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HQ 115342

June 18, 2001

VES-13-18-RR:EC:IT 115342 LLO


Chief, Residual Liquidation and Protest Branch United States Customs Service
6 World Trade Center
New York, N.Y. 10048

RE: Vessel Repair; Vessel Protest; Duty Remission; Casualty; M/V TANABATA; C13-0047075-9;19 U.S.C. §1466;19 C.F.R. §4.14

Dear Sir:

We received your memorandum dated March 3, 2001, requesting we review an application for relief relating to the TANABATA, regarding the dutiability of an asserted casualty occurrence, which took place in foreign waters, and required repairs to take place in a foreign port. Our ruling on this matter is set forth below.


The TANABATA, a U.S. flag vessel operated by Wallenius Lines Holding, Inc., and American V. Ships Marine Ltd., arrived at the port of Baltimore, Maryland on November 22, 2000. The date of entry was November 24, 2000.

An application for relief was timely filed on February 23, 2001. According to the vessel repair entry and other documents in the file, the vessel underwent work in Bremerhaven, Germany

The operator agents, Wallenius Line Holding, Inc. and the Marine Managers, American V. Ships Marine Ltd. submitted an application for relief identifying certain items as non-dutiable. This application for relief is requesting relief regarding the dutiability of an asserted casualty claim due to unexpected damage to the rudder/tiller of the TANABATA.


Whether the evidence presented regarding foreign repairs to the subject vessel is sufficient to warrant remission pursuant to 19 U.S.C. §1466(d)(1).


Title 19, United States Code, 1466, provides in part for payment of an ad valorem duty of 50 percent of the cost of foreign repairs 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.

The regulations governing the submission of evidence and the determination of dutiability of foreign shipyard operations under 19 U.S.C. §1466 are found in 19 C.F.R. § 4.14. Subsection (d)(1) of 19 C.F.R. §4.14 provides that while an application for relief need not be submitted in any particular format, it must make a claim for relief under either paragraph (a) (items that are not subject to duty) and/or paragraph (c) (circumstances allowing remission of duty otherwise due), or both.

Title 19 U.S.C. §1466(d)(1) provides that the Secretary of the Treasury is authorized to remit or refund duties if the owner or master of the vessel was compelled by stress of weather or other casualty to pull into a foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. It is Customs position that “port of destination,” means a port in the United States. (See 19 C.F.R. §4.14(c )(3)(i))

The statute sets forth the following three-part test that must be met in order to qualify for remission under the subsection:

The establishment of a casualty occurrence. The establishment of unsafe and unseaworthy conditions. The inability to reach the port of destination without obtaining foreign repairs.

The term “casualty” as it is used in the statute, has been interpreted as something which, like stress of weather, comes with unexpected force or violence, such as fire, spontaneous explosion of such dimensions as to be immediately obvious to ship’s personnel, or collision (Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 23, 28-29, C.D. 362 (1940). In this sense, a “casualty” arises from an identifiable event of some sort. In the absence of evidence of such casualty event, we must consider the repair to have been necessitated by normal wear and tear (23 Cust. B. & Dec. No. 43, 4,5 (1989)).

In addition, if the above requirements are satisfied by evidence, the remission is restricted to the cost of the minimal repairs necessary to “secure the safety and seaworthiness of the vessel to enable her to reach her port of destination.” (19 U.S.C. §1466(d)(1)). Repair costs beyond that minimal amount are not subject to remission.

In this case, a determination as to whether or not a casualty occurred, according to Customs definition must be made. As stated earlier, three factors, fire, collision and explosion are persuasive circumstances that in some cases, make a strong argument that a casualty occurred. Outside of these three types of occurrences, if it is determined that the incident came with unexpected force or violence of a magnitude equivalent to fire, collision or explosion, then an argument can be made that a casualty occurred. In this instance, although the damage to the rudder/tiller may not have occurred with violent force, the facts indicate that the event was unexpected. Additionally, the damage occurred as a result of the rudder/tiller making contact with the river bottom, indicating that the repairs required were necessary, not because of normal wear and tear, but because of an unexpected accident that required immediate repair.

