Vessel repair; Casualty claim; Engine failure; FV HOOVER; Entry No. C31-0008823-7

HQ 111137 January 31, 1991 VES-13-18-CO:R:IT:C 111137 LLB Category: Carriers Chief, Technical Branch Commercial Operations Pacific Region One World Trade Center Long Beach, California 90731 RE: Vessel repair; Casualty claim; Engine failure; FV HOOVER; Entry No. C31-0008823-7 Dear Sir: Reference is made to your memorandum of June 20, 1990, which forwards the Application for Relief from vessel repair duties submitted on behalf of Mr. Kevin Sather, owner of the fishing vessel HOOVER. FACTS: The vessel HOOVER, while some 15 miles from Bella Bella, British Columbia, Canada, and while en route from Washington State to Alaska, experienced trouble with its engine. A sharp drop in oil pressure was noted, and a broken injector line was fixed on the spot. However it was also noted that one of the valves had slipped into the piston, and for this repairs had to be sought in Bella Bella. The HOOVER was towed to port by another fishing vessel. Repairs were made and the vessel proceeded to Alaska to begin fishing operations. ISSUE: Whether the facts in this case justify a finding of casualty damage which would permit remission of duty under the vessel repair statute. LAW AND ANALYSIS: Section 466, Tariff Act of 1930, as amended (19 U.S.C. 1466) 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 foreign or coastwise trade, or vessels intended to engage in such trade. Paragraph (1), subsection (d) of section 1466 provides that duty may be remitted if good and sufficient evidence is furnished establishing that the vessel was compelled by stress of weather or other casualty to put into a foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination. Thus, it is necessary that in order qualify for duty remission, the party seeking relief must show both the occurrence of a casualty, and that repair was necessary for safety and seaworthiness. 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, explosion 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 a casualty-causing event, we must consider a repair to have been necessitated by normal wear and tear (ruling letter 105159), September 8, 1983). In the present matter, there is no identifiable event to which a casualty might be ascribed. Every indication is that the repairs made to the HOOVER in British Columbia were necessitated by normal wear and tear. However, not all expenses incurred will be subject to vessel repair duty. We note the presence of travel expenses in the amount of $2,200.00 which is free from duty considerations under long-standing judicial precedent (see United States v. George Hall Coal Co., 134 F. 1003 (1905)). Further, owing to the provisions of the U.S.-Canada Free Trade Agreement, vessel repair duty rates are subject to a staged reduction. The duty rate for the repairs in question is 40 percent rather than 50 percent as specified in the vessel repair statute. HOLDING: Following thorough review of the facts and analysis of the law and precedents in this case, we recommend that the application be denied, as specified above. Sincerely, B. James Fritz Chief Carrier Rulings Branch