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HQ 116403

February 23, 2005

VES-13-18-RR:IT:EC 116403 IDL


Supervisory Customs Liquidator
Liquidation Section
U.S. Customs and Border Protection
1100 Raymond Boulevard, Rm. 402
Newark, NJ 07102

RE: Protest No. 4601-05-100061; Vessel Repair Entry No. C46-0017587-0; M/V GREEN WAVE; V-120; 19 U.S.C. § 1466

Dear Madam:

This is in response to your memorandum dated February 2, 2005, forwarding for our review the above-referenced protest. Our ruling on this matter is set forth below.


The GREEN WAVE is a U.S.-flag vessel operated by Central Gulf Lines, Inc. (“CG”; “protestant”), of New Orleans, Louisiana. In May 2003, during the voyage in question, this vessel incurred foreign repair expenditures stemming from a mechanical failure to the main engine. On August, 31, 2003, the vessel arrived in the United States at Honolulu. CG filed with the Port of Honolulu Entry No. C46-0017587-0. The entry included eleven itemized descriptions of work performed on the vessel, eight of which were described as “Casualty-Engine Explosion”.

Pursuant to authorized extensions of time, on January 2, 2004, CG submitted an application for relief of duties, claiming non-dutiable casualty repairs had been performed. The application included a CG-2692 Coast Guard Report of Marine Accident, Death or Injury, dated June 16, 2003, which cited “machinery or equipment failure” pertaining to an oil mist detector malfunction. The application claimed that “smoke had filled the Engine Room, as a result [of] an engine explosion.” On November 5, 2004, the New York Vessel Repair Unit (VRU) denied relief, due to CG’s failure to prove that the foreign repair expenditures should be held to be non-dutiable.

On January 12, 2005, Protest No. 4601-05-100061 was filed against the denial of the application. The protestant has again alleged that an engine explosion had occurred, with the cause remaining unknown. The protestant has included as evidence a CG-2692 Coast Guard Report of Marine Accident, Death or Injury, dated May 16, 2003, which CG had failed to include with the application for relief. The report cited “machinery or equipment failure”, and included a description of a crew member’s actions, whereby he “responded to an engine alarm. He thought he saw smoke in the engine room and notified the bridge, which sounded the emergency alarm It was found that smoke from oil residue was what he had seen”.

The protestant has also included an American Bureau of Shipping (ABS) Class Survey Report and photocopies of the vessel’s daily log information from May 15 through May 31, 2003. The ABS survey, dated June 11, 2003, reports that “according to the on board Log Books,on the 16th day of May 2003, it was noted a Main Engine crank case explosion.” [sic]


Whether the vessel repair costs incurred by the protestant are dutiable under 19 U.S.C. § 1466?


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) authorizes a remission of such duties 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. The statute sets forth the following three-part test that must be met in order to qualify for remission under the subsection:

1. The establishment of a casualty occurrence; 2. The establishment of unsafe and unseaworthy conditions; and The inability to reach the port of destination without obtaining foreign repairs.

In addition, if the above requirements are satisfied by evidence, the remission is restricted to the cost of the minimal repairs necessary to "...secure the safety and seaworthiness of the vessel to enable her to reach her port of destination." (19 U.S.C. § 1466(d)(1)). Duties on repair costs beyond that minimal amount are not subject to remission. We note that three of the eleven items described on the CF-226 pertain to repairs reported as non-casualty items, and, as such, are dutiable.

With regard to the eight remaining items, 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 a repair to have been necessitated by normal wear and tear. HQ 106159 (September 8, 1983).

In the case under consideration, the protestant alleges that the machinery or equipment failure was caused by an engine explosion. However, the protestant has failed to provide any evidence of an explosion. The two Coast Guard reports submitted contain a “casualty” information section, and both reports merely cited “machinery or equipment failure”. The boxes listing “Explosion” were left unmarked.

In addition, we find that, contrary to the ABS report, the vessel’s log records fail to demonstrate that an explosion pertaining to the engine failure occurred. Our examination of the records reveals that on May 16, 2003, a crew member “reports smoke in engine room, cuts fuel to main engine, sounded general alarm,... crew mustered at stations, engine room [indistinguishable] inspected, all O.K.”

In the absence of a showing that the machinery or equipment failure was caused by some outside force, the breakdown or failure of machinery may not be regarded as a casualty under section 1466(d)(1). HQ 226534 (February 12, 1996).

Therefore, the vessel repair costs incurred by the protestant are dutiable under 19 U.S.C. § 1466.


Accordingly, the port should DENY the protest. In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), 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 the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.


Glen E. Vereb

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