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HQ 115761

October 21, 2002

VES-13-18 RR:IT:EC 115761 RSD


Chief, Vessel Repair Unit
U.S. Customs Service
423 Canal Street
Room 306
New Orleans Louisiana 70130

Dear Sir:

RE: Vessel repair; Application; HONDO RIVER; Vessel Repair Entry Number C20-0058576-3; Modifications; Casualty losses

Dear Sir:

This is in response to your memorandum dated July 19, 2002, forwarding for our consideration an application for relief from vessel repair duties assessed pursuant to 19 U.S.C. 1466 that is referenced above. The law-firm, Dyer, Ellis & Joseph, filed the application on behalf of Trico Marine, the operator of the vessel, HONDO RIVER. Your office requests our review with respect to alleged modifications that are specified in tab 13 in the application for relief. Additionally, the HONDO RIVER allegedly sustained a casualty on July 12, 2001. You request that we advise if the repairs in August are eligible to receive the benefits of 1466(d)(1). Our findings are set forth below.


Trico Marine (“Trico”) is the operator of the HONDO RIVER. The HONDO RIVER departed Fourchon, Louisiana on May 16, 2001, and returned to New Orleans, Louisiana on November 25, 2001. During the voyage, the vessel underwent work at a foreign shipyard. A vessel repair entry was filed with Customs on that date. The application for relief was filed on April 23, 2002 at the port of New Orleans. You have asked us to review certain alleged modifications and casualty repairs that were delineated in the application for relief.


Whether the documentation submitted substantiates the applicant’s claim that certain costs contained within the subject vessel repair entry are modifications and therefore are non-dutiable under 19 U.S.C. 1466.

Whether the documentation submitted substantiates the applicant’s claim that it is entitled to relief from vessel repair duties under 19 U.S.C. 1466(d)(1) because certain repairs that were made on the vessel at a foreign shipyard were due to a casualty incident.


Title 19, United States Code, § 1466 (19 U.S.C. § 1466), 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 that 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 non-dutiable under 19 U.S.C. § 1466.

In considering whether an operation has resulted in a modification that is not subject to duty, the following elements may be considered.

1. Whether there is a permanent incorporation into the hull or superstructure of a vessel (See United States v. Admiral Oriental Line et al., T.D. 44359 (1930)), either in a structural sense or as demonstrated by the means of attachment so as to be indicative of the intent to be permanently incorporated. This element should not be given undue weight in view of the fact that vessel components must be welded or otherwise "permanently attached" to the ship as a result of constant pitching and rolling. In addition, some items, the costs of which are clearly dutiable, interact with other vessel components resulting in the need, possibly for that purpose alone, for a fixed and stable juxtaposition of vessel parts. It follows that a "permanent attachment" takes place that does not necessarily involve a modification to the hull and fittings.

2. Whether in all likelihood, an item under consideration would remain aboard a vessel during an extended lay-up.

3. Whether, if not a first time installation, an item under consideration replaces a current part, fitting or structure that is not in good working order.

4. Whether an item under consideration provides an improvement or enhancement in operation or efficiency of the vessel.

ITEM: Grid Coolers
Main engine—flat bar install

Bow thruster—flat bar install


According to the applicant, the flat bar was added to prevent the vessel’s grid coolers from being carried away completely if they broke loose at the through hull fittings while the vessel was at sea. This had happened once before and the cooler assembly was lost. These flat bar retainers prevent the cooler from falling completely away from the hull, if a similar situation reoccurs. The applicant points out that the flat bar does not replace any existing part.

In reviewing this item, we note that adding the flat bar was a permanent addition to the substructure of the vessel, which improved the operation of the vessel. We are satisfied that this item constitutes a non-dutiable modification.

ITEM: Rack Installation

This item is a storage rack for spare parts. It was added to secure storage for spare parts during overseas deployment. The rack was put in the tunnel passageway to the ship’s engine room. According to the applicant, it was a permanent addition and does not replace any other feature of the vessel.

In Headquarters Rulings 112378, dated November 30, 1992, Customs held that the fabrication and installation of paint storage racks on the forward bulkhead of the paint locker was a modification. We find that this item is a permanent addition to the hull of the vessel and thus is a non-dutiable modification.

