Vessel Repair; Application for Relief; Modification; Vessel Repair Entry: 514-3004875-4 Date of Arrival: March 23, 1993 Date of Entry: March 25, 1993 Port of Arrival: Bayonne, New Jersey Vessel: M/V AMERICAN EAGLE V-169

HQ 112797 July 27, 1993 VES-13-18-CO:R:IT:C 112797 DEC CATEGORY: Carriers Deputy Assistant Regional Commissioner Classification and Value Division Attention: Residual Liquidation and Protest Branch New York, New York 10048-0945 RE: Vessel Repair; Application for Relief; Modification; Vessel Repair Entry: 514-3004875-4 Date of Arrival: March 23, 1993 Date of Entry: March 25, 1993 Port of Arrival: Bayonne, New Jersey Vessel: M/V AMERICAN EAGLE V-169 Dear Sir: This is in response to your memorandum dated July 2, 1993, which forwards the application for relief from vessel repair duties filed in connection with the above-referenced vessel for our review. FACTS: The AMERICAN EAGLE is operated by Osprey Ship Management, Incorporated. It is an American-flag vessel. While abroad, the AMERICAN EAGLE stopped in Bremerhaven, Germany, where it underwent various operations. Our review is focused on the installation of deck brackets. An application for relief from vessel repair duties dated May 12, 1993, was timely filed. ISSUE: Whether the cost of foreign shipyard work completed aboard the subject vessel is dutiable pursuant to Title 19, United States Code, section 1466. LAW AND ANALYSIS: Title 19, United States Code, section 1466(a) provides, in pertinent part, for payment of a fifty percent ad valorem duty on the cost of foreign repairs to a vessel documented under United States law to engage in the foreign or coastwise trade, or to a vessel intended to be employed in such trade. The applicant contends that the costs of the installation of the deck brackets are not subject to duty because it is a -2- modification and represents a permanent incorporation into the vessel. Over the course of years, the identification of modification processes has evolved from judicial and administrative precedents. In considering whether an operation has resulted in a modification, which is not subject to duty, the following elements may be considered. (1) Whether there is a permanent incorporation into the hull or superstructure of a vessel (see United States v. Admiral Oriental Line et al., T.D. 44359 (1930)), either in a structural sense or as demonstrated by the means of attachment so as to be indicative of the intent to be permanently incorporated. (2) Whether the item under consideration would remain aboard a vessel during an extended layup. (3) Whether, if not a first time installation, an item under consideration replaces a current part, fitting or structure which is not in good working order. (4) Whether an item under consideration provides an improvement or enhancement in operation or efficiency of the vessel. Before an item is to be construed as a part of the vessel, it must be (1) a permanent attachment and (2) essential to the successful operation of the vessel. Otte v. United States, 7 C.C.P.A. 166, 169 (1916). Customs finds that the installation of the deck brackets constitutes a permanent incorporation into the superstructure of the vessel. Furthermore, the strengthening of the deck enhances the operational efficiency of the vessel. HOLDING: After a thorough review of the submitted evidence, this application for relief from vessel repair duties is granted. The applicant correctly claims that the installation of the deck brackets constitutes a modification. Sincerely, Acting Chief Carrier Rulings Branch