United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1992 HQ Rulings > HQ 0111694 - HQ 0111792 > HQ 0111791

Previous Ruling Next Ruling

HQ 111791

July 25, 1991

VES-13-18-CO:R:IT:C 111791 GEV


Russell W. MacKechnie, Jr., Esq.
Donohue and Donohue
26 Broadway
New York, New York 10004

RE: Vessel Repair; EXXON PHILADELPHIA; Modification; Generator Upgrade; 19 U.S.C. 1466

Dear Mr. MacKechnie:

This is in response to your memorandum dated July 3, 1991, on behalf of your client, Exxon Shipping Company of Houston, Texas, requesting a ruling on the dutiability of certain foreign shipyard work performed on the EXXON PHILADELPHIA. Our ruling on this matter is set forth below.


The EXXON PHILADELPHIA is a U.S.-flag vessel owned and operated by Exxon Shipping Company ("Exxon") of Houston, Texas. On May 21, 1991, the subject vessel departed from the United States en route to Singapore where she was scheduled to undergo biennial repairs at Keppel Shipyard. The vessel arrived in Singapore on June 9. She was scheduled to depart from Singapore on July 15 and arrive at Valdez, Alaska, on or about August 1, 1991.

The focus of Exxon's ruling request is not the biennial repair work to be performed in Singapore (which will be addressed in a forthcoming application for relief filed pursuant to 19 CFR 4.14) but rather the "Generator Upgrade Project" which will expand the power and capabilities of the vessel's auxiliary/ emergency generator system. The project consists of removing the existing 30 kw emergency diesel generator from the vessel, relocating the existing 500 kw auxiliary diesel generator from the engine room to a new Emergency Generator House to be located on the Boat Deck and in which the 500 kw unit will now serve as the new emergency generator, and installing a more powerful 850 kw auxiliary diesel generator in the engine room to replace the 500 kw unit. This project includes the following:

1. Removal or relocation of interferences on the Boat Deck in the way of the new Emergency Generator House.

2. Removal of the 30 kw emergency diesel generator and associated ancillary equipment.

3. Fabrication and installation of a new Emergency Generator House with support systems on the Boat Deck.

4. Relocation of the 500 kw diesel generator to the new Emergency Generator House to serve as the emergency diesel generator.

5. Relocation of modified existing auxiliary switch- board to serve as the emergency switchboard.

6. Removal or relocation of interferences, structures, and equipment currently located in the auxiliary generator space in the engine room as required to provide for the 850 kw diesel generator and ancillary equipment.

7. Installation of an 850 kw diesel generator, foundation, and ancillary equipment and systems in the engine room to serve as the auxiliary diesel generator.

8. Installation of a new Sea Water Service to serve the 850 kw auxiliary diesel generator.

9. Relocation of existing alarm and monitoring devices from the old 500 kw generator to the 850 kw auxiliary diesel generator.

10. Reconnection of new alarm and monitoring system to serve the 500 kw emergency diesel generator.

11. Reconnection of the existing radiator and piping to serve the 500 kw emergency diesel generator in its new location.

12. Modification of the existing ventilation system serving the engine room to supply the auxiliary generator space to be occupied by the 850 kw unit.

13. Modification of the antenna installation in the way of the new Emergency Generator House.

Counsel states that the components of this project are permanently welded to the vessel by means of deck foundations and supports. They are not to be removed from the vessel should she be laid up for a long period. Furthermore, the current auxiliary and emergency diesel generators are operational and are not in need of repair. Rather, the installation of the 850 kw diesel generator serves to provide the subject vessel with new and expanded capabilities and features. The current 500 kw unit can provide only 50% of the power and 75% of the sea speed that the 1000 kw main turbo-generator furnishes to the vessel. The 850 kw generator will provide 85% of the power and permit the vessel to operate at full propulsion power (sea speed). In addition, the installation of the new, more powerful unit simplifies power distribution in the vessel, because overload safeguards, currently necessary on the 500 kw unit's switchboard, can be eliminated.

It is further stated that replacing the current 30 kw emergency diesel generator with the 500 kw unit that formerly served as the auxiliary generator will vastly increase the capabilities of the emergency power generation system. The 30 kw unit can now provide only for navigation lights, interior communications, the auxiliary generator starting compressor, emergency lights, radios, and some navigation instruments. By replacing the 30 kw unit with the 500 kw generator, emergency power can be provided for all the foregoing functions with the following significant additions: all navigation instruments, engine room automation, emergency fire pump, steering gear, emergency diesel fan, foam proportioning pump, lube oil pump, elevator, starting air compressor, bilge pump, and radars.

The above work items are detailed in technical specifications provided by Exxon and appended to the ruling request as Exhibit A.


Whether the foreign work performed on the subject vessel for which relief is sought constitutes a modification/alteration/ addition so as to render the work nondutiable under 19 U.S.C. 1466.


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.

In its application of the vessel repair statute, Customs has held that modifications/alterations/additions to the hull and fittings of a vessel are not subject to vessel repair duties. Over the course of years, the identification of modification processes has evolved from judicial and administrative precedent. In considering whether an operation has resulted in a modification which is not subject to duty, the following elements may be considered.

1. Whether there is a permanent incorporation into the hull or superstructure of a vessel (see United States v. Admiral Oriental Line et al., T.D. 44359 (1930)), either in a structural sense or as demonstrated by the means of attachment so as to be indicative of the intent to be permanently incorporated.

2. Whether in all likelihood, an item under consideration would remain aboard a vessel during an extended layup.

3. Whether, if not a first time installation, an item under consideration replaces a current part, fitting or structure which is not in good working order.

4. Whether an item under consideration provides an improvement or enhancement in operation or efficiency of the vessel

For purposes of section 1466, dutiable equipment has been defined to include:

...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))

In regard to the "Generator Upgrade Project" under consideration, upon reviewing the documentation submitted it is apparent that this work was not a repair but rather was done for the purpose of permanently enhancing the vessel's auxiliary/ emergency generator system. It appears to be akin to a "re- engining" of a vessel with more fuel efficient engines, a procedure we have previously found to be nondutiable (see ruling 104358 dated December 12, 1979). Accordingly, the "Generator Upgrade Project" constitutes a nondutiable modification/ alteration/addition to the EXXON PHILADELPHIA.


The foreign work for which relief is sought constitutes a modification/alteration/addition so as to render it nondutiable under 19 U.S.C. 1466.

It is noted, however, that this ruling is merely advisory 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 (19 CFR 4.14(b)(1)(2)). 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 (19 CFR 4.14(d)(1))).


B. James Fritz

Previous Ruling Next Ruling