VES-13-18-CO:R:IT:C 111976 MLR
Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90731
RE: Petition for Review on Vessel Repair Entry No. 779-1515363-7;
Alleged Casualty; BARGE ZBO-260
Dear Sir:
This is in response to your memorandum of October 28, 1991,
regarding the petition for review of Headquarters Ruling No.
111681 RAH, submitted by Mr. T.W. Kennard, of B.A. McKenzie, on
behalf of Washington Marine Service.
FACTS:
The record reflects that BARGE ZBO-260 (hereinafter
"BARGE") departed Seattle, Washington, on December 17, 1990, in
ballast and under tow by the tug CASCADE destined for Port Moody,
British Columbia (B.C.). On arrival at Port Moody, B.C., sea
water was found in tank #1 port. The barge was taken to the
nearest available repair facility in Vancouver, B.C. for repairs.
The statement by the vessel's master, Rodney G. Gullickson,
provides in part:
To the best of my knowledge and belief, when
the tug CASCADE put towing lines on the Barge
ZBO 260, the barge was in seaworthy
condition, with no indication of any hull
damage which would allow water to enter the
Barge.
The first I became aware of any damage to
the Barge was after arrival at Port Moody, at
time of inspection of the tanks. Upon
discovery of the damage, it was obvious that
the vessel could not safely take on its
intended cargo.
To be able to secure repairs necessary to
permit the vessel to complete the intended
voyage, it was necessary to move the vessel
to the nearest repair facility at Vancouver,
B.C. This was done, and the repairs were
accomplished.
To the best of my knowledge and belief, the
repairs were required to make the vessel
seaworthy and to enable it to complete its
intended voyage.
To the best of my knowledge and belief, the
damage to the hull of the Barge ZBO 260 was
caused by the striking of a submerged object
while the barge was on route from Seattle,
Washington to Port Moody, B.C. on the above
described voyage.
The barge arrived at the Port of Tacoma, Washington, on
December 23, 1990; after additional time to submit a complete
entry was granted, it was filed on March 22, 1991, along with an
application for relief seeking remission for: (1) ABS Survey -
repairs, (2) Key Marine Industries, Ltd. - material and labor,
and (3) Westward Shipping - attending repairs.
Customs Headquarters Ruling No. 111681 determined that the
master's statement was persuasive, but did not conclusively
establish the occurrence of a casualty, and that the vessel's
logs did not indicate heavy weather. The Westward Shipping
Ltd., Invoice was found void, because the repairs were only
referred to as "attending repairs". Therefore, the application
for relief did not sustain the finding of a casualty as required
under 19 U.S.C. 1466(d)(1).
In its petition for review, B.A. McKenzie submits: (1) a
letter from Washington Marine Services, stating that the
vessel's logs do indicate high winds, and that the barge was
undamaged when it left Seattle, Washington; (2) a statement from
Westward Shipping Ltd., indicating that only necessary repairs
were made to enable the vessel to continue the scheduled voyage,
and that the nature of the damage could have caused a pollution
incident if towed; (3) a statement from Key Marine Industries
Ltd., indicating that it performed only those repairs to make
the vessel seaworthy; (4) a letter from M.D.A. Marine Associates
(Vancouver) Ltd., indicating that the damage was considered to be
consistent with the alleged cause (i.e. striking a floating
object), and that the repairs had to be made in Vancouver, B.C.;
and (5) a statement from the American Bureau of Shipping,
indicating that the repairs were considered necessary prior to
departing Vancouver, B.C., for the continued validity of the load
line certificate.
ISSUE:
Whether sufficient evidence is presented to sustain the
finding that the repairs to the BARGE were necessitated by stress
of weather or other casualty, thus making duties thereon
remissible pursuant to 19 U.S.C. 1466(d)(1).
LAW AND ANALYSIS:
Title 19, United States Code, section 1466(a), provides in
pertinent part for payment of duty in the amount of 50 percent ad
valorem on 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 be employed in such
trade.
Paragraph (1), subsection (d) of section 1466 provides that
duty may be remitted if good and sufficient evidence is furnished
establishing that the vessel was compelled by stress of weather
or other casualty to put into a foreign port to make repairs to
secure the safety and seaworthiness of the vessel to enable her
to reach her port of destination. Thus, it is necessary that in
order to qualify for duty remission, the party seeking relief
must show three elements: (1) the occurrence of a casualty; (2)
that the repair was necessary for the safety and seaworthiness of
the vessel to enable it to reach its port of destination; and,
(3) remission is sought for only those repairs necessary to
enable the ship to do so. Additional repairs which are not
directly related to the foregoing elements are not subject to
remission.
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, explosion 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 a casualty causing event, we must consider the
repair to have been necessitated by normal wear and tear (ruling
letter 105159, September 8, 1983).
