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 > 2001 HQ Rulings > HQ 114556 - HQ 115294 > HQ 115040

Previous Ruling Next Ruling
HQ 115040

July 21, 2000

VES-13-18-RR:IT:EC 115040 GEV


Chief, Liquidation Branch
U.S. Customs Service
Post Office Box 2450
San Francisco, CA 94126

RE: APL KOREA; V-31E; Vessel Repair Entry No. 110-7995905-9; Protest No. 3001-00-100102; Proration; General Services; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated April 28, 2000, forwarding for our review the above-referenced protest. Our ruling on this matter is set forth below.


The APL KOREA is a U.S.-flagged vessel which underwent certain foreign shipyard work in China and Singapore. Subsequent to the completion of the work the vessel arrived in the United States at the port of Seattle, Washington, on April 2, 1999. A vessel repair entry was timely filed.

An application for relief from duties assessed on the costs contained within the subject entry was timely filed. Pursuant to Customs ruling letter 114782, dated August 20, 1999, the application for relief was granted in part and denied in part.

A petition for review of the aforementioned decision was timely filed. Pursuant to Customs ruling letter 114859, dated December 10, 1999, the petition for review was granted in part and denied in part.

The subject entry was subsequently liquidated on January 7, 2000. A protest, dated February 28, 2000, was timely filed. In conjunction with the myriad of costs for which relief is sought, the protestant also takes issue with the proration calculation method used by Customs.


Whether the costs for which the protestant seeks relief are dutiable pursuant to 19 U.S.C. § 1466.


Title 19, United States Code, § 1466(a), provides in part for payment of an ad valorem duty of 50 percent of the foreign cost of equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country 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.

Item No. 101 covers drydocking and general services which are to be prorated between dutiable and nondutiable costs in accord with our oft-stated position. (See Customs ruling letters 115024 and 115039, dated June 26, 2000) The protestant has offered nothing in the way of new/additional legal authority to compel a change of our position in this matter. Consequently, these costs will continue to be prorated.

With respect to the protestant’s claim that Customs incorrectly includes 19 U.S.C. § 1466(h)(3) duties in its proration calculation, we reiterate our position provided in our ruling on the petition in this case and as set forth in Customs ruling letter 226873, dated October 29, 1996, wherein we stated:

Duty assessed under 19 U.S.C. § 1466(h)(3) is a 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.

Accordingly, our proration calculation method remains unchanged as we decline to adopt the protestant’s methodology. (See Customs ruling letters 115024 and 115039, dated June 26, 2000, which addressed this matter.)

Item No. 316 is entitled, “LIFE BOAT FALLS RENEWAL AND LOAD TEST (ABS AND USCG AND SOLAS INSPECTION)”. This cost was determined to be dutiable since the invoice description provides that the work included “fall wires renewal”. (Emphasis added) The protestant maintains that this cost is not dutiable since the work was done pursuant to a mandatory requirement. We disagree.

In regard to the dutiablity of survey/inspection costs, we note that pursuant to Customs Service Decision (C.S.D.) 79-277, we stated that, “[i]f the survey was undertaken to meet the specific requirements of a governmental entity, classification society, insurance carrier, etc., the cost is not dutiable event if dutiable repairs were effected as a result of the survey.” (Emphasis added) Consequently, since this “renewal” reflected on the shipyard invoice constitutes dutiable repairs/maintenance that is not segregated from nondutiable costs, Item No. 316 remains dutiable. (See Customs ruling letters 115024 and 115039, dated June 26, 2000, which considered this same work and found it to be dutiable.)

Item No. 4 Additional includes MacGregor Global Services invoice no. 9980370 which covers the cost of a MacGregor hatch cover service engineer. The protestant maintains that this cost was incurred in conjunction with the hatch cover modification work covered by Item No. 502 was which determined to be nondutiable pursuant to Customs ruling letter 114782. Upon reviewing the record we are in accord with the protestant’s position. Accordingly, Item No. 4 Additional is nondutiable.

Item No. 5 Additional covers the services of a John Crane-Lips Marine Propulsional Systems engineer (see John Crane-Lips invoice no. 600275) which the protestant alleges were incurred pursuant to non-dutiable inspection work on the bow thruster. Upon further review of the record, we are in accord with the protestant’s position. Accordingly, Item No. 5 Additional is nondutiable.


Following a thorough analysis of the facts as well as the law and applicable precedents, we have determined that this Protest should be granted in part and denied in part as specified in the Law and Analysis portion of this ruling.

In accordance with § 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to mailing this decision. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.


Sandra L. Bell

Previous Ruling Next Ruling