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HQ 111201

October 20, 1990

VES-13-18-CO:R:P:C 111201 KVS


Chief, Technical Branch
Commercial Operations Division
1 World Trade Center
Long Beach, CA 90831

RE: Vessel repair; modification; mist box Vessel: PRESIDENT KENNEDY V-13
Vessel Repair Entry No. C27-0011706-5
Protest No. 27040-002771
Date of Arrival: October 14, 1989
Port of Arrival: San Pedro, California

Dear Sir:

This is in response to your memorandum of July 17, 1990, which forwards for our consideration protest no. 27040-002771, filed in connection with the PRESIDENT KENNEDY, vessel repair entry no. C27-0011706-5. Our findings are set forth below.


The PRESIDENT KENNEDY, a U.S.-flag vessel, underwent foreign shipyard operations at Kobe, Japan on September 26, 1989, and at Hong Kong, from September 30 until October 1, 1989. The work completed at Hong Kong included the installation of a stack mist box. The vessel arrived in the United States at San Pedro, California, on October 14, 1989 and made timely entry on October 20, 1989.

The record reveals no application for relief filed in connection with the subject vessel. The vessel repair entry was liquidated on May 11, 1990. The protest currently under consideration was timely filed on June 26, 1990.


Whether the installation of a new stack mist box is a permanent addition to the hull and fittings of the subject vessel, rendering the cost of such installation non-dutiable under 19 U.S.C. 1466.


Title 19, United States Code, section 1466(a) provides, in pertinent part, for payment of duty in the amount of 50 percent ad valorem on the cost of foreign repairs to vessels engaged, intended to engage, or 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/alterations/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.

Customs has also held that the decision in each case as to whether an installation constitutes a non-dutiable 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 (Customs Memorandum 108871 (April 16, 1987), citing C.S.D. 83-35).

In support of its contention that the installation of a mist box is a non-dutiable permanent addition to the vessel, the protestant has submitted the following: an invoice from Hongkong United Dockyards, Ltd. listing the stack mist box installation, internal job control forms covering the installation in question and drawings entitled "C-10 STACK MIST BOX INSTALLATION."

Upon careful review of the evidence before us, we find that the installation of the stack mist box aboard the subject vessel meets the criteria set forth above and the cost of such installation is not dutiable pursuant to 19 U.S.C. 1466. Accordingly, the protest is granted in full.


The installation of a stack mist box aboard the subject vessel constitutes a permanent addition to the hull and fittings and the cost of such installation is not subject to the duty levied pursuant to 19 U.S.C. 1466.


B. James Fritz

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