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HQ 115199

April 2, 2001

VES-13-18 RR:IT:EC 115199 RSD


Chief Residual Liquidation and Protest Branch U.S. Customs Service
Liquidation Branch
555 Battery St., Room 107
San Francisco, California 94111

RE: Vessel Repair Entry No. C27-0171412-6, M/V SEA-LAND EXPRESS; V-290; Travel, rental, and allowances; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated October 6, 2000, forwarding a petition for review from U.S. Ship Management, Inc. of your ruling on an application for relief from duties assessed pursuant to 19 U.S.C. § 1466. Our findings are set forth below.


The M/V SEA-LAND EXPRESS is a U.S.-flag vessel owned by U.S. Ship Management. Subsequent to completion of foreign shipyard work, the vessel arrived in Los Angeles, California on June 14, 2000.

An application for relief with supporting documentation was timely filed. Pursuant to a letter dated September 13, 2000, the Chief, Residual Liquidation and Protest Branch, San Francisco, California denied in part the aforementioned application. A petition for review of this decision was timely filed seeking relief with respect to travel and rental expense charges listed on various invoices incurred pursuant to repair work carried out on board of the M/V SEALAND EXPRESS in Asia.


Whether the travel, rental, and allowance charges for which the petitioner seeks relief are dutiable pursuant to 19 U.S.C. § 1466.


Title 19, United States Code § 1466, provides in pertinent part for the payment of an ad valorem duty of 50 percent of the costs of “ equipments, or any part thereof, including boats, purchased for or the repair part or material to be used, or expenses of repairs made in a foreign country upon a vessel document under the laws of the United States”

Petitioner contends that travel and rental expenses allowances are not actually labor performed on or materials used on the vessel and should be excluded from Customs duties. You have also pointed out that the petitioner is also seeking relief from duty for the use of a generator in the 7th item because it claims that it is a rental.

While the petitioner’s position at one time reflected Customs position with respect such charges, pursuant to the decision of the U.S. Court of Appeals for the Federal Circuit (CAFC) in Texaco Marine Services, Inc., and Texaco Refining and Marketing Inc. v. United States, 44 F.3d 1539 (1994), it no longer represents Customs position in this matter. (See also Customs memorandum 113308, dated January 18, 1995, published in the Customs Bulletin on February 8, 1995 (Customs Bulletin and Decisions, vol. 29, no. 6 at p. 59), as clarified in Customs memorandum 113350, dated March 3, 1995, published in the Customs Bulletin on April 5, 1995 (Customs Bulletin and Decisions, vol. 29, no. 14, at p. 24)). It should be noted that in post-Texaco vessel repair entries such as the one currently under consideration, Customs has held travel and allowance charges to be dutiable (Customs ruling letter 115100 dated October 26, 2000). In Headquarters Ruling 113977, dated November 12, 1997, we ruled that travel expenses, transportation, equipment rental and living expenses that were incurred pursuant to dutiable repairs, pursuant to the Texaco decision were dutiable. Furthermore, the petitioner has not pointed to which particular items on the submitted invoices should be exempted from duty.

Accordingly, the travel, rental and allowance charges in question are dutiable.


The rental/meals/travel expenses for which the petitioner seeks relief are dutiable pursuant 19 U.S.C. § 1466. Consequently, the petition is denied in full.


Larry L. Burton

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