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HQ 114357

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May 21, 1998
VES-13-18-RR:IT:EC 114357 GOB

CATEGORY: CARRIER

Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 415 P.O. Box 2450
San Francisco, CA 94126

RE: Vessel Repair Entry No. H24-0021221-1; ALASKA SPIRIT; 19 U.S.C. 1466; Petition

Dear Madam:

This is in response to your memorandum of April 22, 1998, which forwarded the petition submitted by Western Overseas Corporation on behalf of the Fishing Company of Alaska ("FCA" or "petitioner") with respect to the above-referenced vessel repair entry.

FACTS:

The evidence of record indicates the following. The ALASKA SPIRIT (the "vessel"), a U.S.-flag vessel owned and operated by the petitioner, arrived at the port of Los Angeles, California on January 9, 1996. The subject vessel repair entry was subsequently filed. The vessel underwent certain foreign shipyard work in Japan.

In Ruling 227038 dated February 19, 1998, the application for relief was denied with respect to the subject entry.

ISSUE:

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

LAW AND ANALYSIS:

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, and equipment purchased in a foreign country for, 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.

In Ruling 227038 on the application for relief, two primary findings were made. First, we rejected FCA's claim for relief based upon its assertion that the vessel was not within the scope of 19 U.S.C. 1466(a) liability because it was undocumented by reason of the destruction of its certificate of documentation in a fire. Second, we determined that FCA failed to make any assertions that specific items were nondutiable.

The petitioner makes certain claims on pages three through six and pages 33 through 40 of its submission.

On pages three through six, the petitioner reiterates its claim that the vessel was not within the scope of 19 U.S.C. 1466(a) liability at the time of most of the repairs because it was "an undocumented vessel" by reason of the destruction of its certificate of documentation in a fire. We have communicated a second time on this issue with the U.S. Coast Guard, which is the agency with the responsibility for the documentation of vessels. The U.S. Coast Guard has advised us clearly that the documentation of a vessel is not invalid by reason of its destruction. We concur with the position of the Coast Guard. As we pointed out in Ruling 227038, and as the Coast Guard has advised us, the acceptance of the petitioner's claim would, at a minimum, create an unworkable administrative environment for the Coast Guard with respect to the documentation of vessels. Accordingly, we once again reject this claim.

The petitioner asserts, on pages 34-37 of its submission, that certain drydock costs and/or general services costs (e.g., tug service, air, water, electricity, etc.) are nondutiable based upon "the usual and accepted practice of Customs prior to December 29, 1994."

The subject entry is a "post-Texaco" entry, i.e., an entry filed after the appellate decision in Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 44 F.3d 1539 (CAFC 1994), aff'g 815 F.Supp. 1484 (CIT 1993). Accordingly, the Texaco decision applies to this entry. As we have stated in many rulings, the first of which was Ruling 113474 dated October 24, 1995, drydock costs and/or general services costs are to be prorated between dutiable costs and nondutiable costs.

On page 37 of its submission, the petitioner states: "Charges for items which do not cover equipment, or repairs, or the cost of labor in connection therewith, are not subject to duty. See 19 U.S.C. 1466." The petitioner does not specify any particular shipyard items as being relevant to this statement. Accordingly, this statement brings no relief to the petitioner. In the event that this statement pertains to drydock costs and/or general services costs, we reiterate that those costs are to be prorated, as stated above.

On pages 37-38 of its submission, the petitioner requests relief with respect to parts and/or materials purchased from the following U.S. vendors: Alpine Manufacturing Co., Inc., Crawford's, Grainger, PC& Mac Connection, Puget Sound Inflatables, Inc., and McMaster-Carr Supply Company. After a review of the documentation of record, we find that the parts and/or materials purchased from these vendors are nondutiable pursuant to 19 U.S.C. 1466(h)(2). Note, however, that the inspection and servicing fee of $1,812.76 on Puget Sound Inflatables, Inc. invoice #7026 is dutiable under 19 U.S.C. 1466(a) because it is not a part or material.

On pages 38-39 of its submission, the petitioner recites 19 U.S.C. 1466(d)(2), 19 U.S.C. 1466(h)(3) and part of T.D. 75-257. In this section of the submission, the petitioner does not specify any particular shipyard items as being relevant to these authorities. Accordingly, the recitation of these authorities brings no relief to the petitioner.

HOLDING:

As detailed above, the petition is granted in part and denied in part.

Sincerely,

Director,
International Trade Compliance

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