Vessel repair; modification; inspection Protest No. 312689-000016 Vessel: ARCO SPIRIT V-CF48 Date of Arrival: August 20, 1988 Port of Arrival: Valdez, Alaska Vessel Repair Entry No. C31-0005008-8

HQ 110639 June 1, 1990 VES-13-18-CO:R:P:C 110639 KVS CATEGORY: Carriers Chief, Technical Branch Commercial Operations Division 1 World Trade Center Suite 705 Long Beach, CA 90831 RE: Vessel repair; modification; inspection Protest No. 312689-000016 Vessel: ARCO SPIRIT V-CF48 Date of Arrival: August 20, 1988 Port of Arrival: Valdez, Alaska Vessel Repair Entry No. C31-0005008-8 Dear Sir: This is in response to your memorandum of October 31, 1989, which forwarded for our consideration protest no. 312689-000016, filed in connection with the ARCO SPIRIT, vessel repair entry no. C31-0005008-8. Our findings are set forth below. FACTS: The ARCO SPIRIT, owned by ARCO Marine, Inc. (hereinafter referred to as "protestant"), underwent shipyard operations in Korea from July 24, 1988 to August 10, 1988. The vessel arrived in the United States at Valdez, Alaska on August 20, 1988 and made timely entry. The protestant filed an application dated October 14, 1988. Our letter of July 31, 1989 denied the application as deficient and the entry was liquidated on August 16, 1989. The protest currently under consideration was timely filed on September 20, 1989. ISSUE: Whether the foreign shipyard work undertaken on the subject vessel is subject to duty under the vessel repair statute, 19 U.S.C. 1466. - 2 - LAW AND ANALYSIS: Title 19, United States Code, section 1466(a) provides, in pertinent part, for payment of duty in the amount of 50 percent ad valorem on the cost of foreign repairs to vessels documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to be employed in such trade. In its application of 19 U.S.C. 1466, Customs has held that modifications/alterations/additions to the hull and fittings of a vessel are not subject to vessel repair duties. Customs has held that for an item to be characterized as a nondutiable modification, it must encompass the installation of an item as a new design feature, not as a replacement for, or restoration of, parts now performing a similar function. Customs Memorandum 108871 (4-16-87). Customs has also held that the decision in each case as to whether an installation constitutes a nondutiable addition to the hull and fittings of the vessel depends to a great extent on the detail and accuracy of the drawings and invoice descriptions of the actual work performed. Customs Memorandum 108871 (4-16-87), citing C.S.D. 83-35. Even if an article is considered to be part of the hull and fittings of a vessel, the repair of that article, or the replacement of a worn part of the hull and fittings, is subject to vessel repair duties. See, C.I.E. 233/60. After thorough analysis of the documents submitted, we find the following items to be non-dutiable: Item 108 Rudder stock modification Item 108-2 X-Ray Item 304-2 Main/stand-by generator modification Item 305 Circulation water sea valves modification Item 307 Main condenser vent modification (installation) coating Item 319 Main condenser level control modification Item 320 Boiler fuel piping modification Item 321 Fuel oil treatment modification (installation) Item 810 Dirty ballast part flow system installation - 3 - Item 812 No. 7 Port and starboard cargo tank sounding tubes installation Item 819 Cargo pump discharge pipe installation Item 821 P/S gallows stand pipe modification Item 825 Cargo manifold drain modification Item 826 Cargo pump temperature alarms modification Item 902 I.G.S. modifications and removals Item 303 is a main turbine throttle valve inspection. The shipyard invoice indicates that the work involved labor and material to "check, operate and lubricate all main turbine throttle valves". The fact that all of the valves were lubricated as well as inspected indicates that this task was more a maintenance function than part of a classification survey. Accordingly, the cost of the inspection is dutiable. HOLDING: Following a thorough review of the evidence provided, and as detailed in the "Law and Analysis" section of this ruling, we resommend that the protest be granted in part and denied in part. Sincerely, B. James Fritz Chief Carrier Rulings Branch