VES-13-02-OT-RR:BSTC:CCR H302915 AMW
Supervisory Liquidation 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; 19 U.S.C. § 1466; Vessel Repair Entry C20-0080939-5; Protest 2002-18-100046; M/V C-COMMODORE
Dear Madame:
This is in response to your memorandum dated June 11, 2019, forwarding for our further review the Protest and Application for Further Review (“AFR”) filed by James T. Brown and Melanie Fridgant of Holman Fenwick Willan LLP, on behalf of their client, Alpha Marine Services, LLC (“Protestant” or “Alpha Marine”), with respect to Vessel Repair Entry C20-0080939-5. Our decision is set forth below.
FACTS
The M/V C-COMMODORE (the “vessel”) is a U.S.-flag vessel owned by Alpha Marine Services, LLC, which is an affiliate of Edison Chouest Offshore (“ECO”). One July 30, 2017, the vessel arrived in Morgan City, Louisiana from Chaguaramas, Trinidad and Tobago. The vessel’s agent subsequently filed a CBP Form 226 (Record of Vessel Foreign Repair or Equipment Purchase) with CBP’s Vessel Repair Unit – New Orleans (“VRU”) to document foreign shipyard costs. The entry form states that the vessel underwent dutiable repairs in Brazil, performed by Bram Offshore Transportes Maritimos, Ltda (“Bram Offshore”), which is an affiliate of Alpha Marine through ECO. The entry form states that the repairs had been charged in Brazilian reais at a value of R$[ ], which converted to USD $[ ] at an exchange rate of 0.3161800.
On January 26, 2018, the VRU issued a Determination of Duty letter assessing a valuation of USD $[ ], which resulted in a duty consequence of USD $[ ]. On July 25, 2018, Alpha Marine submitted a Protest and AFR regarding the VRU’s determination. In doing so, Alpha Marine argued in part that the VRU incorrectly calculated the foreign repair costs in U.S. dollars instead of Brazilian reais. On November 16, 2018, the VRU issued an order denying Alpha Marine’s Protest and AFR. In support of its determination, the VRU provided Alpha Marine with a previous memorandum in which this branch recommended the VRU deny a similar protest and AFR submitted by another ECO affiliate on the basis that that protestant did not provide adequate evidence demonstrating the transaction occurred in Brazilian reais.
On January 8, 2019, Protestant submitted a request for this branch to set aside the VRU’s denial of its Protest and AFR under 19 U.S.C. § 1515(c). On March 21, 2019, this branch issued a memorandum instructing the VRU to set aside the denial on the basis that the VRU failed to consider additional evidence submitted by Protestant. On April 8, 2019, Holman Fenwick submitted a Supplemental Submission on behalf of Alpha Marine containing a certified translation of the subject purchase orders and a signed declaration that the transaction occurred in Brazilian reais. The VRU subsequently forwarded Alpha Marine’s Protest and AFR for our review.
ISSUE
Whether, pursuant to 19 U.S.C. § 1466, protestant has provided sufficient evidence to show that the subject repair transaction was conducted in Brazilian reais.
LAW AND ANALYSIS
As an initial matter, we note that the information in the file indicates that the protest was timely filed under the statutory and regulatory provisions for protests, having been filed within 180 days of the date of duty determination. 19 U.S.C. § 1514(c)(3) and 19 C.F.R. § 174.12(e). This filing meets the criteria for further review as provided in 19 C.F.R. § 174.24(b) in that it involves questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts.
19 U.S.C. § 1466(a) requires the payment of a 50% ad valorem duty on the “[t]he equipments, or any part thereof . . . 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 . . . .” This provision is implemented by 19 C.F.R. § 4.14, which also outlines the bond requirements, entry requirements, and deadlines for submitting evidence of the cost of foreign repairs. Pursuant to 19 C.F.R. § 4.14(e), each vessel repair entry “must show all foreign voyage expenditures for equipment, parts of equipment, repair parts, materials and labor.” 19 C.F.R. § 4.14(i)(1)(i) further requires that applications for relief from the assessment of a vessel repair duty must include “[i]temized bills, receipts, and invoices.”
In support of its claim, Alpha Marine has submitted the following documents: (1) original Portuguese-language purchase orders related to the subject repair transactions, each containing an assigned monetary value but lacking a currency denomination; (2) certified English-language translations of each purchase order depicting the transaction value in Brazilian reais; and (3) a declaration by a Bram Offshore “record custodian” claiming that the amount stated on each original purchase order is in Brazilian reais. Alpha Marine failed, however, to provide any service orders, invoices, or an underlying contract related to the subject repairs.
We find that the subject purchase orders are insufficient to demonstrate that the transaction occurred in Brazilian reais. To begin with, CBP has consistently found that purchase orders submitted without corroborating evidence are insufficient to grant relief. See HQ 116525 (Dec. 21, 2005) (“absent any other documentation, the purchase order submitted alone is insufficient), HQ 111309 (Mar. 5, 1991) (“unlike an invoice, which is a document frequently generated by a third party contemporaneously with delivery, a purchase order is a less certain variable in the delivery chain”). In addition, CBP has consistently held that internally generated documents (e.g., purchase orders, notarized statements of corporate officers), without more evidence, are self-serving statements that do not constitute sufficient proof in support of the position postured. See HQ H252033 (June 18, 2014), HQ H246931 (Apr. 3, 2014), HQ H057909 (March 2, 2010), and HQ 111942 (March 15, 1995). Here, Protestant failed to provide any additional information regarding the subject transactions outside of the self-serving declaration discussed below. In fact, although the purchase orders specify that the underlying “invoices and service reports must be submitted electronically” to an ECO email account, Protestant failed to provide these invoices.
The signed statement by Bram Offshore’s record custodian, which asserts that the purchase orders are valued in Brazilian reais, is also self-serving. As noted above, Bram Offshore and Alpha Marine are both affiliates of ECO. This is similar to the situation outlined in HQ H246931 (Apr. 3, 2014) in which we found that the declaration submitted by a technical manager was self-serving because the manager’s employer was the ultimate owner of the vessel. CBP eventually accepted the technical manager’s statement in HQ H246931, however, because “the shipyard invoice, in tandem with the self-serving statements, provide[d] sufficient evidence. . . .” In contrast, Alpha Marine has failed to provide invoices, service orders, or other billing documents to corroborate the Bram employee’s declaration, instead relying on the self-serving and internally prepared purchase orders.
As stated above, 19 C.F.R. § 4.14(i)(1)(i) provides a specific listing of the kinds of documentary evidence which must be filed to support applications for relief from vessel repair duties. This list begins with “itemized bills, receipts, and invoices.” Considering that no such third-party corroborating evidence has been provided, Protestant’s self-serving purchase orders and signed statement, which are presented without additional proof, are insufficient to demonstrate that payment was made in Brazilian reais.
HOLDING
The protestant has not provided sufficient evidence to show that the foreign repair costs should be calculated in Brazilian reais instead of U.S. dollars. You are therefore instructed to deny the protest with respect to the costs discussed in this ruling.
In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2007), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any final duty determination of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Lisa L. Burley
Chief/Supervisory Attorney-Advisor
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations and Rulings
U.S. Customs and Border Protection