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HQ 109859

December 2, 1988

VES-13-18 CO:R:P:C 109859 GV


Gerard S. Doyle, Jr.
Senior Counsel
Sea-Land Service, Inc.
10 Parsonage Road
Post Office Box 800
Iselin, New Jersey 08830

RE: Dutiable Status of Foreign Work Done to U.S.-flag Vessels under 19 U.S.C. 1466

Dear Mr. Doyle:

This is in reference to your letter of November 3, 1988, in which you request a ruling as to whether certain work done to two U.S.-flag vessels is dutiable under 19 U.S.C. 1466.


Sea-Land Service, Inc. ("Sea-Land"), is the owner of two U.S.-built, U.S.-flag vessels: S.S. SEA-LAND PRODUCER; and S.S. SEA-LAND CONSUMER. These vessels are fully cellularized container vessels. As presently configured they can carry containers of both 35 and 40 foot lengths. The work under consideration will convert five original 35 foot container groups to one new 40 foot container group and three new 45 foot container groups above and below deck. In addition, one original 35 foot container group below deck will be modified for general cargo use. Work in question shall include, but not be limited to:

1. Relocation of one existing watertight bulkhead and three transverse hatch girders complete with cell guide structure;

2. Fabrication and installation of removable 20 foot cell plugs in new hatch groups;

3. Fabrication of new 45 foot hatch covers at new hatch groups 4, 5 and 7;

4. Providing new 20 foot ISO lifting fittings on hatch covers at hatch No. 1;

5. Reinforcement and outfitting of existing hatch covers at hatch group 3 and 9 for one tier of 2 x 20 foot containers across;

6. Extension, reinforcement and outfitting of existing 35 foot hatch covers for use as new 40 foot covers at new group 6;

7. Removal of existing buttress towers at frames 125, 141, 158 and 173;

8. Modification of stacking frames on new groups 2, 3, 8, 9 and 10;

9. Fabrication and installation of new deck pedestals outboard in way of new groups 4, 5, 6 and 7;

10. Modifying hatch No. 1 for general cargo below deck;

11. Reinforcement and outfitting of hold tank tops for 20 foot, 40 foot and 45 foot containers;

12. Relocation of vents, sounding tubes, and bilge wells as necessary;

13. Relocation of refrigerated container electrical outlets; and

14. Completion of inclining and deadweight surveys, if required.

In addition to the above information, Sea-Land has submitted specifications and a drawing detailing the work to be done.


Whether the conversion of two container vessels as described herein, which will result in greater carrying capacity and commercial flexibility for the vessels, would constitute a modification to the hull and fittings so as to render the work non-dutiable under 19 U.S.C. 1466.


Title 19, United States Code, section 1466, provides in pertinent part for payment of an ad valorem duty of 50 percent of the cost of foreign repairs to or equipment purchased for a vessel documented under the laws of the United States to engage in the foreign or coastwise trade.

In its application of the vessel repair statute (19 U.S.C. 1466), Customs has held that modifications/alter- ations/additions to the hull and fittings of a vessel are not subject to vessel repair duties. A leading case in the interpretation and application of section 1466 is United States v. Admiral Oriental Line et al, T.D. 44359 (1930) where the Court considered the issue of whether steel swimming tanks installed on a U.S.-flag vessel in a foreign port constituted equipment or repairs within the meaning of section 1466. In holding that the installation of these tanks did not constitute either equipment or repairs and therefore was not dutiable, the Court in Admiral Oriental cited earlier court decisions which define equipment, promulgations by the Board of Naval Construction, and regulations of the Treasury Department, as well as opinions of the Attorney General.

Accordingly, for purposes of section 1466, dutiable equipment has been defined as:

... 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. Admiral Oriental, supra., (quoting T.D. 34150, (1914)).

By defining what articles are considered to be equipment, the authority cited above formulated criteria which distinguish those items deemed to be modifications/alterations/additions to the hull and fittings and therefore not dutiable under section 1466. These items include:

...those applications which are permanently attached to the vessel, and which would remain on board were the vessel to be laid up for a long period... Admiral Oriental, supra.,
(quoting 27 Op. Atty. Gen. 228)

Furthermore, the Court in Otte v. United States, T.D. 36489 (1916) stated that before an item can be regarded as part of a vessel, it must be "essential to the successful operation" of the vessel.

It is apparent that the work described in your letter would constitute a non-dutiable modification to the subject vessel rather than dutiable equipment or repairs.


The conversion of two container vessels as described herein, which will result in greater carrying capacity and commercial flexibility for the vessels, would constitute a modification to the hull and fittings so as to render the work non-dutiable under 19 U.S.C. 1466.

It is noted, however, that this ruling is merely advisory in nature and does not eliminate the requirement to declare work done abroad at the subject vessel's first United States port of arrival, nor does it eliminate the requirement of filing the entry showing this work (see sections 4.14 (b)(1)(2), Customs Regulations). Furthermore, any final ruling on this matter is contingent on Customs review of the evidence submitted pursuant to section 4.14 (d)(1), Customs Regulations.


B. James Fritz

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