HQ 111728: Vessel Repair; Modification; Air Compressor; Advisory Ruling; 19 U.S.C. 1466; NEDLLOYD HUDSON; Entry No. 559- 1237207-9.

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 111728

                         January 9, 1992

VES-13-18   CO:R:IT:C  111728  JBW

CATEGORY:   Carriers

Deputy Assistant Regional Commissioner
Classification and Value Division
ATTN:  Regional Vessel Repair Liquidation Unit
6 World Trade Center
New York, New York 10048-002980

RE:  Vessel Repair; Modification; Air Compressor; Advisory
     Ruling; 19 U.S.C. 1466; NEDLLOYD HUDSON; Entry No. 559-
     1237207-9.

Dear Sir:

     This letter is in response to your memorandum of June 7,
1991, which forwards for our review the application for relief
filed in conjunction with the above-referenced vessel repair
entry.

FACTS:

     The record reflects that the subject vessel, the NEDLLOYD
HUDSON, arrived at the port of Boston, Massachusetts, on November
6, 1990.  Vessel repair entry, number 559-1237207-9, was filed on
the same day as arrival.  The entry indicates that the vessel,
among other items, had a complete compressed air system installed
while the vessel was in Felixstowe, England.  An application for
relief was filed on January 23, 1991.  This application was
denied in part by your office, for no documentation was included
with the application to establish the claim that the installation
of the air compressor is not subject to duty as a modification.

     A petition was filed on March 21, 1991.  In support of its
claim, the petitioner submits an invoice from Hamworthy Marine
that provides a cost for the installation of the air compression
system.  The invoice, however, does not describe the work
performed.  The petition does not provide an explanation or
description of what work was done.  The petitioner merely makes
reference to an advisory ruling in which this office stated that
given the information submitted, the prospective work would be
considered a modification that is not subject to duty.
Headquarters Ruling Letter 110993, dated May 2, 1990.

ISSUE:

     Whether the evidence submitted as part of the application
for relief is sufficient to establish that the installation of
the air compressor is modification to the vessel.

LAW AND ANALYSIS:

     Title 19, United States Code, section 1466, provides in
pertinent part for payment of duty in the amount of fifty percent
ad valorem on the cost of foreign repairs to vessels documented
under the laws of the United States to engage in foreign or
coastwise trade, or vessels intended to engage in such trade.

     In its application of the vessel repair statute, the Customs
Service has held that modifications, alterations, or additions to
the hull and fittings of a vessel are not subject to vessel
repair duties.  Over the course of years, the identification of
work constituting modifications on the one hand and repairs on
the other has evolved from judicial and administrative precedent.
In considering whether an operation has resulted in a
modification that 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, 18 C.C.P.A. 137 (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.  This element
          should not be given undue weight in view of the fact
          that vessel components must be welded or otherwise
          "permanently attached" to the ship as a result of
          constant pitching and rolling.  In addition, some
          items, the cost of which is clearly dutiable, interact
          with other vessel components resulting in the need,
          possibly for that purpose alone, for a fixed and stable
          juxtaposition of vessel parts.  It follows that a
          "permanent attachment" takes place that does not
          necessarily involve a modification to the hull and
          fittings.

     2.   Whether in all likelihood an item under consideration
          would remain aboard a vessel during an extended lay-up.

     3.   Whether, if not a first time installation, an item
          under consideration constitutes a new design feature
          and does not merely replace a part, fitting, or
          structure that is performing a similar function.

     4.   Whether an item under consideration provides an
          improvement or enhancement in operation or efficiency
          of the vessel.

     For purposes of section 1466, dutiable equipment has been
defined to include:

          portable articles necessary or appropriate
          for the navigation, operation, or maintenance
          of a vessel, but not permanently incorporated
          in or permanently attached to its hull or
          propelling machinery, and not constituting
          consumable supplies.

T.D. 34150, 26 Treas. Dec. 183, 184 (1914)(quoted with approval
in Admiral Oriental).

     The Customs Service has held that the decision in each case
as to whether an installation constitutes a nondutiable addition
to the hull and fittings of the vessel depends to a great extent
on the detail and accuracy of the drawings and invoice
descriptions of the actual work performed.  Even if an article is
considered to be part of the hull and fittings of a vessel, the
repair of that article, or the replacement of a worn part of the
hull and fittings, is subject to vessel repair duties.

     In Headquarters Ruling Letter 110993, this office held that,
based on the work order description and accompanying drawing, the
proposed installation of the air compressor would be a
modification to the vessel that is not subject to duty.  However,
this advisory ruling stressed that any final determination would
be contingent on review of the evidence submitted as part of the
entry and procedure for review.  The only evidence submitted as
part of the petition for relief is an invoice stating that the
air compressor was installed.  Given the frequency with which
work orders are changed, we cannot assume that the work actually
performed to install the air compression system was identical to
the work proposed in the work order.  Without further description
of the actual installation process, we are unable to conclude
that the installation of the air compressor constitutes a
modification to the vessel.   For this reason, the petition for
review is denied.


HOLDING:

     Notwithstanding the advisory ruling stating that the
installation of an air compression system would  constitute a
modification to the subject vessel, without further description
of the actual installation process, we are unable to conclude
that the installation of the air compressor constitutes a
modification to the vessel.   For this reason, the petition for
review is denied.

                              Sincerely,



                              B. James Fritz
                              Chief
                              Carrier Rulings Branch