Vessel Repair Entry No. C15-0020477-6; SS WILSON; Drydocking and General Services Charges; Propeller Polishing; 19 U.S.C. § 1466

HQ 115549 March 6, 2002 VES-13-18-RR:IT:EC 115549 GEV CATEGORY: Carriers Chief, Vessel Repair Unit U.S. Customs Service 423 Canal Street New Orleans, Louisiana 70130 RE: Vessel Repair Entry No. C15-0020477-6; SS WILSON; Drydocking and General Services Charges; Propeller Polishing; 19 U.S.C. § 1466 Dear Sir: This is in response to your memorandum dated December 18, 2001, forwarding a petition for our review of your decision to deny, in part, their application for relief from duty. Our ruling on this matter is set forth below. FACTS: The SS WILSON is a U.S.-flag vessel which incurred foreign repair costs during the period of February 25, 1997 to March 24, 1997. Subsequent to the completion of work in question, the vessel arrived at the port of Wilmington, North Carolina on April 24, 1997. A vessel repair entry was timely filed. An application for relief with supporting documentation was timely filed which your office granted in part and denied in part. A petition for review of your decision was timely filed. The petitioner claims relief for the following drydocking and general services costs: Cantiere Navale Fratelli invoice no. 10 (Items 2.01-2.16 and 2.18-2.19, 4.01-4.02, 11.01-11.02 and 12); and Cantiere Navale Fratelli invoice no. 11 (Items 1.01-11.02). In addition, the petitioner claims relief for Item no. 11 on Cantiere Navale Fratelli invoice no. 11 covering propeller polishing. - 2 - ISSUES: Whether the drydocking and general services costs for which the petitioner seeks relief are dutiable under 19 U.S.C. § 1466. Whether the costs for propeller polishing for which the petitioner seeks relief are dutiable under 19 U.S.C. § 1466. LAW AND ANALYSIS: Title 19, United States Code, § 1466 (19 U.S.C. § 1466), provides in pertinent part for the payment of an ad valorem duty of 50 percent of the cost of “…equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States…” With respect to drydocking and general services costs, notwith-standing the petitioner’s arguments to the contrary, since the subject entry contains both dutiable and nondutiable costs, the general services and drydocking costs at issue are to be prorated pursuant to Customs ruling letter 113474 and memorandum 113350 both of which addressed Customs implementation of the decision of the U.S. Court of Appeals for the Federal Circuit in Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 44 F.3d 1539 (CAFC 1994). Accordingly, the drydocking and general services costs covered by Canitere Navale Fratelli invoice no. 10 (Items 2.01-2.16 and 2.18-2.19, 4.01-4.02, 11.01-11.02 and 12); and Cantiere Navale Fratelli invoice no. 11 (Items 1.01-11.02) remain dutiable on a prorata basis. Item 11 of Cantiere Navale Fratelli invoice no. 11 covers propeller polishing which, the petitioner contends, was done as part of a routine drydocking survey. In support of this position the petitioner cites two prior Customs rulings (108365, dated February 12, 1987, and 227171, dated December 9, 1997) wherein it was determined that since the propeller polishing in question was done pursuant to a non-dutiable survey, it was non-dutiable as well. - 3 - We note, however, that other than the petitioner’s claims, the record in this case is devoid of any indicia that the subject propeller polishing was done pursuant to a non-dutiable survey. To the contrary, the invoice description specifically states that the work done under this item is “FOR: Routine Maintenance”. Furthermore, unlike other work items contained within the same invoice, there is no cross-reference to a non-dutiable ABS survey. Absent such a nexus, Customs has determined that propeller polishing is dutiable maintenance (see, e.g., Customs ruling letters 112045, dated March 10, 1992, 112480, dated March 16, 1993, and 112778, dated March 14, 1995). We so hold with respect to the propeller polishing covered by Item 11 of Cantiere Navale Fratelli invoice no. 11. HOLDINGS: The drydocking and general services costs for which the petitioner seeks relief are dutiable on a prorata basis under 19 U.S.C. § 1466. The costs for propeller polishing for which the petitioner seeks relief are dutiable under 19 U.S.C. § 1466. Accordingly, the petition is denied in full. Sincerely, Larry L. Burton Chief Entry Procedures and Carriers Branch