The second part of the test, requires the establishment of unsafe and unseaworthy conditions. “Seaworthiness means that the vessel will be fit in every way for the contemplated voyage. The vessel must not only be in a condition to meet the risks which may be reasonably expected, but she must also be in a position to ensure safe carriage of the cargo.” CHARTERING & SHIPPING TERMS, 165 (10th ed. 1977). The facts presented, indicate that damage was permanent and resulted in a 16” degree twist and cracked keyway in the rudder stock and distorted steering gear tiller and guide pins. The damage that occurred limited steering capabilities and subjected the vessel to the possibility of further damage, since it is alleged that the rudder could have snapped off entirely, threatening the vessel with complete immobility. The threat of possible or even probable immobility that could have occurred as a result of the damage the rudder incurred with the vessel’s continued movement, constitutes an unseaworthy and unsafe condition, based upon the definition of “seaworthy” outlined above.

While the possibility of immobility of the vessel demonstrated a foreseeable inability on its part to reach the port of destination without the foreign repairs, at the time repairs occurred, there is no indication that the vessel was immobile and could not reach her port of destination. For this reason, the third part of the test has not been satisfied.

The USCG is the controlling agency that determines questions of a vessel’s fitness to proceed. The procedure by which the USCG renders such a determination is set forth in 2.01-15 and 31.10-25, USCG Regulations (46 C.F.R. § 2.10-15, 31.10-25). The former states that a vessel may not proceed from one port to another for repairs unless prior authorization is obtained from the USCG Officer-In-Charge, Marine Inspection (OCMI) either through the issuance of a USCG “Permit to Proceed to Another Port for Repairs” (CG-948) or a CG-835 which would specify the restrictions on, and duration of, any voyage undertaken prior to obtaining permanent repairs. The latter states that with respect to tank vessels, “No extensive repairs to the hull or machinery which affect the safety of a vessel shall be made without the knowledge of the Officer-In-Charge, Marine Inspection.”

Notwithstanding the clear wording of the above USCG Regulations, specifically 46 C.F.R. §2.10-15, which does not distinguish between foreign or domestic locations, it is the practice of the USCG not to issue a formal permit-to-proceed to a vessel transiting foreign waters because its certificate of inspection would have to be removed resulting in problems in transiting foreign waters. (See Customs Ruling 112060) Furthermore, the USCG acknowledges that vessel operators often make casualty reports for U.S. flag vessels damaged overseas verbally to the proper USCG Marine Inspection Office, followed by the required written report. Since the USCG cannot always send a marine inspector to a damaged vessel overseas they oftentimes consider the classification society report and the report of the vessel’s master to determine the required temporary repairs and voyage restrictions. Id.

Customs has previously addressed the sufficiency of evidence in casualty claims such as this where a vessel that has been damaged abroad proceeds in a state of disrepair between foreign locations (i.e., Port of Radicatel and Germany) prior to it being repaired in a foreign port, and subsequently sails to its U.S. port of destination. (See Customs Rulings 112060, dated June 11, 1992, and 113501, dated October 24, 1995). It is Customs position, as stated in the aforementioned rulings, that despite any practice of verbally reporting foreign casualties to the USCG and that agency’s subsequent verbal instructions, remission pursuant to 19 U.S.C. §1466(d)(1) will not be granted in the absence of documentary evidence that the casualty occurrence was timely reported to the USCG and that agency, directly or through the medium of a marine surveyor, permitted the vessel to proceed between foreign locations in a damaged condition. The mere submission of a CG-2692, without accompanying documentation from the appropriate USCG OCMI authorizing the vessel to proceed in a damaged condition and specifying what, if any, restrictions apply, will not suffice for granting remission pursuant to 19 U.S.C. §1466(d)(1).

The application for relief that has been submitted by the operator agents, does not contain sufficient documentary evidence that the USCG granted the vessel permission to proceed to a foreign port to receive repairs as a result of damages it incurred. In this case, the applicant provided a copy of a United States Coast Guard log entry regarding the inspection of the damages the TANABATA incurred, however, none of the documentary evidence presented sufficiently demonstrates that the USCG provided the TANABATA with actual permission to proceed. Because of the insufficiency of the evidence provided, the application for relief regarding the remission of the duties paid for foreign repairs to the rudder/tiller is denied in full.


The evidence presented regarding foreign repairs to the subject vessel is insufficient to warrant remission pursuant to 19 U.S.C. §1466(d)(1). The applicant’s claim is therefore denied.


Larry L. Burton

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