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HQ 110849

June 26, 1990

VES-13-18-CO:R:P:C 110849 LLB


Deputy Assistant Regional Commissioner
Commercial Operations Division
ATTN: Vessel Repair Liquidation Unit
New Orleans, Louisiana 70130

RE: Protest No. 1401-90-000026: Vessel Repair Entry No. C14-0016679-4: Date of Arrival December 24, 1988, Norfolk, Virginia: Vessel, RAINBOW HOPE

Dear Madam:

Reference is made to the above-captioned protest of the refusal by Customs to consider on its merits, an untimely filed Application for Relief from the assessment of vessel repair duties.


The subject vessel arrived at Norfolk, Virginia, from St. Johns, Newfoundland, on December 24, 1988. A timely but incomplete vessel repair entry was filed on December 29, 1988. A request for extension of time to file evidence of cost for a complete entry was filed on February 21, 1989 (four days prior to the deadline for submitting such evidence) and was denied February 23, 1989. The vessel owner failed to cure the incomplete entry on or before February 25, 1989. Meridian Ship Agency of Virginia, Agent for the vessel owner, submitted a request for further extension of time dated March 8, 1989. That request was denied on May 8, 1989, for the reason that no acceptable reason for reversing the initial denial was offered. No document purporting to be an Application for Relief from duties was submitted until April 5, 1989.

When it was determined that Customs would not consider the tardy "Application", the operator (through counsel) submitted a petition seeking reversal of the decision dismissing the untimely initial submission. This petition was denied in an October 4, 1989, ruling letter. The protest currently before us presents two distinct matters for consideration. One of these involves a review of the facts and evidence in order to determine whether there is merit to the protest per se, which would require reliquidation of the vessel repair entry. The other issue concerns the validity of the time limitations provided for submission of an Application for Relief as set forth in section 4.14(d)(1)(ii) of the Customs Regulations (19 CFR

The charges underlying the protest in this case are stated to have resulted from an incident occurring during a voyage from Iceland. While proceeding southbound from Iceland, toward Norfolk, Virginia, the deck log abstracts in evidence substantiate that the main engine was shut down as a result of a fire in the engine room. The vessel had been encountering heavy weather at the time with the vessel rolling and pitching in heavy swells. It is alleged that the agitated motion of the vessel caused the port side fuel oil return line to be chafed through, resulting in bunkers having been sprayed on the exhaust manifold which led to combustion. A report prepared by the American Bureau of Shipping confirms that the copper fuel line was found chafed through and leaking upon examination.

Section 466, Tariff Act of 1930, as amended (19 U.S.C. 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.

Paragraph (1), subsection (d) of 1466 provides that duty may be remitted if good and sufficient evidence is furnished establishing that the vessel was compelled by stress of weather or other casualty to put into a foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. Thus, it is necessary that in order to qualify for duty remission, the party seeking relief must show both the occurrence of a casualty, and that repair was necessary for safety and seaworthiness.

The term "casualty" as it is used in the statute, has been interpreted as something which, like stress of weather, comes with unexpected force or violence, such as fire, explosion or collision (Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 28-29, C.D. 362 (1940)). In this sense, a "casualty" arises from an identifiable event of some sort. In the absence of evidence of such a casualty, we must consider the repair to have been necessitated by normal wear and tear (ruling letter 105159, September 8, 1983).

The right to protest the liquidation of an entry is provided in section 514, Tariff Act of 1930, as amended (19 U.S.C. 1514). Even though no pre-liquidation prayer for relief might be submitted, there is a statutory right to seek refund of duties assessed under subsection (a) of the vessel repair statute (19 U.S.C. 1466(a)), and a section 1514 protest seeking such refund must be considered on its merits. The failure to submit a timely Application for Relief under the Customs Regulations is tantamount to the failure to seek pre-liquidation relief from duties. Therefore, this protest will be considered on its merits.

The record reveals that repairs were made to the air cooler and that an electric motor was rewound while the vessel was in Iceland before the fire damage at issue had occurred. These items are clearly dutiable repairs under section 1466(a) of the vessel repair statute.

