19 U.S.C. §1466; Vessel Repair Entry No. C20-0082562-3; Waterman Steamship Corporation, GREEN WAVE; Protest No. 2002-12-100100.

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H237912 May 6, 2013 VES-3-18-OT:RR:BSTC:CCR H237912 DAC CATEGORY: Carriers Supervisory Import Specialist Vessel Repair Unit U.S. Customs and Border Protection 423 Canal Street, Suite 246 New Orleans, LA 70130 RE: 19 U.S.C. §1466; Vessel Repair Entry No. C20-0082562-3; Waterman Steamship Corporation, GREEN WAVE; Protest No. 2002-12-100100. Dear Sir: This is in response to your memorandum of January 14, 2013, forwarding for our review the protest filed on behalf of Waterman Steamship Corporation, (hereinafter also “Waterman” or “protestant”) with respect to Vessel Repair Entry No. C20-00482562-3. Our determination is set forth below. FACTS: The subject vessel is the GREEN WAVE, and it is a United States flagged vessel. The vessel arrived in the United States on March 25, 2012, at Port Hueneme, California, after receiving services at Lyttelton, New Zealand. On June 22, 2012, Waterman submitted Vessel Repair Entry No. C20-00482562-3 to U.S. Customs and Border Protection (CBP), for the subject vessel. The CBP Vessel Repair Unit (VRU) issued a duty determination letter to Waterman that was dated September 7, 2012. On October 4, 2012, Waterman timely filed the subject Protest No. 2002-12-100100. See 19 U.S.C. § 1514. On January 14, 2013, the CBP Vessel Repair Unit in New Orleans forwarded the subject protest to the Cargo Security, Carriers and Restricted Merchandise Branch for review. With regards to Protest No. 2002-12-100100, the protestant specifically states that the subject protest requests relief based upon 19 U.S.C. § 1466(h)(2), with respect to the assessment of duties on the following articles: “Charts, Flat Belt, and McMaster items shipped from the US to the vessel in New Zealand.” There are additional details relevant to each of the articles that appear on the associated invoices. There are three relevant invoices, which describe the subject articles as follows: Invoice 1. (1) “Invoice Number: 21110686”; Invoice Date: 01/24/12; (Issued from McCurnin Nautical Charts Company, Inc.). The items listed on such invoice are described as: North Pacific Ocean SW Part, West Coast Tide Tables 2012, Pacific Current Tables 2012, Europe & West Coast of Africa, CWPIOTT 2012, East Coast Tide Tables 2012. Invoice 2. (2) “Your Order No.: 3727185 Rev 0”; Your Order Date: 01/24/2012; (Issued from Alfa Laval, Inc., located in Richmond, Virginia.) The item listed on such invoice is described as: Flat Belt. Invoice 3. (3) “Invoice Number: 16301923”; Invoice Date: 01/26/12; (Issued from McMaster-Carr.) The items listed on such invoive are described as follows: 3.1) Heavy Duty Graduated Dispenser, 3.2) Heavy Duty Graduated Dispenser, 3.3) Spout Extender for Small & Medium Lid, Heavy Duty Graduated Dispenser, 3.4) DeWalt 14” Multi Cutter Saw (DW 872), 3.5) Saw Blade for Multi Cutter Saws, 3.6) Inage Liquid Level Tape, 3.7) Meterstick, 3.8) Starrett Dial Caliper, 3.9) Starrett Dial Caliper, 3.10) Economy Feeler Thickness Guage Set, 3.11) Economy Feeler Thickness Guage Set, 3.12) Starrett Dial Test Indicator. In your letter you request a determination as to whether protestants request for relief should be granted with respect to the invoices described above. Our determination is set forth below. ISSUE: Whether, pursuant to 19 U.S.C. § 1466, the subject protest items for which the protestant seeks relief shall be granted. LAW AND ANALYSIS: Title 19, United States Code, section 1466(a) (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 and equipment for “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.” 19 U.S.C. § 1466(a). In regards to the subject protest, Waterman seeks relief pursuant to 19 U.S.C. § 1466(h)(2), which provides, in pertinent part: (h) Foreign repair of vessels. The duty imposed by subsection (a) of this section shall not apply to-- (2) the cost of spare repair parts or materials (other than nets or nettings) which the owner or master of the vessel certifies are intended for use aboard a cargo vessel, documented under the laws of the United States and engaged in the foreign or coasting trade, for installation or use on such vessel, as needed, in the United States, at sea, or in a foreign country, but only if duty is paid under appropriate commodity classifications of the Harmonized Tariff Schedule of the United States upon first entry into the United States of each such spare part purchased in, or imported from, a foreign country;… 19 U.S.C. § 1466(h)(2). (emphasis added.) In Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 44 F.3d 1539 (Fed. Cir. 1994), aff’g 815 F.Supp. 1484 (Ct. Int'l Trade 1993), the court stated in pertinent part as follows with respect to the reach of 19 U.S.C. § 1466: Texaco urges us to reject the Court of International Trade’s “but for” approach and to interpret “expenses of repairs” so as to exclude those expenses (e.g., expenses for clean-up and protective covering work) not incurred for work directly involved in the actual making of repairs. Such a reading has no basis in the plain language of the statute, however. Aside from the inapplicable statutory exceptions, the language “expenses of repairs” is broad and unqualified. As such, we interpret “expenses of repairs” as covering all expenses (not specifically exempted in the statute) which, but for dutiable repair work, would not have been incurred. (emphasis added.) Hence, the relevant statute has been interpreted in a manner that construes the statute broadly when determining whether an article or service is subject to duty, and construing the exemptions narrowly, when determining