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HQ 226534

February 12, 1996

VES-13-04-RR:IT:EC 226534 GEV


Chief, Vessel Repair Liquidation Unit
U.S. Customs Service
423 Canal Street
New Orleans, Louisiana 70130

RE: Vessel Repair Entry No. C14-0024344-5; S/S FRED G; V-12; Casualty; Boiler Repairs; 19 U.S.C. § 1466(d)(1)

Dear Sir:

This is in response to your memorandum dated November 7, 1995, forwarding a petition for review of your decision denying an application for relief from duties assessed pursuant to 19 U.S.C. § 1466. Our findings are set forth below.


The S/S FRED G is a U.S.-flag vessel operated by Pacific Gulf Marine, Inc. On September 30, 1993, the vessel departed Norfolk, Virginia, bound for Antwerp, Belgium. On October 7, 1993, the vessel incurred extensive boiler failure necessitating its being towed by a deep sea tug to Antwerp for discharge of its cargo and repairs. The repairs took place during the period of October 14-21, 1993. The vessel arrived in the United States at Norfolk, Virginia, from Antwerp, Belgium, on November 1, 1993. A vessel repair entry was timely filed.

Pursuant to an authorized extension of time, an application for relief, dated January 28, 1994, was timely filed seeking remission pursuant to 19 U.S.C. § 1466(d)(1) for the cost of the boiler repairs. In support of its claims, the applicant submitted the following documentation: shipyard invoices; copies of the deck log (Enclosure 1); a copy of a letter from the U.S. Coast Guard (USCG) authorizing the vessel to proceed to the discharge port for repairs (Enclosure 2); a copy of the USCG form CG-2692 ("Report of Marine Accident, Injury or Death") (Enclosure 3); and a copy of American Bureau of Shipping (ABS) Report No. AN18485 (Enclosure 4).

By letter dated May 27, 1994, the New Orleans Vessel Repair Liquidation Unit denied the application for relief, enclosed a copy of C.S.D. 79-32, and provided notification of the right to file a petition for review of the application denial. A petition, dated June 17, 1994, was timely filed. The basis for the petitioner's request for remission is that the boiler failure in question could not have been foreseen since inspections by both the ABS and the USCG prior to the voyage found the boilers in good condition. In support of this contention the petitioner has provided an ABS Annual Machinery Class Survey dated 10 August 1993, and USCG Vessel Inspection Records dated February 19, 1993, and May 20, 1993.


Whether evidence is presented sufficient to prove that foreign repairs performed on the subject vessel's boilers for which relief is sought were necessitated by a casualty occurrence thus warranting remission pursuant to 19 U.S.C. § 1466(d)(1).


Title 19, United States Code, § 1466, provides in part for payment of an ad valorem duty of 50 percent of the cost of foreign repairs to vessels documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to engage in such trade. Section 1466(d)(1) provides that the Secretary of the Treasury is authorized to remit or refund such duties if the owner or master of the vessel was compelled by stress of weather or other casualty to put into such foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. It is Customs position that "port of destination" means a port in the United States. (see 19 CFR § 4.14(c)(3)(i))

The statute sets forth the following three-part test which must be met in order to qualify for remission under the subsection:

1. The establishment of a casualty occurrence.

2. The establishment of unsafe and unseaworthy conditions.

3. The inability to reach the port of destination without obtaining foreign repairs.

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, spontaneous explosion of such dimensions as to be immediately obvious to ship's personnel, 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 casualty event, we must consider the repair to have been necessitated by normal wear and tear (ruling letter 106159, dated September 8, 1983).

In addition, if the above requirements are satisfied by evidence, the remission is restricted to the cost of the minimal repairs necessary to "...secure the safety and seaworthiness of the vessel to enable her to reach her port of destination." (19 U.S.C. § 1466(d)(1)). Repair costs beyond that minimal amount are not subject to remission.

In the case under consideration, the petitioner has neither alleged that the boiler failure was caused by an identifiable event/extrinsic force as discussed above, nor provided conclusive evidence to that effect. Rather, the petitioner states, "It is our contention that the boiler casualties in question could not have been foreseen and, therefore, casualty repair expenses related thereto qualify for relief from Customs duty." (See p. 2 of the petition) In support of this contention, the petitioner cites C.S.D. 79-32 which states, in part, "CIE 1829/58 holds that a breakdown of machinery is not regarded as a casualty in the absence of extrinsic force unless the record shows that the difficulty could not have been foreseen." (See p. 1 of petition)

Upon reviewing C.S.D. 79-32 in its entirety, it is readily apparent that it does not support the petitioner's claim. That case involved a U.S.-flag vessel arriving in a foreign country in ballast to load cargo. When deballasting began, the forepeak valve was found to be stuck shut thereby preventing proper deballasting. The vessel owner stated that failure to correct the problem could lead to excessive stress on the hull and cause the vessel to become overloaded, exceeding ABS and USCG safety guidelines. Foreign repairs were obtained to correct the problem. In holding this repair work to be dutiable, Customs stated as follows:

"CIE 1829/58 holds that a breakdown in machinery is not regarded as a casualty in the absence of extrinsic force unless the record shows that the difficulty could not have been foreseen. While CIE 1161/62 provides that the element of foreseeability is not [sic] longer dispositive, we affirm that a breakdown or failure of machinery may not be regarded as a casualty in the absence of a showing that it was caused by some outside force." (Emphasis added; with respect to Customs elimination of the doctrine of foreseeability as a consideration in the administration of the vessel repair statute, see also CIE 688/62 and T.D. 55670(2))

Accordingly, the basis upon which the petitioner seeks relief (i.e., foreseeability) has been rendered nugatory pursuant to the above-cited administrative precedents. Furthermore, Customs has long-held boiler repairs to be dutiable in the absence of evidence sufficient to prove that the repairs were caused by stress of weather or a well defined casualty occurrence (see Headquarters Rulings 106887 and 107358). Consequently, the boiler repairs in question are dutiable.


Evidence is presented insufficient to prove that certain foreign repairs performed on the subject vessel for which relief is sought were necessitated by a casualty occurrence therefore remission pursuant to 19 U.S.C. § 1466(d)(1) is denied.


William G. Rosoff

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