19 U.S.C. 1466; CHIEF GADAO, V-008B; Vessel Repair Entry No. C27-0158637-5; Petition

HQ 114570 January 13, 1999 VES-13-18-RR:IT:EC 114570 GOB CATEGORY: Carriers Port Director of Customs Attn.: Vessel Repair Liquidation Unit, Room 107 P.O. Box 2450 San Francisco, CA 94126 RE: 19 U.S.C. 1466; CHIEF GADAO, V-008B; Vessel Repair Entry No. C27- 0158637-5; Petition Dear Madam: This ruling is in response to your memorandum dated December 23, 1998, which forwarded the petition submitted by Matson Navigation Company (“Matson” or “petitioner”) with respect to the above-referenced vessel repair entry. FACTS: The CHIEF GADAO (the “vessel”), a U.S.-flag vessel owned and operated by the petitioner, arrived at the port of San Pedro, California on February 18, 1997. The subject vessel repair entry was timely filed. The vessel underwent certain foreign shipyard work in Korea in January and February of 1997. In Ruling 114034 dated October 16, 1998, the application for relief with respect to the subject entry 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 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. The subject entry is a “post-Texaco” entry, i.e., an entry filed after the appellate decision in Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 44 F.3d 1539 (CAFC 1994), aff’g 815 F.Supp. 1484 (CIT 1993). Accordingly, the Texaco decision applies to this entry. The petitioner requests relief with respect to general services costs and prefabricated steel. General Services Costs It is Customs oft-repeated position that general services costs and drydock costs are to be prorated between dutiable and nondutiable costs. See, for example, Ruling 113474 of October 24, 1995, and the many rulings which have followed on this issue. Our position was also fully explained in Ruling 114034, the application ruling with respect to the subject entry. Our position remains in full force and effect. Accordingly, this claim of the petitioner is denied. Prefabricated Steel The petitioner claims that many prefabricated steel items are eligible for treatment under 19 U.S.C. 1466(h)(2) and (3). The claim with respect to 19 U.S.C. 1466(h)(3) was thoroughly discussed in Ruling 114034, the application ruling with respect to the subject entry. Similarly, the claim with respect to 19 U.S.C. 1466(h)(2) and (3) was discussed in Ruling 226873 dated October 29, 1996, which also involved a Matson vessel repair entry. Therein we stated: With respect to 19 U.S.C. 1466(h)(2), it is our position that 19 U.S.C. 1466(h)(2) contemplates duty-paid entry of eligible spare repair parts or materials having been made prior to the vessel repair entry at issue. The petitioner has not established that this occurred. Prefabricated steel is not a “part” eligible for 19 U.S.C. 1466 (h)(3). Accordingly, the costs of the prefabricated steel are dutiable under 19 U.S.C. 1466(a). HOLDING: As detailed above, the petition is denied. Sincerely, Jerry Laderberg Chief, Entry Procedures and Carriers Branch