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HQ 112872

March 15, 1995

VES-13-18-CO:R:IT:C 112872 GEV


Deputy Regional Director
Commercial Operations
Pacific Region
1 World Trade Center
Long Beach, California 90831

RE: Vessel Repair Entry No. C27-0082398-5; SEA-LAND PATRIOT; V-132/133/134; Modifications

Dear Sir:

This is in response to your memorandum dated August 23, 1993, forwarding an application for relief from duties assessed pursuant to 19 U.S.C. ?1466. You have requested our advice regarding several items contained within the above-cited vessel repair entry. Our opinion on these items is set forth below.


The SEA-LAND PATRIOT is a U.S.-flag vessel operated by Sea-Land Service, Inc. The subject vessel had foreign shipyard work performed during April of 1993. Subsequent to the completion of the work the vessel arrived in Los Angeles, California on May 9, 1993. A vessel repair entry was filed on May 11, 1993.

Pursuant to an authorized extension of time, an application for relief was timely filed. The applicant claims that certain work constitutes non-dutiable modifications. In support of these claims the applicant has submitted shipyard invoices, drawings and specifications depicting the work in question, and Customs advisory ruling 112626, dated March 29, 1993.


Whether evidence is presented sufficient to prove that the foreign work performed on the subject vessel for which the applicant seeks relief constitutes modifications so as to render the work non-dutiable under 19 U.S.C. ? 1466.


Title 19, United States Code, ? 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 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. This element should not be given undue weight in view of the fact that vessel components must be welded or otherwise "permanently attached" to the ship as a result of constant pitching and rolling. In addition, some items, the cost of which is clearly dutiable, interact with other vessel components resulting in the need, possibly for that purpose alone, for a fixed and stable juxtaposition of vessel parts. It follows that a "permanent attachment" takes place that does not necessarily involve a modification to the hull and fittings.

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

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

Very often when considering whether an addition to the hull and fittings took place for the purpose of 19 U.S.C. ? 1466, we have considered the question from the standpoint of whether the work involved the purchase of "equipment" for the vessel. It is not possible to compile a complete list of items that might be aboard a ship that constitute its "equipment". An unavoidable problem in that regard stems from the fact that vessels differ as to their services. What is required equipment on a large passenger vessel might not be required on a fish processing vessel or offshore rig.

"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))

By defining what articles are considered to be equipment, the Court attempted to formulate criteria to distinguish non-dutiable items which are part of the hull and fittings of a vessel from dutiable equipment, as defined above. These items might be considered to include:

...those appliances 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).

A more contemporary working definition might be that which is used under certain circumstances by the Coast Guard; it includes a system, accessory, component or appurtenance of a vessel. This would include navigational, radio, safety and, ordinarily, propulsion machinery.

In regard to the particular items forwarded for our review, we find that the record supports the applicant's claim that the work detailed under the following items constitutes non-dutiable modifications:

Item M26 - Conversion 8.5' & 9.5' Containers Item 5.1-29a - Cell Guides at #1 Hatch
Item H-9,10,16A - Faceplates
Item H-1 - Hatch Cover Liner
Item H-2 - Foremast with Foam Monitor
Item H-3 - Web Frame
Item H-11 - Hinge Frames

We note that the Vessel Repair Liquidation Unit (VRLU) has requested our opinion on several additional items contained within the entry. Item 1.4 of Mitsubishi Heavy Industries, Ltd. bill no. 3142-549110-02 covers cleaning costs. Inasmuch as the documentation does not support a finding that the cleaning in question was associated in whole or in part with non-dutiable work, Item 1.4 is dutiable.

Item M-11 is entitled, "Blend Oil Tank Drain Modification." Upon reviewing the documentation submitted, it is apparent that the work done under this item does in fact constitute a non-dutiable modification.

Item 3.2-9 is entitled, "Stern Tube Seal Overhaul." Upon reviewing the documentation submitted, we are in accord with the VRLU that the work done under this item is dutiable.


Evidence is presented sufficient to prove that certain foreign work discussed above which was performed on the subject vessel constitutes modifications so as to render the work non-dutiable under 19 U.S.C. ? 1466. In regard to the other work items for which our review is requested, we find them dutiable as discussed in the Law and Analysis section above.


Arthur P. Schifflin

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