Vessel Repair; 19 U.S.C. 1466; PRESIDENT JEFFERSON, V-303; Entry No. 110-6461504-7

HQ 113221 November 2, 1994 VES-13-18-CO:R:IT:C 113221 GOB CATEGORY: Carriers Deputy Regional Director Commercial Operations Pacific Region One World Trade Center Long Beach, California 90831 RE: Vessel Repair; 19 U.S.C. 1466; PRESIDENT JEFFERSON, V-303; Entry No. 110-6461504-7 Dear Sir: This is in response to your memorandum dated August 31, 1994 which forwarded the application for relief submitted by American President Lines, Ltd. ("applicant") in connection with the above- referenced entry. FACTS: The record reflects that the PRESIDENT JEFFERSON (the "vessel") arrived at the port of Seattle, Washington on March 8, 1994 (voyage 303). The above-referenced vessel repair entry was filed on March 15, 1994. You request our determination with respect to the following items: Invoice No. Item 2703 insurance and security 2704 propeller removal 2704 stern seal assembly 2705 tailshaft magnaflux test p. 4 CF 226 survey ISSUE: Whether the subject items are dutiable pursuant to 19 U.S.C. 1466. LAW AND ANALYSIS: 19 U.S.C. 1466 provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to - 2 - vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to be employed in such trade. Insurance and Security We find that the insurance cost is dutiable as a cost directly related to repairs. We find that the cost of security is nondutiable because it appears to be essentially a fire watch service which we have previously held to be nondutiable as a drydocking cost. Propeller Removal and Stern Seal Assembly The applicant claims that the costs of these items are not dutiable because the vendor repaired these items on a previous voyage (voyage 299) and the earlier repairs failed. The applicant indicates that the work on the subject voyage is covered by a warranty provided by the vendor. However, the application also states that "[t]he payment of this invoice is in dispute." We find that the costs of these items are dutiable as repairs. The only warranty repairs which are potentially nondutiable under 19 U.S.C. 1466 are warranty items for new construction. Tailshaft Magnaflux Test We find that this item is nondutiable because the record indicates that repairs were not associated with this test. Survey We find that the survey listed as item 11 on the CF 226 is dutiable because it is directly related to dutiable repairs. HOLDING: As detailed supra, the application is granted with respect to the security cost and the tailshaft magnaflux test and is denied with respect to the other items. Sincerely, Arthur P. Schifflin Chief Carrier Rulings Branch