Vessel Repair; Sparrows Point, Maryland, Vessel Repair Entry No. C13-0016089-7; dated February 4, 1991, SS SEMINOLE (formerly MOBILE MERIDIAN); Petition for Relief; Surveys; 19 U.S.C. 1446

HQ 112277 April 9, 1993 VES-13-18-CO:R:IT:C 112277 BEW CATEGORY: Carriers Deputy Assistant Regional Commissioner Commercial Operations ATTN: Regional Vessel Repair Liquidation Unit New York, New York 10048-0945 RE: Vessel Repair; Sparrows Point, Maryland, Vessel Repair Entry No. C13-0016089-7; dated February 4, 1991, SS SEMINOLE (formerly MOBILE MERIDIAN); Petition for Relief; Surveys; 19 U.S.C. 1446 Dear Sir: This is in response to a memorandum that forwards a Petition for Relief from duties assessed under the provisions of title 19, United Stated Code, Section 1466, in vessel repair entry No. C13- 0016089-7, relating to the SS SEMINOLE (formerly MOBILE MERIDIAN). FACTS: The record reflects that the SS SEMINOLE is an American-flag vessel owned by Mobile Oil Corporation that had shipyard work performed on her in Malaysia Shipyard and Engineering SDN. BHD. in Malaysia from the period November 2 through December 29, 1990. The vessel arrived at the port of Sparrows Point, Maryland, on January 31, 1990. Vessel repair entry number C13-001608907 was filed on February 4, 1991, reflecting the foreign work performed to the vessel in Malaysia. The SS SEMINOLE was renamed during the yard work. In a ruling dated February 3, 1992, 111907 RAH, we ruled that Items 102, 103 and 105 constituted modifications to the hull and fittings of the vessel and were thereby nondutiable within the meaning of 19 U.S. C. 1466. However, with regard to the American Bureau of Shipping (ABS) surveys, the ruling held that the applicant had failed to present sufficient evidence to establish that items 35 through 38 constitute nondutiable surveys under 19 U.S.C. 1466. The petition centers primarily around the ABS surveys. The petitioner has submitted both ABS invoices and reports, and contends that neither the statute nor the regulations require the submission of ABS or other survey reports. The petitioner contends that the requirements in 19 CFR 4.14(d)(1)(iii)(c) relate to photocopies of reports of the cause of and the type of damage caused by a casualty, and not to routine periodic surveys. ISSUE: Whether the applicant has presented sufficient evidence to establish that items 35 - 38 constitute nondutiable surveys under 19 U.S.C. 1466. 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 engaged, intended to engage, or documented under the laws of the United States to engage in the foreign or coastwise trade. Section 4.14(b)(2), Customs Regulations (19 CFR 4.14(b)(2)) provides, in pertinent part, that entry shall be filed with the appropriate Customs officer within five working days after the vessel's arrival. The subject entry was timely filed. Pursuant to section 4.14(d)(1)(ii), Customs Regulations, the application for relief, with supporting evidence, shall be filed within 60 days from the date of first arrival of the vessel, unless Customs grants an extension. Applications for relief are to be submitted for each vessel repair entry for which relief is sought. Although an application for relief need not be in any particular form, pursuant to section 4.14(d)(1)(i), Customs Regulations, it should allege that an item or a repair expense is not subject to duty under either paragraph (a) of section 4.14 (items that are not subject to duty) and/or paragraph (c) (circumstances allowing remission of duty otherwise due). Section 4.14(d)(1)(iii) provides that unless such evidence is already filed with Customs, each application for relief shall include duplicate copies of the following evidence, in addition to any other documents the applicant wishes to submit in support of the application: (A) All itemized bills, receipts, and invoices covering items specified in paragraph (a)(1) of this section, segregating the cost of those items for which relief is sought from all other items listed in the vessel repair entry. It is a well established Customs principle that relief cannot be granted to a party that has failed to satisfy its obligation pursuant to 19 C.F.R. 4.14(b)(2)(ii) to provide evidence of cost of repairs (i.e., invoices) within 60 days after the vessel arrives. (See Headquarters Decision 109961 KMF). Although paragraph (C) of this section of the Regulations relates to ABS reports performed to determine the seaworthiness of a vessel after it suffers damages due to a casualty, we equate reports of ABS surveys relating to periodic and "continuous" or "ongoing" surveys to invoices that detail the repair work performed on a specific vessel. Customs has held that where periodic surveys are undertaken to meet the specific requirements of a classification society, insurance carrier, etc., the cost of the surveys is not dutiable even when dutiable repairs are effected as a result thereof; however, in the liquidation process Customs should go beyond the mere labels of "continuous" or "ongoing" before deciding whether the item is dutiable. If an inspection or survey is conducted as a part of an ongoing maintenance and repair program labeled "continuous" or "ongoing" the cost is dutiable. Also, if the survey is to ascertain the extent of damage sustained, or to ascertain if the work is adequately completed, the costs are dutiable as part of the repairs that are accomplished pursuant to holdings in C.I.E. 429/61, C.S.D. 79-2, and C.S.D. 79-277. We have thoroughly reviewed the entry documentation and the additional documents submitted with the petition in this matter. It is our conclusion that the repairs that were made to the certain items were made to replace a current part, fitting or structure that was not in good working order at the time of the inspection and repair. With regard to the American Bureau of Shipping (ABS) surveys under consideration our findings are as follows: Item 35 ABS Invoice No. 1-612-1-0009, the entire amount is nondutiable. Item 36 ABS Invoice No.1-612-1-0007, the entire amount is nondutiable with the exception of the cost for the "port & Stbd. boiler survey," and "time outside normal hours." With regard to time outside of normal hours, there is no evidence to show whether this time relates to a dutiable or nondutiable survey. Item 37 ABS Invoice No. 1-612-1-0008 all items of costs are dutiable. Item 38 ABS Invoice No. 1-612-0010, the entire amount is nondutiable. HOLDING: Following a thorough review of the LAW AND ANALYSIS of the evidence, the petition is granted with the exception of the items enumerated above. Please refer this matter immediately for liquidation, and inform the petitioner of the right to file a protest upon the posting of the bulletin notice of liquidation. Sincerely, Stuart P. Seidel Director, International Trade Compliance Division