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HQ 115691

July 5, 2002

VES-13-18-RR:IT:EC 115691 GEV


Chief, Vessel Repair Unit
U.S. Customs Service
423 Canal Street
New Orleans, Louisiana 70130

RE: Vessel Repair Entry No. NK7-0200001-0; LIBERTY SUN; Modification; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated May 24, 2002, forwarding an application for relief from vessel repair duties assessed pursuant to 19 U.S.C. § 1466. You specifically inquire as to the merits of the applicant’s modification claim pertaining to Item MDD 517 of Exhibit 1b. Our ruling on this matter is set forth below.


The LIBERTY SUN is a U.S.-flag vessel which incurred foreign repair costs. Subsequent to the completion of the work in question, the vessel arrived at New Orleans, Louisiana, on September 8, 2001. A vessel repair entry was timely filed.

An application for relief with supporting documentation was timely filed on behalf of the vessel owner, Liberty Shipping Group Limited Partnership, by the vessel operator, Liberty Maritime Corporation. The application seeks relief for a myriad of costs, including Item MDD 517 listed on Malta Drydocks invoice no. 009152 (Exhibit 1b). It is alleged that the work covered by this item constitutes a non-dutiable modification. It is this claim for which you seek our advice.


Whether the work in question for which the applicant seeks relief constitutes a modification to the subject vessel and is therefore nondutiable under 19 U.S.C. § 1466.


Title 19, United States Code, § 1466(a) (19 U.S.C. § 1466(a)), provides in pertinent part for the payment of an ad valorem duty of 50 percent of the cost of “equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States”

In its application of the vessel repair statute, Customs has held that modifications, alterations, or additions to the hull and fittings of a vessel are not subject to vessel repair duties. The identification of work constituting modifications vis-à-vis work constituting repairs has evolved from judicial and administrative precedent. (See Otte v. United States, 7 Ct. Cust. Appls. 166, T.D. 36489 (1916); United States v. Admiral Oriental Line et al., 18 C.C.P.A. 137, T.D. 44359 (1930); and Customs Bulletin and Decisions, Vol. 31, Number 40, published October 1, 1997.) The factors discussed within the aforementioned authority are not by themselves necessarily determinative, nor are they the only factors which may be relevant in a given case. However, in a given case, these factors may be illustrative, illuminating, or relevant with respect to the issue of whether certain work may be a modification of a vessel which is nondutiable under 19 U.S.C. § 1466.

Upon reviewing the documentation covering Item MDD 517, specifically the aforementioned shipyard invoice, it is readily apparent that the evidence presented is insufficient to support the applicant’s claim. We note the statement in the application that, “This was a permanent addition and as such is a modification.” This statement, in and of itself, is not probative of a modification claim. The scant, three-sentence description appearing thereon evidences none of the factors indicative of a modification as discussed in the above-referenced authority. Accordingly, in the absence of evidence to the contrary, Item MDD 517 is therefore dutiable.


The work in question for which the applicant seeks relief does not constitute a modification to the subject vessel and is therefore dutiable under 19 U.S.C. § 1466


Jeremy Baskin
Acting Chief

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