Protest No. 2704-92-101841; Vessel Repair Entry No. C27- 0061087-9; PRESIDENT ADAMS V-34; Maintenance; Cleaning; Air Scavenger Spaces

HQ 112315 July 14, 1992 VES-13-18-CO:R:IT:C 112315 GEV CATEGORY: Carriers Chief, Technical Branch Commercial Operations Pacific Region One World Trade Center Long Beach, California 90731 RE: Protest No. 2704-92-101841; Vessel Repair Entry No. C27- 0061087-9; PRESIDENT ADAMS V-34; Maintenance; Cleaning; Air Scavenger Spaces Dear Sir: This is in response to your memorandum dated June 3, 1992, which forwards for our review the protest filed in conjunction with the above-referenced vessel repair entry. FACTS: The record reflects that the subject vessel, the PRESIDENT ADAMS, arrived at the port of San Pedro, California on February 1, 1992. Vessel repair entry no. C27-0061087-9 was filed on February 3, 1992. Protestant presents this protest concerning Customs denial of relief from duty on work done on the vessel for the process involving the cleaning of air scavenger spaces. Protestant contests Customs Ruling HQ 111700, in which we held that the removal of carbon and oil deposits from the main engine air scavenger spaces is a maintenance operation, the cost of which is subject to duty under 19 U.S.C. 1466. ISSUE: Whether removing carbon and oil deposits from diesel engine air scavenger spaces constitutes a nondutiable cleaning or a dutiable maintenance operation under 19 U.S.C. 1466. LAW AND ANALYSIS: The protestant seeks relief for the cleaning of certain main engine air scavenger spaces. (We incorporate by reference pages 1 and 2 of HQ 111700 which describes in detail the operation of the air scavenger spaces.) - 2 - Our position is that the Customs Service has consistently held that cleaning is not dutiable unless it is performed as part of, in preparation for, or in conjunction with dutiable repairs or is an integral part of the overall maintenance of the vessel. (see Headquarters Ruling Letter 110841, dated May 29, 1990, and cases cited therein). The Customs Service considers work performed to restore a part to good condition following deterioration or decay to be maintenance operations within the meaning of the term repair as used in the vessel repair statute. See generally, Headquarters Ruling Letter 106543, dated February 27, 1984; C.I.E. 142/61, dated February 10, 1961. Protestant argues that our decision is contrary to statute, regulations and court precedent. Protestant should take note that this issue was already addressed on pages 2 and 3 of HQ 111700. The fact remains that there is no binding precedent on the precise issue of the maintenance operation that involves the cleaning of the air scavenger spaces. Neither is our decision contrary to a "...long established Customs policy..." as petitioner argues. Our initial ruling on this subject was issued on December 3, 1990, in HQ 110911. Prior to this time, there was no Customs policy that specifically addressed the maintenance operation which includes the cleaning of the air scavenger spaces. However, in regard to cleaning operations in general, it has been the longstanding policy of Customs that cleaning is dutiable if it is performed as part of, in preparation for, or in conjunction with dutiable repairs or is an integral part of the overall maintenance of the vessel. HQ 110911 was issued in response to an application for relief which called to our attention the fact that from 1982-1990 the Vessel Repair Liquidation Unit in San Francisco was not assessing vessel repair duty under 19 U.S.C. 1466(a) for the process of cleaning air scavenger spaces on vessels, whereas the other regions were holding this process to be dutiable. In HQ 110911 we ruled that the process involving the cleaning of the air scavenger spaces is a dutiable maintenance procedure because the end result of the described activity is to restore efficiency to the vessel's engines. The failure to assess appropriate duty no more establishes policy than any other failure by an employee of an organization. Protestant argues that this "change" by Customs of its long established policy is a violation of both the Administrative Procedures Act ("APA") and Customs' own regulations. Protestant has challenged our ruling, alleging that it constitutes a substantive rule change which violates the notice and opportunity to participate requirements of the APA and 19 CFR 177.10(c)(1). Individual employees do not set the policy of this or any other large organization. How much less so is the case in which the petitioner has for years known that Customs' policy is - 3 - set by Customs Headquarters. A mistake by an employee will not trigger the requirements of notice and opportunity to participate as required by both the Administrative Procedures Act and Customs' regulations. Finally, it does not appear that protestant ever received any written ruling or determination of the Customs Service pursuant to Part 177 of the Customs Regulations prior to HQ 110911 (see above). Consequently, protestant cannot claim the protection afforded importers under the regulation. In addition, while it may be determined that protestant will have to pay an additional sum of money in unpaid vessel repair duties, there is no reason to believe that it would have altered its actions in any way had it known the true facts. Protestant submits that: (a) The logistics of our operations dictate that due to time/schedule restraints that this inspection work be accomplished in Asia. (b) Within the time constraints of our operation schedule, coupled with the environmental restraints for disposal, it is questionable that these inspections could be successfully be accomplished on the West Coast. Consequently, protestant is unable to show reasonable reliance on the erroneous noncollection practice, a necessary element of detrimental reliance. See, B-240089.2, 1991 U.S. Comp. Gen. LEXIS 698. HOLDING: The removal of carbon and oil deposits from the main engine scavenger spaces is a maintenance operation the cost of which is subject to duty under 19 U.S.C. 1466. Protest is denied. Sincerely, B. James Fritz Chief Carrier Rulings Branch