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HQ 115330

April 16, 2001

VES-13-18-RR:IT:EC 115330 LLO


Chief, Liquidation Branch

P.O. Box 2450
San Francisco, CA 94126

RE: Petition for Review; SEA-LAND DEVELOPER; V-0006; Vessel Repair Entry No. C27-0171478-7; 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 2, 2001, requesting we review a petition relating to the SEA-LAND DEVELOPER, V-0006 regarding the dutiability of expenses incurred while foreign repairs are performed. Our ruling on this matter is set forth below.


The SEA-LAND DEVELOPER, 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 November 7, 2000. The date of entry was November 14, 2000.

An application for relief was timely filed. Pursuant to a ruling letter from the San Francisco office dated February 8, 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, transportation, rental and administrative charges.


Whether the travel, transportation, rental and administrative 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.


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, rental and administrative expenses are not actually labor performed on or materials used on the vessel and should be excluded form 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 p.59), as clarified in Customs memorandum 113350, date 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, rental, and administrative expenses in question are dutiable.


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

Larry L. Burton
Entry Procedures and Carriers Branch

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