us-cbp-cross-rulings-hq-109995•HQ 109995: Vessel Repair Entry No. C-10-4905437-7 SS MONTRACHET
HQ 109995: Vessel Repair Entry No. C-10-4905437-7 SS MONTRACHET
us-cbp-cross-rulings-hq-109995HQ 109995: Vessel Repair Entry No. C-10-4905437-7 SS MONTRACHETGuidance
Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.
HQ 109995
July 10, 1989
VES-13-18-CO:R:P:C 109995 BEW
CATEGORY: Carriers
Deputy Assistant Regional Commissioner
Commercial Operations
ATTN: Regional Vessel Repair Liquidation Unit
New York, New York 10048-0945
RE: Vessel Repair Entry No. C-10-4905437-7 SS MONTRACHET
Dear Sir:
This is in reference to an application for relief from
duties and accompanying documentation, filed by B. A. McKenzie &
Co., Inc., on behalf of Crest Tankers, Inc., in relation to the
above referenced vessel repair entry dated December 22, 1987,
transmitted to this office in February 1989. We have reviewed
the entire record, and render the following advice.
Title 19, United States Code, section 1466, provides in
part for payment of an ad valorem duty of 50 percent of the cost
of foreign repairs to vessels documented under the laws of the
United States to engage in the foreign or coastwise trade.
Section 1466 (d)(1) provides that the Secretary of the Treasury
is authorized to remit or refund such duties 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.
In regard to Hitachi Zosen Singapore (PTE) Ltd., Invoice No.
MS87-2724, dated November 21, 1987, the following items are
considered to be non-dutiable under the vessel repair statute.
PAGE NO. ITEM NO. DESCRIPTION
1 1(A-F) General Services,
16 35 Staging and Transportation,
17 36 Staging,
18 38(A) Transportation.
19 39(D) Staging,
20 6 Transportation and Staging,
23 26 Staging,
- 2 -
PAGE NO. ITEM NO. DESCRIPTION
24 42 Transportation,
26 010 Shore telephone services,
014 Heating, lamps to electric
motors,27507Megger test,
32 & 33 A(1-5, 7-14) General Services,
33 B Dry Docking,
34 102 Staging for sea chest area,
50 604(3) Staging,
604(4) Staging,
604(5) Removal and Refitted 4
lifeboats to shore
(transportation),
51 604(2) Accessory work -
transportation,
55 701 Accessory work - staging,
57 717(2) Staging,
802(1) Staging,
60 408(3) Staging,
86 ADD(14(2) Staging, and
92 715 Overseas calls.
Item A(6) on page 32 of Hitachi Zosen Singapore (PTE) Ltd.,
Invoice No. MS87-2724, covers the cost incurred for obtaining a
gas free inspection. Pursuant to C.I.E.'s 1188/60 and 429/61 the
cost of obtaining a gas free certificate constitutes an ordinary
and necessary expense incident to repair operations and is
dutiable. However, this charge should be apportioned between the
costs which are to be remitted and those for which relief is not
warranted, and duty assessed on that portion of the charge
applicable to items which are not being remitted.
In Headquarters ruling 106543 JM, we held that mere cleaning
operations are not dutiable. However, cleaning operations which
remove rust and deteriorations 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 (See
C.I.E. 429/61). It appears from our review of the invoice that
cleaning and inspections were done in several items listed in
the subject invoice. Accordingly, the cost of the work performed
on the following items is non-dutiable.
PAGE NO. ITEM NO. DESCRIPTION
4 23 Boiler blow overboard port,
4 24 Boiler blow overboard
starboard,
7 5 Line Shaft bearing,
8 10 Casing Removal HP & LP
Turbines,
- 3 -
PAGE NO. ITEM NO. DESCRIPTION
9 12 Inspection and Cleaning,
11 13(a) Dye check-sub-item,
12 13 Main Engine steam strainer,
14 Main Thrust bearing
inspection,
20 7 Boiler cleaning water sides
(P&S) boiler,
22 9 Boiler safety valve P&S,
25 43(a) Boiler deck scupper pipe,
43(b) Basin drain pipe,
27 Stritching cleaning,
38 104 Anchor, chains and lockers
cleaning,
39 104 (1&2) Accessary work,
39 104 (5) Filled chain locker with water
and rem suction, and
49 601 Lifeboat weight test,
The inspection and cleaning in item 13(b) resulted in
repairs. Accordingly, both the inspection and cleaning and the
costs of the repairs are dutiable.
All costs listed in the Sanki International Inovice No.
177/87 are for items associated with the ultrasonic thickness
gauging of the hull construction of the subject vessel. The
costs associated with this invoice are non-dutiable costs as
inspection and testing.
In its application of the vessel repair statute (19 U.S.C.
1466), Customs has consistently held that modifications/altera-
tions/additions to the hull and fittings of a vessel which allow
the vessel to operate more efficiently are not subject to vessel
repair duties. Alterations to the hull and fittings of vessels
are not within the purview of section 1466, and the cost of the
work is not subject to duty. An article must be permanently
attached to the vessel and it must be essential to the successful
operation of the vessel (see Otte v. United States, 7 C.C.P.A.
