VES-13-18-CO:R:IT:C 112797 DEC
Deputy Assistant Regional Commissioner
Classification and Value Division
Attention: Residual Liquidation and Protest Branch
New York, New York 10048-0945
RE: Vessel Repair; Application for Relief; Modification;
Vessel Repair Entry: 514-3004875-4
Date of Arrival: March 23, 1993
Date of Entry: March 25, 1993
Port of Arrival: Bayonne, New Jersey
Vessel: M/V AMERICAN EAGLE V-169
Dear Sir:
This is in response to your memorandum dated July 2, 1993,
which forwards the application for relief from vessel repair duties
filed in connection with the above-referenced vessel for our review.
FACTS:
The AMERICAN EAGLE is operated by Osprey Ship Management,
Incorporated. It is an American-flag vessel. While abroad, the
AMERICAN EAGLE stopped in Bremerhaven, Germany, where it underwent
various operations. Our review is focused on the installation of
deck brackets. An application for relief from vessel repair duties
dated May 12, 1993, was timely filed.
ISSUE:
Whether the cost of foreign shipyard work completed aboard the
subject vessel is dutiable pursuant to Title 19, United States Code,
section 1466.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466(a) provides, in
pertinent part, for payment of a fifty percent ad valorem duty on
the cost of foreign repairs to a vessel documented under United
States law to engage in the foreign or coastwise trade, or to a
vessel intended to be employed in such trade.
The applicant contends that the costs of the installation of
the deck brackets are not subject to duty because it is a
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modification and represents a permanent incorporation into the
vessel. Over the course of years, the identification of
modification processes has evolved from judicial and administrative
precedents. In considering whether an operation has resulted in a
modification, which is not subject to duty, the following elements
may be considered.
(1) Whether there is a permanent incorporation into
the hull or superstructure of a vessel (see United
States v. Admiral Oriental Line et al., T.D. 44359
(1930)), either in a structural sense or as
demonstrated by the means of attachment so as to
be indicative of the intent to be permanently
incorporated.
(2) Whether the item under consideration would remain
aboard a vessel during an extended layup.
(3) Whether, if not a first time installation, an item
under consideration replaces a current part,
fitting or structure which is not in good working
order.
(4) Whether an item under consideration provides an
improvement or enhancement in operation or
efficiency of the vessel.
Before an item is to be construed as a part of the vessel, it must
be (1) a permanent attachment and (2) essential to the successful
operation of the vessel. Otte v. United States, 7 C.C.P.A. 166,
169 (1916).
Customs finds that the installation of the deck brackets
constitutes a permanent incorporation into the superstructure of the
vessel. Furthermore, the strengthening of the deck enhances the
operational efficiency of the vessel.
HOLDING:
After a thorough review of the submitted evidence, this
application for relief from vessel repair duties is granted. The
applicant correctly claims that the installation of the deck
brackets constitutes a modification.
Sincerely,
Acting Chief
Carrier Rulings Branch