New York Vessel Repair Entry No. 514-3004580-0, S/S HOWELL LYKES, Voyage No. 33; Petition; Casualty; 19 U.S.C. 1466(d)(1); 19 CFR 4.14

HQ 112426 April 29, 1993 VES-13-18 CO:R:IT:C 112426 BEW CATEGORY: Carriers Chief, Residual Liquidation Branch U.S. Customs Service 6 World Trade Center New York, New York 10048-0945 RE: New York Vessel Repair Entry No. 514-3004580-0, S/S HOWELL LYKES, Voyage No. 33; Petition; Casualty; 19 U.S.C. 1466(d)(1); 19 CFR 4.14 Dear Sir: This is in reference to a memorandum from your office which forwards for our review a Petition for Relief from duties filed in conjunction with the above-referenced vessel repair entry. The entry and application were timely filed. FACTS: The record reflects that the subject vessel, the S/S HOWELL LYKES, arrived at the port of Port Elizabeth, New Jersey, on September 26, 1991. Vessel repair entry, number 514-3004580-0, was filed on September 26, 1991. The entry indicates that the vessel underwent repairs while in Naples, Italy, during the period of September 14 through September 15, 1991. The entry also indicates that on September 9, 1991, while at the port of Alexandria, Egypt, the local surveyor of the American Bureau of Shipping (ABS) surveyed the subject vessel for damage which was caused by the Bulgarian M.V. SERDICA when she struck the HOWELL LYKES while she was docked at the port of Alexandria. The applicant alleged that each of the invoices submitted relate to the repairs necessary because of a casualty. Specifically, you refer for our consideration the invoices generated by the alleged casualty. In our decision 112010 BEW, dated June 2, 1992, we ruled that: It is clear from the evidence that the vessel suffered damage to the port side occasioned by the M.V. SERDICA while it was docked in Egypt. With regard to the evidence that the vessel was in need of repairs to secure her safety and seaworthiness, however, the documents show that the repairs were not made until September 14 and 15, 1991, when the vessel was in the port of Naples, Italy . . . Federal regulations provide for evidence that permits an expeditious resolution of the question of seaworthiness. The applicant has not met the burden of proof that the particular repairs to this vessel (being related to the stowage of cargo) were necessary for the safety and seaworthiness of the vessel. Accordingly, in the absence of any determination of the USCG regarding the subject vessel's safety and seaworthiness, and absent the evidence that would be adduced by the required USCG determination on the issue of seaworthiness, the applicant has failed to substantiate its claim for remission under 1466(d)(1). The petitioner has submitted a report from the American Bureau of Shipping relating to the accident in Egypt and the repairs made in Naples. ISSUE: Whether sufficient evidence is presented to establish that foreign repairs were necessitated by a "casualty" which is remissible under the vessel repair statute (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 documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to be employed 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). 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. Customs Regulations require that certain supporting evidence be submitted with an application for relief from duties on repairs resulting from stress of weather. 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 United States (19 C.F.R. 4.14(d)(1)(iii)(D)-(F)). The file contains affidavits from the master, copies of relevant pages from the ship's official log for the date of September 9, 1991, Notice of Damage to company officials, and ABS surveys relating to the alleged casualty. The log for September 9, 1991, shows that at 09:23 hours, the HOWELL LYKES was discharging its cargo of containers while moored along side the Alexandria, Egypt, container terminal . The M.V. SERDICA was maneuvering in the area and landed heavily along the port side of the subject vessel, causing possible damage to her hull, as well as damage to her cargo stowage deck fittings, and containers stowed along the ship's port side. The United States Coast Guard (USCG) is the controlling agency that determines questions of a vessel's fitness to proceed. The procedure by which the USCG renders such a determination is set forth in sections 2.01-15 and 31.10-25, USCG Regulations (46 CFR 2.10-15, 31.10-25). The former states that a vessel may not proceed from one port to another for repairs unless prior authorization is obtained from the USCG Officer-In-Charge, Marine Inspection (OCMI) either through the issuance of a USCG "Permit to Proceed to Another Port for Repairs" (CG-948) or a CG-835 that would specify the restrictions on, and duration of, any voyage undertaken prior to obtaining permanent repairs. The latter states that with respect to tank vessels, "No extensive repairs to the hull or machinery which affect the safety of a vessel shall be made without the knowledge of the Officer-In-Charge, Marine Inspection." Notwithstanding the clear wording of the above USCG Regulations, specifically 46 CFR 2.10-15 that does not distinguish between foreign or domestic locations, Customs has been informed by the OCMI, New York, New York, in a letter dated November 7, 1991, that "A formal Permit to Proceed is not normally issued to a vessel transiting foreign waters because the Certificate of Inspection (COI) would have to be removed from the vessel that would cause problems in transiting foreign waters." In addition, we have subsequently learned from the Chief, Merchant Vessel Inspection and Documentation Division, USCG Headquarters, in a letter dated April 14, 1992, that "Vessel operators often make casualty reports for U.S. flag vessels damaged overseas verbally to the proper Coast Guard Marine Inspection Office, followed by the required written report. The Coast Guard cannot always send a marine inspector to a damaged vessel overseas on short notice. In such cases, the Coast Guard may consider the classification society report and the report of the vessel's master to determine the required temporary repairs and voyage restrictions." The ABS Report No. AL 6989, dated September 9, 1991, reports that the vessel suffered damage as a result of the said collision, however it further states, "Due to vessel's commitments, No repairs were carried out at that time, however, it is recommended that containers' pedestals at Frames No. M28 M30 port side not be used ... pending satisfactory repair to be carried out and dealt with to the satisfaction of the attending Surveyor at the earliest Owner's convenience and not later than the next regular drydock due on December 1991". The vessels' log book was endorsed by the surveyor at this time. In a telex from the Master to Lykes, it is stated "ABS SURVEYOR FINDS VESSEL SEAWORTHINESS NOT AFFECTED." Based on the foregoing, we find from the evidence submitted with the petition that the ABS inspection revealed that the safety and seaworthiness of the vessel was not affected by the collision, therefore, the evidence submitted is insufficient to sustain a finding of "casualty" as provided under the statute. Accordingly, the petition is denied. HOLDING: The evidence presented is insufficient to prove that the foreign repairs performed on the subject vessel were necessitated by a casualty occurrence, thus warranting remission pursuant to 19 U.S.C. 1466. The petition is denied. Sincerely, Stuart P. Seidel Director, International Trade Compliance Division