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HQ 109995

July 10, 1989

VES-13-18-CO:R:P:C 109995 BEW


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.


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,


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
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.


4 23 Boiler blow overboard port,
4 24 Boiler blow overboard starboard,
7 5 Line Shaft bearing,
8 10 Casing Removal HP & LP


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
rather than dutiable repairs to the vessel due to damage or deterioration:


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;

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).

Please liquidate on the basis set forth above.

We are returning your complete file to you for your information and original record.


B. James Fritz

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