Vessel Repair Entry No. C46-0016953-5; 19 U.S.C. 1466; M/V NOSAC RANGER, V-141

HQ 114649 March 30, 1999 VES-13-18-RR:IT:EC 114649 GOB CATEGORY: Carriers Port Director of Customs Attn.: Residual Liquidation and Protest Branch, Room 761 Six World Trade Center New York, N.Y. 10048 RE: Vessel Repair Entry No. C46-0016953-5; 19 U.S.C. 1466; M/V NOSAC RANGER, V-141 Dear Madam: This is in response to your memorandum of March 19, 1999, which forwarded the petition submitted by Pacific Gulf Marine, Inc. (“petitioner”) with respect to the above-referenced vessel repair entry. FACTS: The M/V NOSAC RANGER (the “vessel”), a U.S.-flag vessel, arrived at the port of Bayonne, New Jersey on November 14, 1995. The subject vessel repair entry was timely filed. The vessel underwent certain foreign shipyard work on its voyage. In Ruling 113977 dated November 12, 1997, the application for relief was granted in part and denied in part. ISSUE: Whether the subject items are dutiable pursuant to 19 U.S.C. 1466? 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. The petitioner contests the determination of Ruling 113977 with respect to the proration of the “Drydocking” and “Services and Facilities” costs. It states that “the fundamental and underlying reason for drydocking the vessel was to undertake regulatory inspections and class surveys ...” The petitioner claims that the method of proration “unjustly inflates [the] dutiable percentage...” It further asserts that certain of the costs in these categories (e.g., compressed air, fire main, communication, garbage/trash removal, cooling water, crane services, and sewage disposal) should be ruled nondutiable because they related to work performed by the crew. We do not accept the petitioner’s claims with respect to these costs. 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. It is Customs oft-repeated position with respect to post-Texaco entries that general services costs and drydock costs are to be prorated between dutiable and nondutiable costs. This position is an attempt to administer 19 U.S.C. 1466 as fairly and impartially as possible. The method of proration is simple. In Ruling 226873 dated October 29, 1996, we stated: In accordance with Ruling 113474 and Memorandum 113350, and as your forwarding memorandum states, the drydocking charges should be prorated between the dutiable and nondutiable costs associated with the drydocking. The method of prorating was described in Ruling 113474, supra: the drydocking costs “should be apportioned to reflect the dutiable and non-dutiable foreign costs in this entry.” For example, if, aside from the subject “drydocking costs,” as described supra, fifty percent of the costs of that particular drydocking were dutiable and fifty percent were nondutiable, then fifty percent of the subject “drydocking costs,” as described supra, would be dutiable and fifty percent would be nondutiable. The costs of general services and/or drydock costs to be prorated are not involved in the calculation of what portion of the costs is dutiable and what portion is nondutiable. The costs described by the petitioner (see above) are typical general services and/or drydock costs. We find that they are dutiable. We also find that the cost of the gas free certificate is to be prorated, in accordance with longstanding precedent. We find that the costs with respect to the CO2 system (item 102.3n) and the engine room bilges (item 102.4) are nondutiable as costs incident to nondutiable regulatory inspections or surveys. We find that the trash removal cost described in the petition (item 102.3h) “to dispose of debris resulting from the ship’s crew working in the cargo spaces chipping and painting” is dutiable as a cost incident to dutiable maintenance work, i.e., chipping and painting. The petitioner seeks relief with respect to the cost of propeller replacement (item 109.2b) which was necessitated as a result of a casualty during a previous voyage. We find that this claim is without merit. The exemption from duty in 19 U.S.C. 1466(d)(1) is not applicable with respect to foreign repair or equipment necessitated by a casualty which occurred on a previous voyage. C.I.E. 1325/58. The clear purpose behind 19 U.S.C. 1466(d)(1) is to allow a vessel to make emergency repairs “to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination[.]” Such is clearly not the case when repairs are accomplished on a subsequent voyage. Further, the exemption in 19 U.S.C. 1466(d)(1) is with respect to “such vessel, while in the regular course of her voyage ...” The subject vessel on the subject voyage was not compelled by stress of weather or other casualty to make repairs to secure the safety and seaworthiness of the vessel to enable the vessel to reach her port of destination. The subject cost is dutiable. The petitioner seeks relief under 19 U.S.C. 1466(h)(3) with respect to a “5-blade, right-hand, Nikalium propeller.” We affirm our determination of Ruling 113977 in the application for this entry that the subject propeller is equipment of the vessel, and is therefore not eligible for treatment under 19 U.S.C. 1466(h)(3). HOLDING: As detailed above, the petition is granted in part and denied in part. Sincerely, Jerry Laderberg Chief, Entry Procedures and Carriers Branch