of, in
preparation for, or in conjunction with dutiable repairs or is an
integral part of the overall maintenance of the vessel (see
C.I.E.'s 18/48; 125/48; 910/59; 820/60; 51/61; 569/62; and
698/62).
Insofar as the applicability of 19 U.S.C. 1466(h)(3) is concerned
(subsection 1466(h) expired on December 31, 1992, and again
became effective on January 1, 1995, and so is applicable to the
entry under consideration), that provision provides that duties
imposed by subsection 1466(a) shall not apply to "the cost of
spare parts necessarily installed before the first entry into the
United States, but only if duty is paid under appropriate
commodity classifications of the Harmonized Tariff Schedule of
the United States [HTSUS] upon first entry into the United States
of each such spare part purchased in, or imported from, a foreign
country." In a memorandum of May 31, 1995 (File: VES-13-R:IT:C
113291), Customs stated that for treatment under this provision
Customs would require a vessel operator to complete continuation
sheets normally submitted with entries for consumption and attach
them to the vessel entry form. Also according to this
memorandum, Customs stated it would "... apply the provision to
all parts [but not, obviously, to materials or equipments] which
are purchased and installed abroad."
The recent Court decision in Texaco Marine Services, Inc. v.
United States, 44 F. 3d 1539 (Fed. Cir. 1994), is applicable in
this case (see memorandum dated March 3, 1995, from the Assistant
Commissioner of Customs, Office of Regulations and Rulings and
published in the Customs Bulletin of April 5, 1995 (Customs
Bulletin and Decisions, vol. 29, no. 14, page 24), in which
Customs took the position that the decision in that case was
applicable, in its full weight and effect, to all vessel repair
entries filed with Customs on or after the date of that decision
(December 29, 1994)). Customs has considered the effect of
Texaco in several rulings (see, e.g., ruling 226485, dated
February 5, 1996). In ruling 226485, we noted, basically, that
the Court upheld the "but for" test which had been proffered by
Customs in the lower court trial (i.e., the costs involved (post-
repair cleaning and protective coverings) were an integral part
of the dutiable repair process and would not have been necessary
"but for" the dutiable repairs). We noted that the Court
provided clear guidance with respect to the proper interpretation
of 19 U.S.C. 1466, in that it rejected Customs Court and CIT
cases as incorrectly decided if they were inconsistent with the
"but for" test (see American Viking Corp. v. United States, 37
Cust. Ct. 237, C.D. 1830, 150 F. Supp. 746 (1956) (expense of
providing lighting for dutiable repairs); International
Navigation Co. v. United States, 38 Cust. Ct. 5, C.D. 1836, 148
F. Supp. 448 (1957) (transportation expenses for foreign repair
crew to travel to and from an anchored vessel being repaired);
and Mount Washington Tanker Co. v. United States, 1 CIT 32, 505
F. Supp. 209 (1980) (transportation costs for members of a
foreign repair crew performing dutiable repairs)) and explained
how the case of United States v. George Hall Coal Co., 142 F.
1039 (2d Cir. 1906) (see also T.D. 24932 and 134 F. 1003 (1905)),
was consistent with the "but for" test in that the expenses there
were dry-docking expenses which "would have been incurred
irrespective of whether or not dutiable repairs were performed"
(44 F. 3d at 1546).
As we noted in ruling 226485, the decision in Texaco is
dispositive of many vessel repair issues (in that it changes
Customs interpretations of 19 U.S.C. in regard to a "myriad of
foreign repair expenses." In a memorandum dated January 18,
1995, the Assistant Commissioner of Customs, Office of
Regulations and Rulings, described some of these changes (this
memorandum, published in the Customs Bulletin of February 8, 1995
(Customs Bulletin and Decisions, vol. 29, no. 6, page 59) was
modified in other respects by the March 3, 1995, memorandum from
the Assistant Commissioner (see above)). According to the
January 18, 1995, memorandum:
... [W]e currently do not consider the following foreign
costs dutiable under the vessel repair statute: air, crane,
drydocking charges, electricity, travel/transportation,
launch use, lodging, security and staging. Absent these
costs being incurred pursuant to events such as a regularly
scheduled survey or in conjunction with work that would
otherwise be nondutiable or remissible (e.g., a modification
or casualty), they would undoubtedly constitute [dutiable]
"expenses of repairs" under the "but for" test discussed
above. * * * We emphasize that this list is not all
inclusive; other foreign costs not herein discussed should
undergo the same scrutiny [i.e., scrutiny to ensure
consistency with the "but for" test].
The LAW AND ANALYSIS portion of ruling HQ 226485, and the above-referenced January 18 and March 3, 1995, memorandums from the
Assistant Commissioner (a copy of each is enclosed for your
convenience) are incorporated by reference into this ruling, in
regard to their description and interpretation of this issue
(i.e., the applicability of Texaco).
