Vessel Repair; 19 U.S.C. 1466(d)(1); Vessel Repair Entry No. C31-0009827-7; Protest No. 3126-92-100011; Casualty; F/V MISS HUMBOLDT V-1

HQ 112226 July 22, 1992 VES-13-18-CO:R:IT:C 112226 MLR CATEGORY: Carriers Deputy Regional Director Commercial Operations Pacific Region One World Trade Center Long Beach, California 90831 RE: Vessel Repair; 19 U.S.C. 1466(d)(1); Vessel Repair Entry No. C31-0009827-7; Protest No. 3126-92-100011; Casualty; F/V MISS HUMBOLDT V-1 Dear Sir: This is in response to your memorandum of April 15, 1992, (your file VES-13-SF:O:C:T BZ) regarding the protest, filed by Daniel J. Figueiredo. FACTS: The record reflects that the F/V MISS HUMBOLDT, arrived at Kodiak, Alaska, on July 5, 1991. Vessel repair entry, number C31-0009827-7, was untimely filed on July 25, 1991, indicating foreign work performed on the vessel at Vancouver, Canada. Mr. Figueiredo states that in June 1991, en route from Eureka, California, to Sand Point, Alaska, the engine "overheated and froze up". The Canadian Coast Guard towed the vessel into Campbell River, Vancouver, B.C. There the engine was overhauled. The invoice indicates that 6 cylinder kits and 3 exchange cylinder heads were installed. According to Customs Round Voyage Rule where a vessel which was repaired just prior to the voyage in question is presumed to be seaworthy for a round voyage, limited to six months, Mr. Figueiredo submitted documentation which substantiated that the engine was repaired in August 1989. Customs denied remission of duty for the engine overhaul in June 1991, because the "extensive repairs were made nearly two years before (the) incident". Customs believed a mechanical failure necessitated the repairs; therefore, the work done did not qualify as an "other casualty" for duty to be remitted. Consequently the entry was liquidated on December 20, 1991. A protest was timely filed on March 2, 1992. Mr. Figueiredo now contends that Customs did not consider the type of engine and its maintenance requirements when duty was assessed. He states that the vessel is powered by a Cummins 250 diesel engine and that it is not uncommon to go 15 to 25 years between major overhauls. He asserts that between the August 1989 engine overhaul and the emergency repairs in June 1991, the engine had approximately 800 hours. Throughout the 800 hours, regular maintenance was performed as recommended in the Cummins 250 diesel engine manual. Mr. Figueiredo believes that the engine was well maintained and in a "like new condition" at the time of the overheating incident near Campbell River, B.C., and the engine problem was not anticipated. Further, he states that the cost of repairs was approximately $2,000 more in Canada than it would have been in the United States. Accordingly, Mr. Figueiredo seeks remission in the amount of $2123.00. 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: 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 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. In Dollar Steamship Lines, Inc. v. United States, 5 Cust. Ct. 23, 28-29, C.D. 362 (1940), the term "casualty" was discussed: The phrase 'or other casualty' is supplemental to and qualifies the phrase 'stress of weather' broadening the term to include other similar casualties. A casualty similar to 'stress of weather' would include such as is violently exerted; that which comes with unexpected force or violence, such as that of a fire, or a collision, or an explosion. 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). In Customs Service Decision 79-32, we held that a breakdown in machinery may not be regarded as a casualty within the purview of the vessel repair statute in the absence of a showing that the breakdown or failure was caused by some extrinsic force. Further, in International Navigation Co. Inc. v United States, 1957, 38 Cust. Ct. 5, 11, C.D. 1836 (1957), the court stated in part: ...It is evident that under the provision as enacted it was not intended that duties should be remitted in all cases where repairs were made because of damages suffered or equipment damaged or worn out during the course of a voyage, even though such repairs were necessary to maintain the vessel in a seaworthy condition. It was only where the damage occurred by reason of some serious or extraordinary event, described as 'stress of weather or other casualty,' that remission was permitted. ORR Ruling 192-71 {abstracted as T.D. 71-83(38)}, holds that if satisfactory evidence is furnished clearly showing any part of a vessel to have been repaired and/or serviced just prior to the commencement of a voyage from a United States port, it is reasonable to assume the part is seaworthy for a round voyage, foreign and return, limited to six months from the date of repair or servicing. In ORR Ruling 192-71, the vessel's boilers were opened, cleaned and examined externally and internally; all repair work that was required was performed; and the boilers were hydrostatically tested, proven tight and certified in the boiler survey report as being in satisfactory condition. Less than six months later, the vessel's boilers failed on the voyage undertaken just subsequent to the repairs and survey. This was considered a casualty. Here the facts closely resemble those in HQ 105970. There a diesel engine on a fisheries research vessel was overhauled in May 1979. In January 1981, after running 3000 hours subsequent to the overhaul, the engine began to knock. The vessel was towed in and the engine was overhauled. It was claimed that the engine had an expected life of 10,000 hours between overhauls, and that because the engine failed after 30 percent of its expected life, the failure was sudden and constituted a casualty. It was also alleged that the vessel's crew serviced the engine prior to the voyage, and that the engine oil was analyzed. Customs regarded this type of servicing not sufficient to fall within the purview of ORR Ruling 192-71. It was held that mere mechanical failure of machinery, standing alone, does not qualify as an "other casualty" under 19 U.S.C. 1466(d)(1). Customs did consider the engine's failure after only 3000 hours, and its "servicing" prior to the voyage at issue; however, the circumstances still did not warrant remission under the administrative casualty presumption of ORR Ruling 192-71. As stated above, the record is analogous to HQ 105970 where a casualty was not found. Because the record does not contain any additional evidence to establish the contrary, we are unable to find that a casualty, as it is used in 19 U.S.C. 1466(d)(1), occurred in this case. HOLDING: The evidence presented is insufficient to sustain the finding of a casualty, thus duties on the foreign repair costs may not be remitted under 19 U.S.C. 1466(d)(1). Sincerely, B.James Fritz Chief Carrier Rulings Branch