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HQ 111131

November 1, 1990

VES-13-04/14/18/23 CO:R:P:C 111131 JBW


Deputy Assistant Regional Commissioner
Commercial Operations c/o Regional Commissioner
New Orleans, LA 70130-2341

RE: Protest No. 5301-90-000128; Vessel Repair; Casualty; One Round Voyage; 19 U.S.C. 1466; 19 C.F.R. 4.14; ACADIAN COMMANDER.

Dear Madam:

This letter is in response to your memorandum of June 18, 1990, which forwards for our review and ruling the above- referenced protest from the assessment of vessel repair duties.


The record reflects that the subject vessel, the ACADIAN COMMANDER, arrived at the port of Galveston, Texas, on October 12, 1988. Vessel repair entry C53-0000130-8, Customs Form 226, was filed on October 18, 1988, indicating extensive repairs performed in England on the vessel.

The evidence submitted demonstrates that repairs were made to the vessel's keel cooling system prior to its departure from the United States. The work order placed by the vessel owner called for draining the #3 ballast tanks and repairing the "keel cooler," specifically the #4 keel cooler. The invoice of G & M Welding and Machine Service (G & M Welding) indicates that the #3 ballast tanks were drained to permit inspection of the keel coolers by the crew and that the keel coolers were welded.

Upon arrival in England in May, 1987, the vessel underwent further servicing of the keel coolers by Sea-Mar Diesel, Ltd. (Sea-Mar). Sea-Mar invoice 3727 indicates that the port and starboard ballast tanks were cleaned out to enable repairs to be made to the #2 and #4 keel coolers. From the engine room log, we deduce that these were the #3 ballast tanks. Inspection by Sea-Mar revealed that water from the coolers could be seen rising through the mud of the port tank. After the tank was cleaned, Sea-Mar determined that the tank had deteriorated to the point where it could no longer be welded. Holes in the tank were patched and cemented over. The same procedure was applied to the starboard tank and the #2 cooler where the leak was under the rear cement tank. Sea-Mar invoice 3726, covering charges for work performed two weeks later, described further repairs to the keel coolers.

Between May 30, 1987, and November 13, 1987, the vessel continued to experience problems with the keel cooling system. On November 13, the vessel was dry-docked in Suffolk, England. The invoice of William Overy & Son, which covers the dry-docking, describes extensive shell plating and steel replacement. This work covered rebuilding not only the #3 ballast tanks and the cooling system, but also the #4 and #5 ballast tanks.

The Customs Service first addressed the dutiability of the repairs in Headquarters Ruling Letter 110139, dated June 15, 1989. In that ruling, we denied that portion of the vessel owner's application for remission relating to foreign repairs of the keel cooling system. The basis for this holding was that good and sufficient evidence was not submitted to establish that the specific part for which remission was sought was repaired or service prior to the vessel's departure from the United States under the "one round voyage" rule. The vessel owner subsequently filed a petition for review. Upon reconsideration, we determined that the application of the one round voyage rule was proper, for the "area which was the subject of failure and repair on the foreign voyage was cleaned, inspected, and repaired in the U.S. immediately preceding the voyage." Headquarters Ruling Letter 110389, dated October 17, 1989.

In transmitting this ruling to the protestant, your office remitted the duty for repairs performed by Sea-Mar Diesel, Ltd., reflected in invoices numbered 3726 and 3727. These invoices covered work performed by Sea-Mar in May, 1987. The remission, however, did not include duties assessed on work performed on the keel cooling system in November, 1987. The principal rationale for denying remission for duties on the latter repairs was that the extent of these repairs exceeded those areas that were subject to repair in the United States and suggested that the cause for the repairs was not casualty, but wear and tear. Moreover, even though the failure of the United States repairs became evident within six months from the date of repair in the United States, your office concluded the seaworthiness of the vessel was not affected until after the six month period had elapsed. The vessel owner protests the failure to remit these duties.


Whether the described protest of vessel repair duties under 19 U.S.C. 1466 (1988) should be denied or allowed on the basis of a claim of casualty under the "one round voyage" rule.


Title 19, United States Code, section 1466, provides in pertinent part for payment of duty in the amount of 50 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. Section 1466(d)(1) provides for the remission or refund of such duties if the owner or master furnishes good and sufficient evidence that the vessel was compelled by stress of weather or other casualty to put into the foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable it to reach its port of destination. The Customs regulations issued under the authority of this statute are found in 19 C.F.R. 4.14 (1990).

The "one round voyage" rule is abstracted in Treasury Decision (T.D.) 71-83(38), 5 Cust. B. & Dec. 160, 167 (1971). That Treasury Decision provides:

If satisfactory evidence is furnished clearly showing any part of a vessel to have been repaired and/or serviced just prior to the commencement of a voyage from a United States port, it is reasonable to assume that the part is seaworthy for a round voyage, foreign and return. Unless evidence indicates some other reason necessitated the repairs during the voyage, failure of that part to function within six month after the repair and/or servicing in the United States may be considered a casualty within the meaning of [19 U.S.C. 1466(d)]. However, remission of duty under that statute in the circumstances is limited to duty on the essential, minimum foreign repairs to the parts.

Section 4.14(c)(3)(i), Customs Regulations (19 C.F.R. 4.14(c)(3)(i)), provides, with regard to the "one round voyage" rule, that:

For the purposes of this section, the term "casualty" does not include any purchases or repairs necessitated by ordinary wear and tear, but does include a part's failure to function if satisfactory evidence shows that the specific part was repaired or serviced immediately before starting the voyage from the United States port and that the part failed to function within six months of such repair or servicing.

The evidence submitted demonstrates that the specific parts repaired in the United States prior to sailing were the #3 ballast tanks and the #4 and other undesignated keel coolers. These were the specific areas repaired by Sea-Mar in May, 1987, and the costs associated with these repairs have been remitted.

The extent of the deterioration of the ballast tanks and the keel cooling system, however, vastly exceeded the repairs performed by G & M Welding in the United States and by Sea-Mar in England. This deterioration necessitated the rebuild not only of the areas previously repaired, but also areas not itemized in the G & M Welding or the Sea-Mar invoices. Absent any evidence to the contrary, we conclude that the repairs performed in November, 1987, to areas not itemized in the invoices of G & M Welding and Sea-Mar were necessitated by ordinary wear and tear. The cost of these repairs is therefore not remissible. Moreover, the evidence demonstrates that, despite operational difficulties, the vessel was able to function for almost six months from the date of the first foreign repairs. The ultimate complete rebuilding of the keel cooling system suggests that these repairs exceeded the essential, minimal repairs necessary to restore the operation of the vessel. The cost of rebuilding of the #3 ballast tanks and the other parts of the keel coolers that had been repaired in the United States are thus not remissible.


The rebuilding of the subject vessel's keel cooling system and #3, #4, and #5 ballast tanks, as described in the invoice of William Overy & Sons, is not remissible. The protest is therefore denied.


Stuart P. Seidel

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