The applicant claims that items 108 (portions only), 329, 330,
401 (portions only), 414, 415, 419, 420 (portions only), 425,
605, and 901 are non-dutiable, as modifications to the hull and
fittings of the vessel. Item 108 is dutiable because the invoice
refers to work which appears to be repairs (i.e., as noted in the
FACTS portion of this ruling, the work included "[g]ouged up and
welded on crack area" and "[d]ismantled rudder and laid down to
dock bottom for repair in sert plate as necessary"). In the
absence of evidence to the contrary (e.g., the specific part of
the ABS survey, referred to in the FACTS portion of this ruling,
could possibly establish that there were no repairs involved in
this work, but that part of the ABS survey is not included in the
file). We note that in ruling 110639 (invoice item 108 D),
similar work was held to be non-dutiable as a modification, but
in that case there was no evidence of dutiable repairs. Of
course, under the "but for" test in Texaco, as described above,
the costs for staging and inspection associated with this item,
even though segregated, would be dutiable.
Item 329 is non-dutiable, as the permanent mounting of two FRP
storage tanks in addition to the two existing tanks (see United
States v. Admiral Oriental Line et al., 18 CCPA 137, T.D. 44359
(1930) (installation of a steel swimming tank held not to a
dutiable repair under 19 U.S.C. 1466); and Admiral Oriental Line
v. United States, T.D. 45453 (1932) (enlarging of steel emergency
generator house in order to house additional machinery held not
to be dutiable under section 1466 as an addition to the hull and
fittings of the vessel)). We note that there is no evidence that
the existing tanks were defective or in need of repair or
replacement and we note that the new tanks were installed in
addition to the existing tanks (see discussion of modifications
in ruling HQ 112851 - qualifying modifications may not involve
the replacement of a current part, fitting, or structure which is
not in good working order).
Item 330 is non-dutiable, as the permanent installation of piping
between the existing overboard pump to the existing overboard
piping for the fire pump (see Admiral Oriental Line v. United
States, T.D. 45453 (1932) (installation of a new independent
filling line to the fresh-water tank, necessary because water
obtained at a named port was satisfactory for boiler purposes but
not for drinking purposes so that a separate and independent
filling line was necessary, held not to be dutiable under 19
U.S.C. 1466 as an addition to the hull and fittings of the
vessel). We note that there is no evidence that the work was to
replace defective piping and we note that the new piping added a
new feature (permitting the pumping of clean water directly
overboard).
The portion of item 401 in controversy (installation of level
alarms) is non-dutiable as an addition to the hull and fittings
(see ruling 112972, January 4, 1994, invoice item 904
(installation of a new gas detection sensor in pump room and a
monitor in engine room console held non-dutiable on the same
basis)).
Item 414 (disconnection and reattachment at a new location of the
fire station hose rack) is non-dutiable as an alteration to the
hull and fittings (see ruling 112972, invoice item 513
(disconnection and relocation of ballaster for flood lights held
non-dutiable on the same basis)).
Item 415 (installation of piping between fire station hydrants
and offsticker) is non-dutiable as an addition to the hull and
fittings on the same basis as item 330 above.
Item 419 (extension of the existing pump room access platform) is
non-dutiable as a modification or alteration to the hull and
fittings of the vessel (see above, see also ruling 112641, March
21, 1996, invoice items 427 (enlarging of life raft platform held
non-dutiable) and 429 (extension of catwalk held non-dutiable)).
The portion of item 420 in controversy (installation of a padeye
at the top of the forward mast) is non-dutiable as an addition to
the hull and fittings of the vessel (see ruling 112553, February
16, 1993, invoice item 426, in which installation of bracket with
pad eye to kingposts was held non-dutiable on this basis).
Item 425 (installation of rigging cleats) is non-dutiable as an
addition to the hull and fittings (see Abstract 18861 (1932
protest decision of the 3rd Division of the Customs Court,
Admiral Oriental Line) holding that installation of teakwood hand
rails was a non-dutiable addition to the hull and fittings);
C.I.E. 1294/58 (installation of "MacGregor" hatches held non-dutiable on this basis); and ruling 112454, March 31, 1993,
invoice item 514 (installation of pad-eyes held non-dutiable on
this basis)).
Item 605 (installation of steam heaters in staterooms) is non-dutiable as an alteration or modification to the hull and
fittings (see E.E. Kelly & Co. v. United States, T.D. 44913
(1931) (permanent installation of lavatory and deck-chair
compartments for storing deck chairs held to be non-dutiable on
this basis), and Admiral Oriental Line v. United States, T.D.
44886 (1931) (installation of heating coils in the deep tanks of
vessels held to be non-dutiable on this basis)).
Item 901 (installation of a vapor recovery manifold system) is
nondutiable as an addition to the hull and fittings of the vessel
(see ruling 112553, invoice item 912-6, in which the installation
of a vapor recovery manifold was held non-dutiable on this
basis).
