Vessel Repair; Application for Relief; Modification; Vessel Repair Entry No. 514-3004595-8; SEA-LAND ACHIEVER V-38

HQ 112910 December 1, 1993 VES-13-18-CO:R:IT:C 112910 DEC CATEGORY: Carriers Chief, Residual Liquidation and Protest Branch United States Customs Service Six World Trade Center New York, New York 10048-0945 RE: Vessel Repair; Application for Relief; Modification; Vessel Repair Entry No. 514-3004595-8; SEA-LAND ACHIEVER V-38 Dear Sir: This is in response to your memorandum dated October 1, 1993, which forwards the application for relief from vessel repair duties filed in connection with the above-referenced vessel for our review. FACTS: The SEA-LAND ACHIEVER is owned and operated by Sea-Land Service, Incorporated. The items that are the subject of this application for relief from the assessment of vessel repair duties were performed while the vessel was abroad. In particular, the applicant contends that the operations performed to increase the vessel's container capacity (Item 8) as well as the shortening of the vessel's foremast and relocation of navigational lights (Item 11) are non-dutiable modifications. 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. Over the course of years, the identification of modification processes has evolved from judicial and administrative precedents. -2- 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). The applicant contends that these two items represent modifications to the vessel. However, the evidence submitted for review of Items 8 and 11 included an invoice stating that these operations were installed as per the applicant's specifications and drawings together with an outline of the specifications for the operations under consideration. Given the frequency with which work orders are changed, we cannot assume that the work actually performed was identical to the work proposed. Without a more detailed shipyard invoice describing the actual operations, Customs is unable to conclude that these items constitute modifications to the vessel. For this reason, the application for relief is denied and these items will remain dutiable unless a detailed invoice describing the work performed is submitted. Headquarters Ruling 112779 (Jul. 26, 1993). While these items are related to the work that is the subject of an advisory ruling (Headquarters Ruling 111849 (Feb. 3, 1992)), the Customs Service has consistently stated that these rulings are merely advisory and do not eliminate the requirement to declare work done abroad at the subject vessel's first United States port of arrival, nor does it eliminate the requirement of filing the entry showing this work (19 C.F.R. 4.14(b)(1)(2)). Furthermore, any final ruling is contingent on Customs review of the evidence submitted pursuant to 19 C.F.R. 4.14(d)(1). The advisory ruling -3- stressed that any final determination would be contingent on review of the evidence submitted as part of the entry and procedure for review. HOLDING: After a thorough review of the submitted evidence, this application for relief is denied for the reasons detailed in the Law and Analysis section of this ruling. Sincerely, Arthur P. Schifflin Chief