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HQ 115662

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May 28, 2002

VES-13-18-RR:IT:EC 115662 GEV

CATEGORY: CARRIER

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

RE: Vessel Repair Entry No. C20-0038574-3; Protest No. 2002-01- 101377; M/V ASHALT COMMANDER; V-01-01; Casualty; 19 U.S.C. § 1466

Dear Sir:

This is in response to your memorandum dated April 18, 2002, which forwarded for our review the above-referenced vessel repair protest. Our ruling on this matter is set forth below.

FACTS:

The M/V ASPHALT COMMANDER is a U.S.-flag vessel owned by Sargeant Marine, Inc. Subsequent to the completion of foreign shipyard work, the vessel arrived at St. Rose, Louisiana, on March 13, 2001. A vessel repair entry was untimely filed on August 2, 2001, and a pre-penalty notice for this late filing was subsequently issued.

An application for relief was not submitted with respect to this entry which was forwarded for liquidation that occurred on August 31, 2001. A protest, dated November 28, 2001, was timely filed seeking remission on the cost of cargo/ballast tank repairs which, the protestant avers, are due to a casualty.

With respect to the casualty claim under consideration, the protestant states that at the time the M/V ASPHALT COMMANDER arrived in Curacao, Netherlands Antilles, on January 1, 2001, to dock for some engine exhaust system modifications and miscellaneous other minor
repairs, the vessel owners took the opportunity to perform some close-up tank inspections of the vessel tanks as they are not normally available for inspections due to the vessel’s use as a hot asphalt carrier. During the tank inspections, structural cracking in the cargo and ballast tanks was discovered. Both the American Bureau of Shipping (ABS) and the U.S. Coast Guard (USCG) determined that the vessel was not seaworthy and was unable to continue on its voyage in its damaged condition.

In support of its claim the protestant has submitted the following documentation: a statement of the master (Exhibit 1); a copy of a USCG letter dated February 9, 2001, suspending the vessel’s Certificate of Inspection (Exhibit 2); a copy of a letter from the ABS, dated January 22, 2001, requiring the vessel to proceed to drydock and submit a repair procedure (Exhibit 3); a copy of a USCG Report of Marine Casualty (CG-2692) (Exhibit 4); a statement from a marine engineer who supervised the repairs in question (Exhibit 5); ABS Report MA-21059 (Exhibit 6); a statement of a different master of the vessel (Exhibit 7); Customs ruling letter 112461, dated December 6, 1994 (Exhibit 8); Customs ruling letter 112140, dated April 7, 1992 (Exhibit 9); and N.V. Curacaose Dok Maatschappi Shipyard Invoice Nos. 0/3309-A (Exhibit 10) and 0/3309 (Exhibit 11).

In addition to the above-referenced documentation, your office also forwarded a copy of a letter dated July 30, 2001, constituting the protestant’s response to the aforementioned pre-penalty notice.

ISSUE:

Whether the protestant’s claim for remission due to a casualty should be granted pursuant to 19 U.S.C. § 1466(d)(1).

LAW AND ANALYSIS:

Title 19, United States Code, § 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..."

Section 1466(d)(1) provides that the Secretary of the Treasury is authorized to remit or refund such duties imposed under § 1466(a) if the owner or master of the vessel was compelled by stress of weather
or other casualty to put into such 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 CFR

The statute sets forth the following three-part test which 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. 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 (Customs ruling letter 106159, dated September 8, 1983).

With respect to the claim in question, the protestant avers that the three above-listed criteria have been met. In support of this claim the protestant specifically references the ABS and USCG documentation submitted. While we are in accord with the protestant’s position as to the second and third of the above-listed criteria, it is our position that the record is deficient as to the first.

In regard to the first of the requisite criteria (i.e., a casualty occur-rence), we note that there is no specifically identified occurrence alleged. Rather, the protestant attributes the structural damage in question to the vessel’s encounter with heavy weather three years earlier “during a Pacific Coast transit in early 1998.” (See p. 2 of protestant’s letter dated July 30, 2001, responding to the afore-mentioned pre-penalty notice) The protestant also references the location of the damage in question (inside the cargo/ballast tanks) as a basis upon which remission should be granted. To that end the protestant cites to prior Customs rulings (Exhibits 8 and 9) addressing
damage to underwater portions of the vessel wherein we held that since such damage is usually not easily detectable or susceptible of definite proof respecting the date and time of occurrence, relief under 19 U.S.C. § 1466(d)(1) is therefore warranted in the absence of evidence showing that the vessel concerned was grounded, struck bottom, or struck some floating object capable of causing damage prior to the commencement of the voyage. (C.I.E. 1202/59) However, the damage currently under consideration did not occur to underwater parts of the vessel. Consequently, Exhibits 8 and 9 are not controlling in this case.

More importantly, we reiterate that the record reflects that the damage in question did not originally occur during the voyage covered by the subject entry, but rather is attributed to heavy weather encountered by the ASPHALT COMMANDER “during a Pacific Coast transit in early 1998.” (See also Exhibits 3 and 7, as well as the protestant’s response to the pre-penalty notice.)

In this regard we note Customs long-held position that repairs required due to a casualty must be made on the same voyage that the casualty occurred. (C.I.E. 1325/58, dated September 18, 1958) This interpretation has been upheld judicially. (See Suwannee Steamship Company v. United States, 435 F.Supp. 389 (1977)) In that case the court determined that, “[Customs] acted in accordance with law in determining that remission of customs duties paid on ship repairs made in foreign ports was precluded unless cause of damage occurred during same voyage as repairs.” (Id. at 390; Emphasis added) It is noteworthy that the court expounded its position by stating that, “In light of the legislative history, which shows a congressional intent to formulate a narrow and strict remission provision to protect American shipyards, the court concludes that [Customs] interpretation of section 466,is in furtherance of the legislative purpose, and therefore ‘in accordance with law.’” Id. at p. 394

Customs position with respect to remission claims on a subsequent voyage for casualty damage allegedly occurring on a prior voyage was further addressed in C.I.E. 538/62, dated May 22, 1962, wherein Customs held that:
remission is not warranted where damage results from a casualty in one voyage, and repairs are obtained in a later one. Relief may be allowed however, in accordance with section [1466(d)(1)]provided the delay
is adequately explained. Mere failure to discover the damage or extent thereof before a voyage terminates does not constitute an adequate explanation. (Emphasis added)

(See also, Customs ruling letter 112125, dated May 13, 1992, citing C.I.E. 538/62)

The protestant in this case offers no plausible explanation as to the failure to discover the damage in question. Accordingly, the evidence submitted is insufficient to support a casualty claim in this case.

HOLDING:

The protestant’s claim for remission pursuant to 19 U.S.C. § 1466(d)(1) is denied.

Accordingly, the protest is denied.

In accordance with § 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to mailing this decision. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web by means of the Freedom of Information Act, and other methods of public distribution

Sincerely,

Jeremy Baskin

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