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HQ 115763

September 30, 2002

VES-13-18-RR:IT:EC 115763 GEV


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

RE: Vessel Repair Entry No. C20-0058530-0; CSX RELIANCE; V-118; Painting; Modification; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated July 18, 2002, which forwarded an application for relief from vessel repair duties assessed pursuant to 19 U.S.C. § 1466. You seek our advice regarding a modification claim of the applicant. Our ruling on this matter is set forth below.


The CSX RELIANCE is a U.S.-flag vessel operated by CSX Lines. Subsequent to the completion of foreign shipyard work, the vessel arrived in Tacoma, Washington, on September 15, 2001. A vessel repair entry was timely filed.

An application for relief with supporting documentation was timely filed seeking relief for a myriad of costs. The work for which our review is sought includes the following: Item 19 (CMP Coatings, Inc. invoice no. 36585) which covers the costs of paint and related materials such as thinner, varnish and remover; and Item 10 (Jurong Shipyard Pte. Ltd. job no. 21-8474) which covers the cost of labor for the application of the aforementioned paint and related materials. The applicant claims that these two items collectively constitute a non-dutiable modification to the subject vessel.


Whether the documentation submitted substantiates the applicant’s claim that Items 10 and 19 contained within the subject entry are a modification to the subject vessel and are 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.

As noted above, the applicant contends that these two items collectively constitute a modification to the subject vessel. The basis for this contention is that these items involve the application of “tin free” paint which is stated to be “an upgrade in terms of its favorable impact on the environment” and “is required to meet federal mandate.”

Notwithstanding the omission of a citation to the “federal mandate” to which the applicant refers, any such “mandate” is not recognized by the above-referenced judicial and administrative precedents as a determinative factor in assessing a modification claim. Furthermore, it should be noted that Customs has long-held “maintenance painting” to be a dutiable operation within the meaning of the vessel repair statute.

(See E.E. Kelly & Co. v. United States, 55 Treas. Dec. 596, T.D. 43322 (CCPA 1929)) In regard to the documentation submitted with the application under review, it is devoid of any indicia that the two work items in question constitute other than “maintenance painting.” The fact that the “tin free” paint applied may have been an upgrade from the paint it replaced on the vessel, in and of itself, is of no moment in this case. Duty-free treatment pursuant to a modification claim is accorded when permanent additions enhance the operating efficiency of a vessel and, in cases such as this which do not involve a first time installation, replace a structure that was in good working order. (See Customs ruling letter 112779, dated July 26, 1993) The documentation submitted by the applicant does not establish that the newly-applied “tin free” paint was replacing paint that was in other than a deteriorated condition.

Accordingly, Items 10 and 19 for which our review is sought do not constitute modifications and remain dutiable.


The documentation submitted does not substantiate the applicant’s claim that Items 10 and 19 contained within the subject entry are a modification to the subject vessel. These two items are therefore dutiable under 19 U.S.C. § 1466.


Georgina Grier

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