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 > 1998 HQ Rulings > HQ 114268 - HQ 114493 > HQ 114302

Previous Ruling Next Ruling
HQ 114302

March 25, 1998

VES-13-18-RR:IT:EC 114302 GOB


Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 107 P.O. Box 2450
San Francisco, CA 94126

RE: 19 U.S.C. 1466; MOKIHANA, V -006; Vessel Repair Entry No. C27-0158612-8; Protest

Dear Madam:

This ruling is in response to your memorandum dated March 13, 1998, which forwarded the protest submitted by Matson Navigation Company ("protestant" or "Matson") with respect to the above-referenced vessel repair entry.


The MOKIHANA (the "vessel"), a U.S.-flag vessel, arrived at the port of Los Angeles, California on October 28, 1996. The subject vessel repair entry was filed on November 5, 1996.

In Ruling 113883 dated April 1, 1997, the application for relief with respect to the subject entry was granted in part and denied in part.

In Ruling 114010 dated October 3, 1997, the petition with respect to the subject entry was granted in part and denied in part.


Whether the subject items are dutiable pursuant to 19 U.S.C. 1466(a).


19 U.S.C. 1466 provides for the payment of duty at a rate of fifty 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 be employed in such trade.

General Services and Drydock Costs. Matson claims that these costs are nondutiable. As we have stated and explained many times previously, these items are to be prorated between dutiable costs and nondutiable costs.

Matson has asked questions with respect to how the costs are to be prorated.

In Ruling 226873 dated October 29, 1996, we stated:

In accordance with Ruling 113474 and Memorandum 113350, and as your forwarding memorandum states, the drydocking charges should be prorated between the dutiable and nondutiable costs associated with the drydocking. The method of prorating was described in Ruling 113474, supra: the drydocking costs "should be apportioned to reflect the dutiable and non-dutiable foreign costs in this entry." For example, if, aside from the subject "drydocking costs," as described supra, fifty percent of the costs of that particular drydocking were dutiable and fifty percent were nondutiable, then fifty percent of the subject "drydocking costs," as described supra, would be dutiable and fifty percent would be nondutiable.

The costs of general services and/or drydock costs to be prorated are not involved in the calculation of what portion of the costs is dutiable and what portion is nondutiable.

With respect to the inclusion of 19 U.S.C. 1466(h)(3) duties in the proration calculation, in Ruling 226873 we stated:

Duty assessed under 19 U.S.C. 1466(h)(3) is vessel repair duty (i.e., 19 U.S.C. 1466 duty), albeit assessed at a rate of duty different from the fifty percent rate of 19 U.S.C. 1466(a). As such, the dutiable amount with respect to duty assessed under 19 U.S.C. 1466(h)(3) is to be included in the dutiable component for the purpose of the proration calculation which is described supra on pages four through six of this ruling.

Modifications to Upper Longitudinal Hatch Coaming (531). Matson claims that this item is a nondutiable modification. It states: "This work was not repairs, but was performed to correct a design deficiency, which required structural enhancement, a permanent modification, at many various locations of the upper longitudinal coaming for added strength and durability." [Emphasis in original.] In its application for relief with respect to the subject entry, Matson stated that this item: "...entails the permanent installation by welding of previously non-existing brackets to add strength to the longitudinal hatch coamings to eliminate the flexing of the hatch covers and fracturing of the container base sockets." [Emphasis supplied.]

We find that this item is dutiable based upon Matson's statement in its application that this item was performed, at least in part, "to eliminate the flexing of the hatch covers and fracturing of the container base sockets." Work which is performed to correct a problem, deficiency, or state of disrepair is dutiable under 19 U.S.C. 1466. The record indicates that there was a problem, deficiency, or condition of disrepair. Accordingly, the work is dutiable.

Modifications to Transverse Box Girder (535). Matson states: "... the work clearly refers to a structural modification due to a deficiency in design construction of the transverse box girders."

Matson has not provided any information which would have us change our earlier findings. The invoice clearly reflects that fractures or cracks occurred, and that the work involved in this item was related to the fractures and cracks. For example, the pertinent invoice states (and this is just one of the instances on the pertinent invoice where cracks or fractures are mentioned): "Where fractures have occurred in transverse box girder plate and/or where chocks were not properly aligned, installed reinforement [sic] per sketch 535-1."

This item is clearly dutiable under 19 U.S.C. 1466. Work performed as a result of fractures, cracks, or other disrepair is dutiable.

14 items of prefabricated steel. Matson reiterates the claims of its petition that the prefabricated steel is eligible for treatment pursuant to 19 U.S.C. 1466(h)(2) and/or (h)(3).

We remain unpersuaded.

With respect to 19 U.S.C. 1466(h)(2), it is our position that 19 U.S.C. 1466(h)(2) contemplates duty-paid entry of eligible spare repair parts or materials having been made prior to the vessel repair entry at issue. The petitioner has not established that this occurred.

Prefabricated steel is not a "part" eligible for 19 U.S.C.

Item 18 on CF 226. Matson repeats the claim of its petition that item 18 on the

CF 226 "is not dutiable because it constitutes accessories and equipment for containers which are instruments of international traffic and which therefore may be entered without duty pursuant to 19 C.F.R. 10.41a(a)(2)." In its petition and protest, Matson describes this item as "container deck sockets."

Matson has provided no documentary evidence in support of this claim. The pertinent invoice does not include information which would link this item with containers or which would indicate that the subject item is accessories or equipment for containers. Therefore, we find that this item is dutiable.


As detailed above, the protest is denied.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, the Freedom of Information Act and other public access channels.


International Trade Compliance

Previous Ruling Next Ruling