Petition for Review on Vessel Repair Entry No. C16-0007623-1, SEA-LAND COMMITMENT, V-14, dated August 16, 1989.

HQ 110795 April 9, 1990 VES-13-18-CO:R:P:C 110795 BEW CATEGORY: Carriers Deputy Assistant Regional Commissioner Commercial Operations Division ATTN: Vessel Repair Liquidation Unit New Orleans, Louisiana 70130 RE: Petition for Review on Vessel Repair Entry No. C16-0007623-1, SEA-LAND COMMITMENT, V-14, dated August 16, 1989. Dear Madam: Reference is made to your memorandum of January 17, 1990, which forwards for our consideration a petition for review filed by Sea-Land Service, Inc., seeking relief from the assessment of duties under the vessel repair statute. FACTS: The vessel in question arrived at the port of Charleston, South Carolina, and filed a vessel repair entry (Customs Form 226) supported by internal documents intended to demonstrate cost for Customs purposes. The company filed an application for relief which was denied by the Regional Vessel Repair Liquidation Unit on the strength of previous published and unpublished Customs rulings (C.S.D. 89-114, and Ruling Letter 110151), determining that such company-generated documents were not credible evidence. The vessel operator has filed a blanket petition covering nine similar entries, of which this is one. ISSUE: Whether denial of the application supported only by internal cost documents was proper and whether, if so, additional evidence has been supplied to cure the noted deficiencies. LAW AND ANALYSIS: Section 1466 provides, in pertinent part, for payment of duty in the amount of 50 percent ad valorem of the cost of foreign repairs to vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to engage in such trade. The Customs Regulations provide in section 4.14 (d)(1)(iii) (19 CFR 4.14 (d)(1)(iii)), a specific listing of the kinds of documentary evidence which "shall" be filed to support appli- cations for relief from vessel repair duties. Listed first among these are "...itemized bills, receipts, and invoices". To be sure, other types of proof are of great value in supporting applications, but none enjoy the primacy of actual itemized cost documents issued by a foreign shipyard. In this case we are presented with a vessel operator- generated listing of contracted-for job order sums which is, at best, insufficient and self-serving. The point is sought to be made that Sea-Land has been submitting and Customs accepting such proofs for some years now. This may be so, but we are unaware of cases in which total reliance was placed on such submissions. As previously indicated, such documentation is a welcome supplement to probative evidence. This does not indicate, however, that it is an acceptable substitute for same. In two of the nine vessel entries covered by the blanket petition under review, the company has made warranty repair claims (Sea-Land PERFORMANCE, V-14, Entry No. C16-0007621-5; Sea-Land NEDLLOYD HUDSON, V-15, Entry No. C16-0007625-6), thus providing us the opportunity, once again, to comment on the status enjoyed by foreign shipyard warranties. In advancing the warranty claims in the two cited entries, the petitioner places reliance in the decision rendered in the case of Sea-Land Service, Inc. v. United States, 683 F. Supp. 1404 (CIT 1988). As a party to that case, Sea-Land must be charged with knowledge that the Court found permissible, warranties: - issued for a reasonable period of time (limited administratively to one year). - issued pursuant to a specific agreement in a construction contract. - supported by written notification of defect from operator to vendor. - and, most critically, issued pursuant to a contract for new vessel construction. None of these elements has been demonstrated to exist, or even mentioned as possibilities in the two cases involving "warranty" claims and, as such, the claims are without merit. HOLDING: Following thorough review and analysis of the facts, law, and evidence, it is our determination that the petition for review must be denied. Sincerely, B. James Fritz Chief Carrier Rulings Branch cc: VRLU, San Francisco VRLU, New York