The applicant claims that the portion in controversy in item 403
(disconnecting one end of the IGS main, providing ventilation,
and crawling inside pipe to inspect and clean the interior and
remove deposits) and the work described in the Cheung Hae
03/15/95 invoice (slop removal) are non-dutiable as consisting of
cleaning and inspection only. As stated above, Customs has long
held that the cost of cleaning is not dutiable unless it is
performed as part of, in preparation for, or in conjunction with
dutiable repairs or is an integral part of the overall
maintenance of the vessel (see, in addition to the C.I.E.'s cited
above for this proposition, ruling 111730, September 19, 1991,
and American Mail Line, Ltd. v. United States, 35 Cust. Ct. 142,
C.D. 1735 (1955) (sweeping and cleaning the holds of a vessel
held non-dutiable); and Northern Steamship Co., Inc. v. United
States, 54 Cust. Ct. 92, C.D. 2514 (1965) (scraping and cleaning
grain, dirt, and other material (including, but only
incidentally, rust) from the Rose Boxes (iron boxes containing
perforations and fitted at the end of bilge suctions in order to
prevent the pipes from being obstructed with solid matter) and
removal of the material held non-dutiable as cleaning not related
to a dutiable repair)).
In the case of item 403, we note that there are other portions of
this item (relating to IGS piping inspection and repairs) which
are clearly dutiable (and which are conceded to be dutiable by
the applicant). We note that the ABS Survey worksheet and other
information which could possibly clarify whether the portion of
item 403 in controversy consisted of work performed in
conjunction with dutiable repairs (ABS Report UL 5475-F) is not
included in the file. Because of the presence of these dutiable
repairs in item 403 which may be related to the cleaning in
controversy, and because of the absence of evidence which could
possibly clarify the matter, we conclude that the portion of this
item in controversy is dutiable.
In the case of the work described in the Cheung Hae invoice,
there is no indication that this work was performed in
conjunction with repairs (see invoice items 701-703, concerning
tank repairs, and note that those items provide separately for
cleaning (referring to invoice item 005)). Therefore, we
conclude that this item is non-dutiable (see above authorities in
regard to cleaning and, in particular, ruling 111730).
The applicant claims that the cost in the Halla Marine 03/13/95
invoice (purchase of an anchor chain) is exempt from the 50% duty
in 19 U.S.C. 1466(a) under section 1466(h)(3), citing the above-referenced May 31, 1995, memorandum (113291). The May 31, 1995,
memorandum defines a "part", for purposes of section 1466(h), as
"... something which does not lose its essential character or its
identity as a distinct entity but which, like materials, is
incorporated into a larger whole." The definition also states
that "[i]t would be possible to disassemble an apparatus and
still ... readily identify a part." An anchor chain meets this
definition (it does not lose its essential character or identity
but is incorporated into a larger whole and it would be possible
to disassemble an apparatus and still readily identify the anchor
chain) (see also ruling 112202, May 20, 1992, invoice item 14,
holding that an anchor chain kit may qualify for treatment under
section 1466(h)(2)). Therefore, if the other requirements
(proper filing of a vessel repair entry and appropriately
completed continuation sheets for consumption entries and payment
of applicable duty) for treatment under section 1466(h)(3) are
met (we note that the vessel repair entry and continuation sheets
have been filed), this item is dutiable under section 1466(h)(3)
and is not subject to the 50% duty under section 1466(a).
The applicant claims that item 002 (services and facilities) is
subject to apportionment (or proration) on the basis of dutiable
and non-dutiable foreign costs or duty-free as electricity, air,
water, telephone, etc.; staging, crane service, or rigging;
cleaning; drydocking; charges for other than equipment, repairs,
or labor in connection therewith; or consumables (the applicant
concedes that the portions of this item consisting of protective
covering (C.14 and C.15) are dutiable). We have taken the
position that charges such as those in controversy in this item,
basically consisting of drydocking and related charges, are
subject to the same apportionment rule Customs has long followed
for gas-freeing costs (see C.I.E. 1188/60) (see ruling 226826,
May 2, 1996, invoice item 002). Therefore, the costs in this
item are subject to apportionment (or proration) on the basis of
dutiable and non-dutiable foreign costs.
(As noted above, the decision in Texaco is applicable to this
entry. Therefore, portions of many of the items relating to
dutiable repairs (e.g., staging) may be dutiable under the "but
for" test approved in that case. In this regard, you should be
guided by that case, the rulings regarding this issue referred to
in this ruling (copies provided), and the January 18 and March 3,
1995, memorandums from the Assistant Commissioner referred to
above.)
HOLDING:
Among the items about which you requested advice, items 329, 330,
401 (including only the portion in controversy), 414, 415, 419,
420 (the portion in controversy), 425, 605, 901, and the Cheung
Hae 03/15/95 invoice are NON-DUTIABLE. Items 108 (the portion in
controversy, including staging) and 403 (the portion in
controversy), are DUTIABLE. The cost in the Halla Marine
03/13/95 invoice qualifies as the cost of a spare part within the
meaning of 19 U.S.C. 1466(h)(3) and, provided that the
requirements in that provision are met (see above), this item is
dutiable under section 1466(h)(3) and is not subject to the 50%
duty under section 1466(a). The costs for the portions of item
002 in controversy are subject to apportionment (or proration) on
the basis of dutiable and non-dutiable foreign costs.
Sincerely,
William G. Rosoff Chief
Entry and Carrier Rulings Branch
Enclosures