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HQ 116039

October 1, 2003

VES-13-18 RR:IT:EC 116039 CK


Kevin C. O’Rourke, Esq.
Law Department
Matson Navigation Co.
333 Market Street
30th Floor
San Francisco, CA 94105-2190

RE: SS LURINE; Modifications

Dear Mr. O’Rourke:

This is in response to your letter dated August 7, 2003 in which you request a ruling as to whether your planned alterations would be dutiable as repairs or nondutiable modifications under 19 U.S.C. §1466. Our reply follows.


The SS LURINE was built in 1973 as an U.S.-flagged roll-on/roll-off vessel. It was reconfigured in 1981 as a combination roll-on/roll-off and container vessel. Due to the demand for 40’ containers and increased movement of automobiles between Hawaii and the mainland, Matson plans to convert Hold 4 to carry 40’ containers and add additional auto capacity. The work will be done in China.

The work will involve the installation of two new levels of automobile capacity above the existing roll-on/roll-off area on the main deck. The first level of the new space above the main deck will be extended into the port and starboard “breezeways” or drive through spaces in the deck house. In order to protect vehicles from soot deposits from the vessel’s stack, the upper level of this area will be covered with a fabric awning supported by bolted on galvanized steel members. To facilitate access from the lower decks to the new auto storage area, a space frame will be built forward of the house to raise the center six container stacks approximately 7½ feet above the main deck.

In addition, Hold 4 will be modified by removing and scrapping four 24’ hatch covers and two internal mid-cell structures with their associated transverse box girders. Four new 40’ hatch covers and one new mid-cell structure with new transverse box girder will be fabricated and installed. The existing forward and aft bulkheads, the tank top, hatch coamings and container pedestals of Hold 4 will be modified and/or reinforced as needed to accommodate the new stowage arrangement.

Hold 4 will also be altered to support a new row of 24’ containers, and new pedestals with lashing access platforms will be added outboard.


Whether the proposed work constitutes a modification to the subject vessel and is therefore nondutiable under 19 U.S.C. §1466.


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, U.S. Customs and Border Protection (CBP) 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 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.

Whether there is a permanent incorporation into the hull or superstructure of a vessel (See United States v. Admiral Oriental Line et al., supra, 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.

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.

Upon reviewing the proposed work as described in your letter in conjunction with the supporting illustrations you submitted, and in light of the above-referenced authority, it is readily apparent that the proposed work will be permanent alterations of, and additions to, the hold and decks. These alterations are nondutiable modifications to the subject vessel.


The proposed work, described above, constitutes a modification to the subject vessel and is therefore nondutiable under 19 U.S.C. §1466.

It is noted, however, that this ruling is merely advisory in nature and does not eliminate the requirement to declare work done abroad at the subject vessel’s first United States port of arrival, nor does it eliminate the requirement of filing the entry showing this work (see §4.14(e), Customs Regulations (19 CFR §4.14(e)). Furthermore, any final ruling on this matter is contingent on Customs review of the evidence submitted pursuant to §4.14(f), Customs Regulations (19 CFR §4.14(f)).


Glen E. Vereb

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