CBP Ruling 110806 — Vessel repair; tank cleaning; oily water removal Vessel: Barge JOVALAN;…

Tariff classification

HTS codes: 6862, 1990, 0700, 1989

Headings: 6862, 1990, 0700, 1989

Product description

The JOVALAN, an unmanned barge engaged in the transportation of crude oil, underwent a series of inspections and shipyard operations at Ensenada, Mexico, which were accomplished in two different calls to that port. Although the documents submitted by the applicant contain a discrepancy as to the dates of those calls, American Bureau of Shipping records indicate that the calls were made between the dates of June 23, 1989 and September 15, 1989. American Bureau of Shipping invoice nos. 692100 and 692101 indicate that the following services were rendered: 1) annual survey of hull; 2) annual load line inspection; 3) load line certificate of renewal; 4) special periodical survey of hull no. 2; and 5) damage survey of cargo tank no. 1. In the case under consideration, the JOVALAN departed Ensenada on September 15, 1989, arriving at Long Beach on September 17, 1989. An application for relief was timely filed on November 14, 1989. The application and supporting documentation were forwarded to Headquarters for our review and ruling as to the dutiability of the cost of oily water removal and tank cleaning as listed on Astilleros Unidos de Ensenada, S.A. de C.V. invoice number 6862, in the amount of $20,071.00. - 2 -

CBP rationale

Title 19, United States Code, section 1466, provides in pertinent part for payment of duty in the amount of 50 percent ad valorem on the costs of foreign repairs to vessels documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to engage in such trade. The Customs Service has long taken the position that cleaning is not dutiable unless performed in preparation for, or as an integral part of repairs. See C.I.E. 51/61 (see also C.I.E. 18/48; C.I.E. 125/48; C.I.E. 820/60; C.I.E. 698/62). In the case under consideration, an examination of American Bureau of Shipping documents reveals that, in addition to the special periodical survey of the hull, a damage survey of the cargo tanks was also performed. Therefore, cleaning was not undertaken for "inspection purposes only", as is alleged by the applicant, but was also undertaken to determine what repairs were necessary. The cleaning and removal of oily water from the tank to allow the assessment of necessary repairs is clearly cleaning done in preparation of repairs within the meaning of C.I.E. 51/61. Accordingly, the cost is dutiable.

Full text

HQ 110806 May 24, 1990 VES-13-18-CO:R:P:C 110806 KVS CATEGORY: Carriers Chief, Technical Branch Commercial Operations Division Suite 705 One World Trade Center Long Beach, CA 90831-0700 RE: Vessel repair; tank cleaning; oily water removal Vessel: Barge JOVALAN; Date of Arrival: September 17, 1989; Port of Arrival: Long Beach, California; Vessel Repair Entry No. C27-0075290-3 Dear Sir: This is in response to your memorandum of January 19, 1990, which forwards for our consideration an application for vessel repair entry C27-0075290-3. Our findings are set forth below. FACTS: The JOVALAN, an unmanned barge engaged in the transportation of crude oil, underwent a series of inspections and shipyard operations at Ensenada, Mexico, which were accomplished in two different calls to that port. Although the documents submitted by the applicant contain a discrepancy as to the dates of those calls, American Bureau of Shipping records indicate that the calls were made between the dates of June 23, 1989 and September 15, 1989. American Bureau of Shipping invoice nos. 692100 and 692101 indicate that the following services were rendered: 1) annual survey of hull; 2) annual load line inspection; 3) load line certificate of renewal; 4) special periodical survey of hull no. 2; and 5) damage survey of cargo tank no. 1. In the case under consideration, the JOVALAN departed Ensenada on September 15, 1989, arriving at Long Beach on September 17, 1989. An application for relief was timely filed on November 14, 1989. The application and supporting documentation were forwarded to Headquarters for our review and ruling as to the dutiability of the cost of oily water removal and tank cleaning as listed on Astilleros Unidos de Ensenada, S.A. de C.V. invoice number 6862, in the amount of $20,071.00. - 2 - ISSUE: Whether the cost of oily water removal and tank cleaning, undertaken in preparation for a damage survey, is dutiable under 19 U.S.C. 1466. LAW AND ANALYSIS: Title 19, United States Code, section 1466, provides in pertinent part for payment of duty in the amount of 50 percent ad valorem on the costs of foreign repairs to vessels documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to engage in such trade. The Customs Service has long taken the position that cleaning is not dutiable unless performed in preparation for, or as an integral part of repairs. See C.I.E. 51/61 (see also C.I.E. 18/48; C.I.E. 125/48; C.I.E. 820/60; C.I.E. 698/62). In the case under consideration, an examination of American Bureau of Shipping documents reveals that, in addition to the special periodical survey of the hull, a damage survey of the cargo tanks was also performed. Therefore, cleaning was not undertaken for "inspection purposes only", as is alleged by the applicant, but was also undertaken to determine what repairs were necessary. The cleaning and removal of oily water from the tank to allow the assessment of necessary repairs is clearly cleaning done in preparation of repairs within the meaning of C.I.E. 51/61. Accordingly, the cost is dutiable. HOLDING: The cost of oily water removal and tank cleaning undertaken in preparation for a damage survey is dutiable under 19 U.S.C. 1466. Sincerely, B. James Fritz Chief Carrier Rulings Branch

View original on CBP CROSS →