ITEM: Seawater Pipe Modification
Measure, Fabricate install
Materials (pipe and fittings) Stagings

This work was completed to correct a problem with the tie in between the bilge and the ballast piping systems for overboard discharge. The two systems are separate but come together at a common overboard discharge. The original location of the tie in was such that it could allow residual oily bilge water to collect in a length of the downstream common piping where it could be carried overboard if the ballast system was utilized. This work corrected the problem by relocating the tie in between the two systems immediately adjacent to the overboard discharge.

This work enhances the vessel’s ability to comply with environmental laws and regulations by reducing the possibility of an accidental prohibited discharge of oily residue. This is a permanent enhancement to the vessel, and thus we find the item is a non-dutiable modification.

ITEM: Main Mast

Materials, fabricate, install staging

According to the applicant, the main mast was hinged to permit clearance and maintenance of the fittings and navigational light fixtures. Two stay wire assemblies were added to the main mast after it became apparent that there was too much play in the mast while underway in a sea state with only the two original stays. This work was a permanent addition to the vessel and does not replace any existing parts.

We find that this item is a non-dutiable modification.


You have asked us to reviews the applicant‘s claims of a remission from vessel repair duties because of a casualty loss which resulted from an accident occurring on July 12, 2001.

19 U.S.C. 1466(d)(1) provides in part that the Secretary of the Treasury is authorized to remit or refund such duties if the owner or master of the vessel furnishes good and sufficient evidence that the vessel was compelled by stress of weather or other casualty to put into a foreign port and make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. 19 CFR 4.14(c)(3)(i) provides that "port of destination" means such port in the United States and "...only the duty on the cost of the minimal repairs needed for the safety and seaworthiness of the vessel is subject to remission or refund."

19 U.S.C. 1466 and 19 CFR 4.14 essentially set forth a three-part test, each of the elements of which must be established by good and sufficient evidence to qualify for remission:

1. a casualty occurrence; 2. an unsafe and unseaworthy condition; 3. the inability to reach the U.S. port of destination without foreign repair

The term "casualty", as it is used in the vessel repair statute (19 U.S.C. 1466), has been interpreted as something which, like stress of weather, comes with unexpected force or violence, such as fire, or spontaneous explosion of such dimensions as to be immediately obvious to ship's personnel, or collision. See Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 28-29, C.D. 362 (1940). In the absence of such a casualty event, we must consider the repair to have been necessitated by normal wear and tear or some other non-casualty situation.

In Dollar Steamship Lines, the court stated in pertinent part:

We are of the opinion that a casualty similar to "stress of weather" should be of necessity a happening that comes with the violence of the turbulent forces of nature.

Black's Law Dictionary (Fifth Edition, 1979) defines casualty as follows:

A serious or fatal accident. A person or thing injured, lost or destroyed. A disastrous occurrence due to sudden, unexpected or unusual cause. Accident; misfortune or mishap; that which comes by chance or without design. A loss from such an event or cause; as by fire, shipwreck, lightning, etc.

In this instance, the applicant has submitted evidence that indicates on July 12, 2001, an accident occurred when the vessel collided with an oil-drilling rig. An accident report and an ABS Survey report explain the nature of the accident and indicate that there was damage to the vessel’s hull. The accident report indicates that the collision caused a crack in the hull in the area of the #3 fuel oil tank located astern of the midship. The crack cause approximately 80-126 gallons of diesel fuel to leak out of this fuel tank into the water. We are satisfied that the evidence submitted indicates that an accident occurred to the vessel, which damaged the vessel. Repairs made to the vessel to remedy the damage caused by the accident would be entitled to remission from duty under 19 U.S.C. 19 U.S.C. 1466(d)(1). However, in reviewing the invoices that the applicant has submitted, we are unable to discern what repairs were made to the vessel as a result of the July 12, 2001, accident. Without invoices that specifically link the repairs made on the vessel to the damage caused by the July 12, 2001, accident, we find that the items will be considered dutiable.


Following a thorough analysis of the facts as well as of the law and applicable precedents, we have determined that the Application for Relief with respect to the items considered should be denied in part and granted in part as specified in the Law and Analysis portion of this ruling.


Glen E. Vereb

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