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 115296 - HQ 115412 > HQ 115358

Previous Ruling Next Ruling
HQ 115358

June 25, 2001

VES-13-18-RR:EC:IT 115358 LLO


United States Customs Service
423 Canal Street, Room 303
New Orleans, Louisiana 70130

RE: Vessel Repair; Vessel Protest No. 1601-01-100026; Duty Remission; M/V OOCL INSPIRATION; V-650;Entry No. C160017402-8; 19 U.S.C. §1466; 19 C.F.R. §4.14

Dear Sir:

We received your memorandum dated April 25, 2001, requesting we review a vessel protest relating to the M/V OOCL INSPIRATION regarding the dutiability of travel and sundry expenses and a duty allegedly charged twice for the same repair. Our ruling on this matter is set forth below.


The M/V OOCL INSPIRATION, a U.S. flag vessel operated by United States Ship Management, Inc., arrived at the port of Charleston, South Carolina on April 14, 2000.

An application for relief was timely filed on June 30, 2000. A protest was filed on February 12, 2001. According to the documents in the file, the vessel underwent work in Rotterdam, Netherlands.

The operator agents, U.S. Ship Management, Inc. submitted an application for relief identifying certain items as non-dutiable. This protest is requesting relief regarding the dutiability of travel and sundry expenses and disputes the duty on a repair that was allegedly charged twice.


Whether the travel and sundry expenses charged by foreign repair technicians while working on 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.

United States Ship Management, Inc., maintains in its protest that travel and sundry expenses meet the criteria specified in title 19 C.F.R. §174.24(b) for further review since the decision against which the protest is filed involves “questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts.” The protestant further asserts that, “[t]he Texaco case only applied to post repair cleaning and protective coverings used in the process of repairs.”

The protestant’s assertions are incorrect with regard to Texaco’s applicability to travel and sundry expenses, and a court not having ruled on the dutiability of travel expenses. The Court of Appeals for the Federal Circuit, affirmed the Texaco Marine Services, Inc. v. U.S., 44 F.3d 1539, 1547 (1994) “but for” test approach. The Court clearly opined that the decision by the Mount Washington Tanker court, which ruled that compensating the members of a Swedish repair crew for their time spent traveling between Sweden and a vessel anchored at sea off of Singapore were not dutiable as an expense of the dutiable repairs performed by the repair crew was incorrect. The travel expenses would have been viewed as coming within the statute had the “but for” approach been used by the court.

The protestant goes on to argue that the application of Texaco’s “but for” test to revoke prior Customs rulings is in contravention of the Customs Modernization Act, title 19 U.S.C. §1625(c), which requires notice and comment before modifying or revoking a prior interpretive ruling or decision. The protestant should note for future reference, that on March 3, 1995, the Assistant Commissioner, Office of Regulations and Rulings, issued a memorandum that was published in the Customs Bulletin on April 5, 1995) (Customs Bulletin and Decisions vol. 29, no. 14 at pr. 24). It provided that all vessel repair entries filed with Customs on or after the date of the Texaco decision were to be liquidated in accordance with the full weight and effect of the ruling. Therefore, expenses that are associated with repair charges are dutiable in accordance with the “but for” approach used in Texaco, if those repairs occurred after April 5, 1995. Without a showing that the charges in question are incident to a non-repair item, they are subject to duties under the vessel repair statute. Additionally, no notice and comment period is required for changes in Customs interpretation that are implemented as a result of rulings made by a court, as is the situation in this case. (See, Sea-land Service, Inc. v. United States, 239 F.3d 1366 (2001). In this situation, the OOCL INSPIRATION received foreign repairs in April of the year 2000, well after the April 5, 1995 Texaco “but for” test approach took effect pursuant to Customs Bulletin and Decisions vol. 29, no. 14 at pg. 24. Additionally, the expenses in question were incidental to the repairs on the vessel. No showing has been made by the petitioner that the travel and sundry expenses in question were incidental to a non-repair item. For this reason, these expenses are dutiable.

The protestant next alleges that with regard to item one on the vessel’s 226 entry form, duty was mistakenly charged both for the Radio Holland and Litton Marine invoices. Protestant asserts that Radio Holland was subcontracted by Litton Marine to do the work and the former billed the latter. The evidence submitted suggests Litton Marine performed some work, but that a Radio Holland technician also aided in connecting the NT200D Model GPS to the M34 ARPA. (See USSM-VESSEL JOB ORDER) The invoices provided do not clearly indicate whether the repairs were performed solely by Radio Holland for Litton Marine, or if one company followed up uncompleted work performed by the other in which case, both would be subject to duty. Because it is unclear whether or not Radio Holland performed all of the repairs on the OOCL INSPIRATION on its own, or finished uncompleted repairs started by Litton Marine, and protestant did not specifically attempt to rebut Customs initial observation that the invoices indicated shared repairs rather than subcontracted work completed solely by Radio Holland, the repairs will remain as initially charged.


Expenses incurred by foreign repairmen while repairing a U.S. flag vessel outside of the United States fall within 19 U.S.C. §1466(a) and are therefore dutiable if incurred incident to the foreign repairs. The protest is denied in full.


Larry L. Burton

Previous Ruling Next Ruling