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HQ 115329





April 16, 2001

VES-13-18-RR:IT:EC 115329 LLO

CATEGORY: CARRIER

Chief, Liquidation Branch

P.O. Box 2450
San Francisco, CA 94126

RE: Petition for Review; SEA-LAND PATRIOT; V-0006; Vessel Repair Entry No. C27-0171488-6; Duty Remission; 19 U.S.C. §1466(d); 19 C.F.R. §4.14; Expenses Incurred Incident to Foreign Repairs

Dear Sir:

We received your memorandum dated March 21, 2001, requesting we review a petition relating to the SEA-LAND PATRIOT, V-0006 regarding the dutiability of expenses incurred while foreign repairs are performed. Our ruling on this matter is set forth below.

FACTS:

The SEA-LAND PATRIOT, a United States-flag vessel operated by United States Ship Management, Inc. of Charlotte, North Carolina arrived at the port of Los Angeles, California on December 5, 2000. The date of entry was December 6, 2000.

An application for relief was timely filed. Pursuant to a ruling letter from the San Francisco office dated March 5, 2001, the application was denied in part. According to the vessel repair entry and other documents in the file, the vessel underwent work in Korea.

The operator agents, United States Ship Management, Inc. submitted an application for relief identifying certain items as non-dutiable, and that application was acted upon by the San Francisco office. This particular petition is requesting relief regarding the dutiability of travel and transportation costs, allowances, and rental expenses.

ISSUE:

Whether the travel and transportation costs, allowances and rental expenses incurred while obtaining repairs to a U.S. flag vessel while outside of the United States are dutiable under 19 U.S.C. §1466.

LAW AND ANALYSIS:

Title 19, United States Code, § 1466(a), provides in part for payment of an ad valorem duty of 50% of the foreign cost of equipment, or any part thereof, including boats, purchased for, or the repair parts of 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.

Petitioner contends that travel, transportation, allowances and rental expenses are not actually labor performed on or materials used on the vessel and should be excluded from Customs duties.

While the petitioner’s position at one time reflected Customs position with respect to 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 such charges to be dutiable (Customs ruling letter 115100 dated October 26, 2000).

Accordingly, the travel, transportation, allowances and rental expenses in question are dutiable.

HOLDING:

The travel, transportation, allowances and rental expenses for which the petitioner seeks relief are dutiable pursuant to 19 U.S.C. 1466. Consequently, the petition is denied in full.

Sincerely,

Larry L. Burton
Chief

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