Vessel Repair; Petition for Relief; ABS Survey; Vessel Repair Entry No. C16-0008571-1 Date of Arrival: September 23, 1992 Port of Arrival: Charleston, South Carolina Vessel: ILE DE FRANCE

HQ 112682 May 13, 1993 VES-13-18-CO:R:IT:C 112682 DEC CATEGORY: Carriers Regional Director Commercial Operations Division 423 Canal Street New Orleans, Louisiana 70130-2341 RE: Vessel Repair; Petition for Relief; ABS Survey; Vessel Repair Entry No. C16-0008571-1 Date of Arrival: September 23, 1992 Port of Arrival: Charleston, South Carolina Vessel: ILE DE FRANCE Dear Sir: This ruling is in response to your memorandum dated April 13, 1993, which forwards for our consideration a petition for relief from vessel repair duties filed in connection with the above-referenced vessel. FACTS: The ILE DE FRANCE, an American-flag vessel, underwent an American Bureau of Shipping ("ABS") inspection of its main engine bearings while in Rotterdam, The Netherlands, on September 8, 1992. Upon arrival of the ILE DE FRANCE in the United States, a vessel repair entry and an application for relief from vessel repair duties, which was denied, was filed. ISSUE: Whether the cost of a continuous survey of machinery is subject to vessel repair duties pursuant to Title 19, United States Code, section 1466. LAW AND ANALYSIS: Title 19, United States Code, section 1466, provides, in pertinent part, for payment of an ad valorem duty of fifty percent on the cost of foreign repairs to a vessel documented under the laws of the United States to engage in the foreign or coasting trade, or a vessel intended to be employed in such trade. -2- Certain vessel inspection operations are generally considered non-dutiable. Where periodic surveys are undertaken to meet the specific requirements of a classification society or insurance carrier, the cost of the surveys is not dutiable even when dutiable repairs are effected as a result thereof. C.S.D. 79-277. However, where an inspection or survey is conducted merely to ascertain the extent of damages sustained or whether repairs are deemed necessary, the costs are dutiable as part of the repairs which are accomplished. Consequently, only the cost of a required scheduled inspection by a qualifying entity (e.g. U.S. Coast Guard or ABS) is non-dutiable. In the liquidation process, Customs must go beyond the mere labels of "continuous" or "ongoing" before deciding whether a part of an ongoing maintenance and repair program labelled "continuous" or "ongoing" is dutiable. If an inspection or survey is conducted as part of an ongoing maintenance and repair program, the cost is dutiable. C.S.D. 89- 94. Additionally, if the survey is undertaken to ascertain the extent of damage sustained or to verify whether the work is satisfactorily completed, the costs are dutiable as part of the repairs which are accomplished. C.I.E. 429/61 (Apr. 28, 1961). Turning to the set of facts before us, we find the petitioner's claim that the "continuous" survey is non-dutiable to be problematic. The fact that a classification society is involved in the survey does not necessarily render all survey costs non-dutiable. Furthermore, the documents submitted indicate that several "pumps were examined, operationally tested, relief valves tested as applicable and found or placed in satisfactory condition . . .." This description of the operation is, arguably, more akin to a repair item. Absent any other persuasive evidence to the contrary, it appears that the continuous survey at issue is a part of an ongoing maintenance and repair program. Consequently, this petition for relief is denied. HOLDING: After a thorough review of the evidence submitted, this petition for relief is denied for the reasons detailed in the Law and Analysis section of this ruling. The Petitioner should be informed of the right to file a Protest following liquidation of this entry, as evidenced by the posting of the bulletin notice of liquidation. Sincerely, Acting Chief