Vessel Repair Entry No. 110-6461872-8; 19 U.S.C. 1466; PRESIDENT ADAMS, V-077; Protest No. 3001-99-100132

HQ 114661 April 20, 1999 VES-13-18-RR:IT:EC 114661 GOB CATEGORY: Carriers Port Director of Customs Attn.: Vessel Repair Liquidation Unit, Room 107 P.O. Box 2450 San Francisco, CA 94126 RE: Vessel Repair Entry No. 110-6461872-8; 19 U.S.C. 1466; PRESIDENT ADAMS, V-077; Protest No. 3001-99-100132 Dear Madam: This is in response to your memorandum of March 25, 1999, which forwarded the protest submitted by American Ship Management, LLC (the “protestant”) with respect to the above-referenced vessel repair entry. FACTS: The PRESIDENT ADAMS (the “vessel”), a U.S.-flag vessel owned and operated by the petitioner, arrived at the port of Seattle, Washington on March 28, 1996. The subject vessel repair entry was subsequently filed. The vessel underwent certain foreign shipyard work in Korea, Taiwan, Japan, and Hong Kong in February and March of 1996. In Ruling 113678 of October 7, 1998, the application was granted in part and denied in part. In Ruling 114554 of December 4, 1998, the petition was granted in part and denied in part. ISSUE: Whether the subject items are dutiable pursuant to 19 U.S.C. 1466(a)? LAW AND ANALYSIS: 19 U.S.C. 1466(a) provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to 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. We note that the protest was timely filed under the statutory and regulatory provisions for protests, 19 U.S.C. 1514(c)(3)(A) and 19 CFR 174.12(e)(1). The subject entry is a “post-Texaco” entry, i.e., an entry filed after the appellate decision in Texaco Marine Services, Inc. v. United States, 44 F.3d. 1539 (CAFC 1994), aff’g 815 F.Supp. 1484, 17 CIT 139 (CIT 1993). In Texaco, the CIT held the costs of cleaning and protective coverings to be dutiable under 19 U.S.C. 1466. The court stated that “[t]he cleaning in this case was indeed an integral part of the repair process since the cleaning would not have been necessary but for the repairs” and “[t]he protective coverings ... are an integral part of the repair process and would not have been necessary but for the repairs.” Texaco Marine Services, Inc. v. United States, 815 F. Supp. 1484, 1487, 17 CIT 139, 142 (CIT 1993). In affirming the CIT, the CAFC held “that the Court of International Trade properly used a ‘but for’ standard for ‘expenses of repairs’ when it evaluated the expenses at issue in this case.” Texaco Marine Services, Inc. v. United States, 44 F.3d 1539, 1548 (CAFC 1994). As a post-Texaco entry, the Texaco decision applies to this entry. Our position with respect to post-Texaco entries has been stated in detail in many rulings, as well as in Memorandum 113350 of March 3, 1995, which was published in the Customs Bulletin and Decisions on April 5, 1995 (vol. 29, No. 14, p. 24). That position is that all vessel repair entries filed on or after the date of the Texaco decision (December 29, 1994) are to be liquidated in accordance with the full weight and effect of the decision - costs of post-repair cleaning and protective coverings incurred pursuant to dutiable repairs are dutiable and all other foreign expenses contained within such entries are subject to the “but for” test, i.e., costs which would not have been incurred but for dutiable repairs are dutiable. General services costs. These items are to be prorated per our oft-stated position with respect to general services costs and drydock costs for post-Texaco entries. See, for example, Ruling 113474 of October 24 1995, and the many rulings which followed on this issue.  Drydock costs. These items are to be prorated per our oft-stated position with respect to general services costs and drydock costs for post-Texaco entries. See, for example, Ruling 113474 of October 24 1995, and the many rulings which followed on this issue. Item 303 Bow Thruster Seals & Anodes. We find that this item (“... to cover the general inspection and 5 year maintenance for Bow Thruster ...”) is nondutiable as a non-repair inspection item. This finding is consistent with our finding in Ruling 114334 of September 23, 1998 with respect to another vessel and vessel repair entry of the protestant. C.O. #1. Bow thruster service engineer. The invoice indicates that the services of the subject engineer were utilized “to attend the MV President Adams item #302 and 303.” We find that this cost is nondutiable because it is a cost incident to other nondutiable items. This finding is consistent with our finding in Ruling 114334 of September 23, 1998. C.O. #15. Hotel costs for crew. The protestant claims that this cost is nondutiable because it is not a repair cost. We determine that this cost is a drydock cost which is to be prorated along with other drydock costs. This is a cost, such as other dydock costs and general services costs, that would not have been incurred but for the work performed on the vessel. HOLDING: As detailed above, the protest is granted in part and denied in part. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to  Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Sandra L. Bell Director, International Trade Compliance Division