Vessel Repair; 19 U.S.C. 1466(d)(1); Vessel Repair Entry No. C21-0000099-4; Protest No. 5301-92-100038; Casualty; Grounding; M/V SPIRIT OF TEXAS V-62

HQ 112106 June 30, 1992 VES-13-18-CO:R:IT:C 112106 MLR CATEGORY: Carriers Deputy Assistant Regional Commissioner Commercial Operations 423 Canal Street New Orleans, Louisiana 70130-2341 RE: Vessel Repair; 19 U.S.C. 1466(d)(1); Vessel Repair Entry No. C21-0000099-4; Protest No. 5301-92-100038; Casualty; Grounding; M/V SPIRIT OF TEXAS V-62 Dear Sir: This is in response to your memorandum of March 12, 1992, regarding the protest, filed by Sharon Steele Doyle, Givens and Kelly, on behalf of Seahawk Management, Inc. FACTS: The record reflects that the M/V SPIRIT OF TEXAS, arrived at Port Arthur, Texas, on April 1, 1991. Vessel repair entry, number C21-0000099-4, was untimely filed on April 10, 1991, indicating foreign work performed on the vessel. Customs did not consider the application for relief filed after the 60-day time period specified in section 4.14(d)(1)(ii) of the Customs Regulations {19 CFR 4.14(d)(1)(ii)}, consequently the entry was liquidated November 11, 1991. A protest was timely filed on January 22, 1992. The charges underlying the protest in this case are stated to have resulted from an incident when the vessel allegedly ran aground on March 1, 1991, near the port entrance of Bourgas, Bulgaria, resulting in two holes in the hull below the water line. The Master, Robert B. Crane, stated that the vessel was proceeding to the pilot station, in the designated inbound traffic lane, when he was informed that the pilot was delayed. He reduced the speed and subsequently stopped the engine. The course was "falling to the right" and Port Control informed him that the vessel was "standing into danger". To bring the head to the left, the engine was put ahead at dead slow and then slow ahead. "Before the heading came left, the ship was felt to be on the bottom." The fore peak tank was later pumped down, and water was discovered to be coming into that tank; however, "not at an alarming rate". The Chief Mate, Stephen Peek, related a similar account of the incident indicating that the inbound lane stops about one mile from the shallow area east of Bourgas breakwater, marked by a buoy. The pilots were delayed and after the engines were stopped, the vessel continued to approach the end of the traffic separation scheme. The bow began to swing to starboard. The pilot called to say the ship was standing into danger, so the Captain ordered left rudder and engines dead slow ahead, then slow ahead. The ship began to swing to port, and the vessel touched bottom. Center of Ocean Engineering Invoice no. 5 indicates that a diving team detected revealed two large inset areas and cracks in the watertight hull. The cracks allowed water to enter the forepeak tank and the #1 port double bottom tank. Drawings are attached to the invoice. The underwater survey also showed that the deformations on the hull "are just slight bendings and there are not obvious changes in the form of the hull". A TV film was made for the ABS, shipowners and the captain. The American Bureau of Shipping survey report states that temporary repairs were carried out: Bottom plate fractures...were made tight with four (4) cimented boxes each of 800x1000x600 mm in way of Bulbous bottom at 1st and 2nd port-stbd bays from forward and five (5) cimented boxes each of 800x1300x800 mm in No. 1 port double bottom tank and at bays formed by frames No. 200-201, 201-202, 202-203, 203-204, 204-205 and the outboard, longitudinal swash bulkhead. The cimented boxes were reinforced with iron rods 16 mm dia and conditions were considered satisfactory for further service. Upon completion of vessel's underwater body examination and temporary repairs carried out as described in...this report the vessel was considered fit to proceed to her service intended. It is recommended that permanent repairs be carried out at vessel's next scheduled drydocking survey. The Chief Engineer, William E. Shuga, stated: Due to the stranding, there was a crack in the shell plating in the forepeak and a crack in No. 1 ballast tank, port side....It was the opinion of the ABS surveyor and myself, that repairs would have to be made to make the vessel seaworthy to return to a U.S. port. We agreed that the leaks should be sealed from the outside to stop all leakage. Leaking compartments were filled with concrete and reinforcing bars from the inside. The record also contains the vessel log which indicates that the vessel touched bottom at 0819, and the U.S. Coast Guard "Report of Marine Accident, Injury or Death" which indicates that the extent of damage is unknown pending an underwater inspection. Protestant states that because the damage was the result of a grounding and the repairs were performed to restore the safety and seaworthiness of the vessel, the costs incurred for the repair of the hull damage should be subject to remission. ISSUE: Whether sufficient evidence is presented to establish that foreign repairs were necessitated by a "casualty" making the duties remissible under the vessel repair statute (19 U.S.C. 1466). LAW AND ANALYSIS: The right to protest the liquidation of an entry is provided in section 514, Tariff Act of 1930, as amended (19 U.S.C. 1514). Even though no pre-liquidation prayer for relief might be submitted, there is a statutory right to seek refund of duties assessed under subsection (a) of the vessel repair statute {19 U.S.C. 1466(a)}, and a section 1514 protest seeking such refund must be considered on its merits. The failure to submit a timely application for relief under the Customs Regulations is tantamount to the failure to seek pre-liquidation relief from duties. Therefore, this protest will be considered on its merits. Title 19, United States Code, section 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 also 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. It is Customs position that "port of destination" means a port in the United States." The statute thus sets a three-part test which must be met in order to qualify for remission under the subsection, these being: 1. The establishment of a casualty occurrence. 2. The establishment of unsafe and unseaworthy conditions. 3. The inability to reach the port of destination without obtaining foreign repairs. 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, or 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 a casualty event, we must consider the repair to have been necessitated by normal wear and tear (ruling letter 106159, September 8, 1983). Customs Regulations require that certain supporting evidence be submitted. This evidence includes photocopies of the relevant parts of the vessel's logs, certification of any claimed casualty by the master or other responsible vessel officer with personal knowledge of the facts, and a certification by the master that the repairs were necessary for the safety and seaworthiness of the vessel to enable her to reach her port of destination in the U.S. 19 C.F.R. 4.14(d)(1)(iii)(D)-(F). 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)}. Repair costs beyond that minimal amount are not subject to remission. The Customs Service has consistently held that the grounding of a vessel constitutes a "casualty" as that term is used in section 1466(d)(1), and that duties on repairs necessitated by a grounding are remissible if the repairs are performed to secure the safety and seaworthiness of the vessel. C.S.D. 89-61. The record supports the finding that a grounding resulted and that the temporary repairs conducted were necessitated to secure the safety and seaworthiness of the vessel. Accordingly, the entry should be reliquidated, the charges for shipyard services performed in Bulgaria being remissible. HOLDING: The evidence presented is sufficient to sustain the finding of a casualty, thus making the duties on the foreign repair costs remissible under 19 U.S.C. 1466(d)(1). Sincerely, B.James Fritz Chief Carrier Rulings Branch