166 (1916), and United States v. Richard & Co., 8 Ct. Cust. App.
231, T. D. 37496 (1917). To be found non-dutiable as a
modification/alteration/addition, the work must involve no
element of repair due to damages, deterioration or wear and tear.
If those are present, the work will be considered a repair and
dutiable. After reviewing the record, we consider the work done
under the following items to be in the nature of non-dutiable
modifications/alterations/additions to the hull and fittings
- 4 -
rather than dutiable repairs to the vessel due to damage or
deterioration:
PAGE NO. ITEM NO. DESCRIPTION
41 804 Tank Anodes,
74 801 Installation of Ballast
Modification, and
81 806 Cargo System Modification.
The remaining items listed on Hitachi Zosen Sigapore (PTE)
Ltd., Invoice No MS87-2724 are dutiable.
Additionally, we have review the following invoices and our
findings are set forth below:
Windsor Marine PTE. Ltd. Bill No. WM/1346/87 - With the
exception of the silverware, all items are non-dutiable
ships stores. The silverware is dutiable as equipment and
supplies;
Windsor Marine PTE. Ltd. Bill No. WM/1375/87 - All items are
dutiable;
Windsor Marine PTE. Ltd. Bill No. WM/1377/87 - Except for
the drinking water and the emergency food which are ships
stores, all items are dutiable;
Windsor Marine PTE. Ltd. Bill No. WM/1296/87 - Except for
the drinking water and emergency food, all items are
dutiable;
Windsor Marine PTE. Ltd. Bill No. WM/1297/87 - All items are
dutiable;
Windsor Marine PTE. Ltd. Bill No. WM/1298/87 - All items are
non-dutiable as ships stores;
Windsor Marine PTE. Ltd. Bill No. WM/1374/87 - All items are
dutiable;
Windsor Marine PTE. Ltd. Bill No. WM/1271/87 - All items are
dutiable;
Electrocatalytic(s) PTE. Ltd. Invoice No. 0153 - All items
are dutiable;
- 5 -
Viking Engineering PTE Ltd. Invoice No. 099/J MC - All
items are dutiable;
Fuji Trading (Singapore) PTE. Ltd. Invoice No. FTS/87-1264 -
All cost are dutiable;
SJP Trading (Singapore) PTE Ltd. Invoice Nos. 5814, 5808,
and 5877 - All cost are dutiable;
Line Control & Instrumentation PTE Ltd. Invoice No.
LCI/034/87 - All items are dutiable;
Haven Automation (Singapore) Private, Ltd. Invoice No. 13942
- All items except land transportation are dutiable. The
land transportation cost is non-dutiable;
Ancel Sigapore Private Limited Invoice Nos. 87 NR/6130 and
87 NR/6131, dated November 3(1), 1987 - All items are
dutiable;
CHUWAC Engineering PTE. Ltd. CEI-87-11-269 - All items
except transportation. The transportation cost are non-
dutiable; and
Pamarine (PTE) Ltd. Invoice No. 11099 - All items are
dutiable.
Customs has held that where periodic surveys are undertaken to
meet the specific requirements of a classification society,
insurance carrier, etc., the cost of the surveys is not dutiable
even when dutiable repairs are effected as a result thereof;
however, in the liquidation process Customs should go beyond the
mere labels of "continuous" or "ongoing" before deciding whether
the item is dutiable. If an inspection or survey is conducted as
a part of an ongoing maintenance and repair program labelled
"continuous" or "ongoing" the cost is dutiable. Also, if the
survey is to ascertain the extent of damage sustained, or to
ascertain if the work is adequately completed, the costs are
dutiable as part of the repairs which are accomplished pursuant
to holdings in C.I.E. 429/61, C.S.D. 79-2, and C.S.D. 79- 277.
Charges for overtime expenses incurred for the performance
of work associated with dutiable repairs constitute a component
of the dutiable repairs and is therefore dutiable (See C.I.E.
970/60). Accordingly, the following survey is dutiable:
Hull damage and repairs survey (including time outside of
normal work hours).
- 6 -
Please liquidate on the basis set forth above.
We are returning your complete file to you for your
information and original record.
Sincerely,
B. James Fritz
Enclosures
CO:R:P:C:BEWhiting:6/13/89
DATE:
FILE NUMBER: 109995 BEW
VESSEL NAME: MONTRACHET
ENTRY NUMBER: C-10-4905437-7
DATE OF ENTRY: December 22, 1987
Deputy Assistant Regional Commissioner
TO : Commercial Operations
ATTN: Regional Vessel Repair Liquidation Unit
New York, New York 10048-0945
FROM : Chief, Carrier Rulings Branch
We attach our advice on the captioned case. Since the
document is an inter-agency memorandum and advisory in nature, it
is not subject to disclosure under the Freedom of Information
Act, 5 USC 552. Despite the foregoing you may, if you agree with
the content of our memorandum, and as a convenience to the
carrier, release a copy of the attachement to the carrier or the
carrier's representative.
Attachment
Continue your research in ChatGPT or Claude
Connect Omnilex to search the legal corpus from your AI assistant.