Section 4.14(d)(1)(iii)(A-G), Customs Regulations [19 CFR
4.14(d)(1)(iii)(A-G)], sets forth the evidence which shall be
included for relief from duties under 19 U.S.C. 1466(d). That
evidence includes all itemized invoices, relevant parts of the
vessel's logs, a certification by the master of the facts
relating to the relief sought, including details of the claimed
stress of weather or other casualty, and a certification by the
master that the repairs were necessary for the safety and
seaworthiness of the vessel.
Owing to factors peculiar to the operation of LASH barges,
special standards of evidence are provided in the Customs
Regulations when casualty claims are made concerning such vessels
under section 1466(d)(1). Section 4.14(d)(1)(iii)(G), Customs
Regulations, provides that in lieu of the evidence required by
paragraphs (B), (D), (E), and (F), evidence may be submitted
showing that: (1) the barge was inspected immediately prior to
departure from the United States, (2) it was then found to be in
seaworthy condition, (3) the damage was discovered during the
course of the foreign voyage, and (4) the repairs performed were
necessary for the safety and seaworthiness of the barge to enable
it to reach its U.S. port of destination.
Although the vessel involved in the present matter is not a
LASH barge, the standards of proof applicable to those barges may
be applied. The regulations specifically applicable to LASH
barges were promulgated because the barges are unmanned and it is
not always possible to precisely document the cause of damage.
The BARGE was also unmanned while in tow. Thus, evidence that
the barge was seaworthy upon U.S. departure, encountered heavy
weather while in tow, and was found to be damaged upon arrival in
a foreign port is sufficient to show a bona fide casualty.
Customs determined that it would establish no specific rules
as to what evidence satisfies the statutory requirements of "good
and sufficient evidence of a casualty" in the case of a LASH
barge. T.D. 82-227. It noted, however, that proper inspection
of the vessel is required prior to loading in the United States
and also at the point at which damages is discovered overseas.
Id. It suggested that proper inspection records, kept in the
ordinary course of business by a vessel owner or operator, would
meet the evidentiary requirements. Id. Documents executed after
the fact and/or by persons with no first-hand knowledge of the
actual condition of barges immediately prior to foreign departure
are of no probative value, and are insufficient for the purpose
for which they are submitted.
Because the master's statement was prepared subsequent to
the repairs performed, it is not sufficient to attest to the
seaworthiness of the barge prior to its departure from the United
States. However, relief may still be granted if the evidentiary
requirements of 19 CFR 4.14(d)(1)(iii)(A-E) are satisfied.
In light of C.I.E. 1202/59, Customs Headquarters Ruling No.
111681 did find the master's statement persuasive that the
vessel suffered hull damage during the voyage in question. In
C.I.E. 1202/59, we held that damage to underwater parts of
vessels is usually not dutiable or susceptible of definite proof
respecting the date and place of occurrence. We also held that
relief under 19 U.S.C. 1466(d)(1) is warranted in the absence
of evidence showing "that the vessel concerned was grounded,
struck bottom, or her propeller contacted some floating object
capable of causing damage, prior to commencement of the voyage."
Therefore, the master's statement satisfies paragraphs (D) and
(E) of 19 CFR 4.14(d)(1)(iii). Further, after reexamining the
record, the vessel's logs do support the master's statement that
the vessel encountered heavy weather, thus satisfying paragraph
(B).
The Westward Shipping Ltd., Invoice submitted with the
application for relief did not adequately segregate the cost of
those items for which relief is sought [as required by 19 CFR
4.14(d)(1)(iii)(A)] because it lacked any description of the work
performed on the vessel. The invoice merely contained a
recapitulation of the cost of various items performed including
"attending repairs." However, the information submitted with the
petition for review is adequate for us to determine that the
"attending repairs" performed by Westward Shipping Ltd. were
exclusively for the hull damage in question, and that the
minimal work necessary to secure the safety and seaworthiness of
the vessel was performed. Furthermore, the additional statements
by Washington Marine Services, Inc., Key Marine Industries Ltd.,
M.D.A. Marine Associates (Vancouver) Ltd., and the American
Bureau of Shipping, Vancouver, B.C., Surveyor, provide good and
sufficient evidence to prove the occurrence of a casualty, that
the repair was necessary for the safety and seaworthiness to
enable the ship to reach its port of destination; and, that
remission is sought for only those repairs necessary to enable
the ship to do so.
While we would prefer that any affidavits or barge condition
surveys concerning the seaworthiness of the vessel are prepared
on the date of the U.S. departure, we will accept the claim of a
casualty occurrence because of the nature of the damage and the
supporting evidence from independent surveyors.
HOLDING:
The evidence presented is sufficient to sustain the finding
of a casualty, thus making the duties on the foreign repair costs
remissible under 19 U.S.C. 1466(d)(1).
Sincerely,
B.James Fritz
Chief
Carrier Rulings Branch