The remainder of the reported repairs were accomplished in St. John's, Newfoundland, Canada. These repairs were limited to the engine room where the fire had been contained. Survey reports, a Coast Guard report, invoices, log extracts, and numerous written statements by ship's officers and crewmembers document the circumstances of the casualty and repairs. There is no doubt that the damage reported resulted from a bona fide casualty, and that the repairs were limited to addressing the casualty-related damage.

The submission by the vessel operator's counsel launches an assault of broad scope against the validity of the Customs Regulations through which the vessel repair statute is administered. The consequences of our findings on this point have effect far beyond the confines of the present case.

In summary, counsel argues that section 4.14(d)(1)(ii), which limits the time within which an Application for Relief may be filed, is invalid. It is stated that the regulation in question is promulgated under sections 66 and 1624 of title 19, United States Code (19 U.S.C. 66 and 1624) which provide general authority to promulgate such regulations as may be necessary to administer various provisions of the Customs and Tariff laws, of which section 1466 is one.

Since these statutory provisions are of a general nature, the regulatory time limits set forth in section 4.14 are said to be directory in nature rather than mandatory. It is stated that this distinction was overlooked in our October 4, 1989, decision on the Petition for Review, and the implication is that reliance upon the case of Socony Vacuum Oil Co., v. United States, 44 CCPA 83, C.A.D. 641 (1957) was misplaced. Only when regulations are mandatory, is compliance therewith a condition precedent to the right accorded by statute.

We are compelled to point out that reliance upon Socony, supra., was correct, unlike counsel's reliance upon the belief that the Customs vessel repair regulations are promulgated pursuant to 19 U.S.C. 66 and 1624. This error is compounded by counsel's repeated reference to these statutes as the authority underlying promulgation of section 4.14 (see page 2 of counsel's cover letter and pages, 4,7, and 9 of counsel's enclosure to the protest).

Reference to the citations of authority preceding Part 4 of the Customs Regulations (19 CFR Part 4), reveals the specific authority for section 4.14 to repose in sections 1466 and 1498 of title 19, United States Code (19 U.S.C. 1466, 1498). The provisions of section 1466 are well known to all parties herein concerned. Of more specific relevance is section 1498 which in pertinent part provides:

(a) The Secretary of the Treasury is authorized to prescribe rules and regulations for the declaration and of entry of ...

(10) Merchandise within the provisions of sections 257, 258 and 1465 of this title
(relating to supplies, repairs, and equipment on vessels and railway cars) at the first port of arrival; ...

Sections 257 and 258 of title 19 are, of course, the predecessor provisions to section 1466(a) and (d). "Merchandise" under section 1498 (a)(10), while perhaps a misnomer, must for lack of an alternative definition include vessel repair and equipment (see International Navigation Co. v. United States, 148 F. Supp 448, C.D. 1836 (1957)).

To summarize our findings in this matter, the right to protest a vessel repair liquidation under section 1514 in cases where an Application for Relief is not considered on its merits due to procedural defects (or, indeed, where none has been submitted) is not in question. In this case, the facts under review support the finding that the vessel suffered damage as the result of a remissible casualty, and the entry should be reliquidated, the charges for shipyard services performed in Canada being remissible. The reliquidation should not include the charges related to work done in Iceland because there is no proof that the operations were related to an "emergency" as related on the vessel repair entry.

The regulations under which Customs administers the vessel repair statute (including all time limits specified therein) appearing in 19 CFR 4.14 are promulgated, inter alia pursuant to the specific authority conferred by 19 U.S.C. 1498(a)(10). The regulatory time limits are mandatory and compliance therewith is a condition precedent to the right to remission upon administrative review of Applications for Relief and Petitions for Review. (See Socony Vacuum, supra.). Denial of review on the merits for the subject Application for Relief was therefore a valid exercise of authority conferred pursuant to statute.


1. The evidence considered substantiates the occurrence of a bona fide casualty and the protest is granted as specified in the Law and Analysis portion of this ruling letter.

2. The time limits set forth in section 4.14, Customs Regulations (19 CFR 4.14) are promulgated pursuant to the specific authority of 19 U.S.C. 1498(a)(10), and are mandatory in nature.

3. Nothing in this ruling affects, in any way, any penalty matters which may be ongoing in relation to this case, such penalties having been properly assessed.


Stuart P. Seidel

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