whether an article is exempt from duty. The plain language of 19 U.S.C. § 1466(h)(2) explicitly states that it applies only to spare parts or materials, thereby the exemption provided in 19 U.S.C. § 1466(h)(2), does not provide for an exemption for articles determined to be equipment. See HQ 113700, March 26, 1998. In its administration of the vessel repair statute, Customs and Border Protection (“CBP”) has frequently used the following definitions: Equipment – An article which constitutes an operating entity unto itself. Equipment retains at least the potential for portability. Equipment may be affixed to a vessel in a non-permanent fashion, such as by means of bolts or other temporary methods, which is a feature distinguishing it from being considered an integrated portion of the hull and superstructure of a vessel. Examples would include winches and generators. Material(s) – An item which is consumed in the course of its use and/or loses its identity as a distinct entity when incorporated into the larger whole, e.g., paint and sheets of steel. Part(s) – An article which does not lose its essential character or its identity as a distinct entity but which, like materials, is incorporated into a larger whole. It would be possible to disassemble an apparatus and still be able to identify a part. Examples would include piston rings and pre-formed gaskets. See H052778, May 7, 2009. H188678, April 2, 2012. We shall begin our discussion and analysis with Invoice 1, and then proceed to Invoice 2 and Invoice 3, sequentially, and these determinations concern the definitions of equipment, materials and parts, provided above. While taking into consideration your recommendations, we will determine whether each article listed on the three invoices falls within one of these definitions. With respect to a determination of an article as equipment or materials or parts, an article that is determined to be “equipment” is dutiable and relief shall not be granted. An article that is determined to be materials or parts is exempt from duty, and relief shall be granted. See HQ 113700, March 26, 1998. With regards to Invoice 1, all of the items on such invoice are nautical charts and tables. We agree with your determination that these items are equipment within the meaning of the definition of equipment provided above and as applied in prior CBP rulings. Accordingly, we determine that all of the items listed and described on Invoice 1 above fall within the meaning of equipment above, and in accordance with 19 U.S.C. § 1466(h)(2), relief should be denied. With regards to Invoice 2, the single article described on the invoice is a “flat belt.” In your letter of January 14, 2013, your office states that, “[w]e find the flat belt on the Alfa Laval invoice to be a part, and will grant relief on it.” See Invoice (2), described above. Based upon the subject protest, the evidence submitted and all of the information available, we agree with your determination that the flat belt is a “part” and with your decision to grant such relief. With regards to Invoice 3, there are twelve articles listed on the invoice. In your letter of January 14, 2013, you state that the items listed as: 3.1, 3.2, 3.4, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, above are equipment. We agree with your determination that the following items are equipment within the meaning of the definition of equipment provided above and as applied in prior CBP rulings: 3.1) Heavy Duty Graduated Dispenser, Equipment; 3.2) Heavy Duty Graduated Dispenser, Equipment; 3.4) DeWalt 14” Multi Cutter Saw (DW 872), Equipment; 3.6) Inage Liquid Level Tape, Equipment; 3.7) Meterstick, Equipment; 3.8) Starrett Dial Caliper, Equipment; 3.9) Starrett Dial Caliper, Equipment; 3.10) Economy Feeler Thickness Guage Set, Equipment; 3.11) Economy Feeler Thickness Guage Set, Equipment; 3.12) Starrett Dial Test Indicator, Equipment. Accordingly, we determine that the items listed and described as 3.1, 3.2, 3.4, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, above fall within the meaning of equipment above, and in accordance with 19 U.S.C. § 1466(h)(2), relief should be denied. With regards to Invoice 3, in your letter of January 14, 2013, you ask whether the items listed as: 3.3 and 3.5 above are eligible for the claimed exemption as parts. We agree with your determination that the following items are parts within the meaning of the definition provided above and as applied in prior CBP rulings: 3.3) Spout Extender for Small & Medium Lid, Heavy Duty Graduated Dispenser, Parts; 3.5) Saw Blade for Multi Cutter Saws, Parts. Accordingly, we determine that the items described as 3.3 and 3.5 fall within the meaning of parts above and satisfy the requirements of the exemption provided at 19 U.S.C. § 1466(h)(2), and therefore, relief should be granted. HOLDING: In accordance with the provisions of 19 U.S.C. § 1466, and for the reasons stated above, the following articles for which the protestant seeks relief are granted: the article listed on Invoice 2, and the articles described on Invoice 3 as 3.3 (spout extender) and 3.5 (saw blade). With regards to all of the articles listed on Invoice 1, they are equipment and the protest should be denied. With regards to the articles listed on Invoice 3 as: 3.1, 3.2, 3.4, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, they are equipment and the protest should be denied. You are instructed to grant the protest in part and deny the protest in part with respect to the articles and invoices discussed above in this ruling. Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Restricted Merchandise Branch Office of International Trade, Regulations & Rulings U.S. Customs and Border Protection