**HQ H019652**

**February 5, 2008**

**VES-13-18-OT:RR:BSTC:CCI** H019652 JLB

**CATEGORY**: Carriers

Supervisory Import Specialist

Vessel Repair Unit

U.S. Customs and Border Protection

1515 Poydras Street, Suite 1700

New Orleans, Louisiana 70112

RE: Protest No. 2002-07-101530; Vessel Repair Entry No. NN3-0000068-8;
SEALAND MOTIVATOR V-0417; 19 U.S.C. § 1466; Survey; Modifications; 19
U.S.C. § 1466(d)(1); Casualty; Consumables

Dear Sir:

This is in response to your memorandum of November 6, 2007, forwarding
the above-referenced protest for further review. We have reviewed the
arguments set forth by your office and by the protestant, Maersk Line
Ltd. Our decision follows.

# FACTS

The subject protest involves various shipyard work undergone by the
vessel SEALAND MOTIVATOR. The vessel is currently owned and operated by
Maersk Line Ltd who acquired the vessel in the middle of the shipyard
period from U.S.S.M. Inc. On July 12, 2004, the vessel arrived in
Gdansk, Poland for various shipyard work and returned to the United
States at the port of Charleston, South Carolina on October 2, 2004. A
vessel repair entry was timely filed.

On January 18, 2005, Maersk Line Ltd. filed an application for relief of
the vessel repair duties assessed on the costs covered in the subject
vessel entry. In response thereto, your office issued a decision on
April 13, 2007, which denied in part, and granted in part, the
application for relief. Accordingly, your office assessed vessel repair
duties in the amount of \$2,409,571.32. A timely protest was filed
thereto for the duties assessed for numerous items.

**ISSUES**

\(1\) Whether Items 2.66, 173, 175, 178, 179 to 183, 16 to 19, 48, 152
and 153 performed on the vessel while in a foreign shipyard constitute
modifications to the vessel and therefore are not dutiable under 19
U.S.C. § 1466?

\(2\) Whether the remaining work in question performed on the vessel
while in a foreign shipyard is dutiable under 19 U.S.C. § 1466?

**LAW AND ANALYSIS**

Pursuant to 19 U.S.C. § 1466(a), there must be a payment of duty in the
amount of 50 percent ad valorem on the cost 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
trades. In its application of the vessel repair statute, U.S. Customs
and Border Protection ("CBP") has held that modifications, alterations,
or additions to the hull and fittings of a vessel are not subject to
vessel repair duties. The factors considered in identifying work
constituting modifications, vis-à-vis work constituting repairs, have
evolved from judicial and administrative precedent. [See]{.underline}
[Otte v. United States]{.underline}, 7 Ct. Cust. Appls. 166, Treasury
Decision (T.D.) 36489 (1916); [United States v. Admiral Oriental Line et
al.]{.underline}, 18 C.C.P.A. 137, Treasury Decision (T.D.) 44359
(1930); [see]{.underline} [also]{.underline} Cust. Bull. and Dec., Vol.
31, No. 40 (Oct. 1, 1997). These factors include:

> 1\. Whether there is a permanent incorporation into the hull or
> superstructure of a vessel.
>
> 2\. Whether in all likelihood an item under consideration would remain
> aboard a vessel during an extended lay-up.\
> \
> 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.

The factors are not by themselves necessarily determinative, nor are
they the only factors which may be relevant in a given case. However, in
a given case, these factors may be illustrative, illuminating, or
relevant with respect to the issue of whether certain work may be a
modification of a vessel which is non-dutiable under 19 U.S.C. § 1466.

A leading case in the interpretation and application of § 1466 is
[United States v. Admiral Oriental Line et al.]{.underline}, 18 C.C.P.A.
137 (T.D. 44359 (1930)). That case distinguished between equipment and
repairs on one hand and permanent additions to the hull and fittings on
the other.

"Dutiable equipment\" has been defined to include: "\...portable
articles necessary or appropriate for the navigation, operation, or
maintenance of a vessel, but not permanently incorporated in or
permanently attached to its hull or propelling machinery, and not
constituting consumable supplies." [See]{.underline} [Admiral
Oriental]{.underline}, supra., ([quoting]{.underline} T.D. 34150,
(1914)).

The court attempted to distinguish non-dutiable items which are part of
the hull and fittings of a vessel from dutiable equipment, as defined
above. Non-dutiable items might include: "\...those appliances which are
permanently attached to the vessel, and which would remain on board were
the vessel to be laid up for a long period." [See]{.underline} [Admiral
Oriental]{.underline}, supra., ([quoting]{.underline} 27 Op. Atty. Gen.
228).

# Remontowa, Part 1, Item 2.24

CBP has held that inspections not resulting in repairs are not dutiable.
[See]{.underline} [American Viking Corp. v. United States]{.underline},
37 Cust. Ct. 237, 247, C.D. 1830 (1956); Headquarters Decision 110395,
dated September 7, 1989. Where periodic surveys are undertaken to meet
the specific requirements of, for example, a classification society or
insurance carrier, the cost of the surveys is not dutiable even when
dutiable repairs are effected as a result thereof. [See]{.underline}
Customs Service Decision (C.S.D.) 79-277. Where an inspection or survey
is conducted merely to ascertain the extent of damages sustained or
whether repairs are deemed necessary, the costs are dutiable as part of
the repairs which are accomplished. [See]{.underline} C.I.E. 429/61;
C.S.D. 79-2, 13 Cust. Bull. and Dec. 993 (1979); C.S.D. 79- 277, 13
Cust. Bull. and Dec. 1395, 1396 (1979).

The burden is on the protestant to establish, by adequate, clear, and
satisfactory documentary evidence, that an item is non-dutiable under 19
U.S.C. § 1466. [See]{.underline} Headquarters Decision 116462, dated May
16, 2005. In this case, insufficient documentation was provided to
demonstrate that the load bearing test was part of the non-dutiable tail
shaft survey. The load bearing test is not mentioned in the American
Bureau of Shipping ("ABS") survey report nor is it mentioned as a
required part of the survey in the ABS Rules for Survey After
Construction 2004, Part 7, Chapter 5, published by ABS. The protestant
merely claims that item 2.24 is part of the survey by stating the "load
bearing test, which is also part of the tail shift survey" with no other
evidence offered. [See]{.underline} Protest at 2. The mere labeling of
the test as part of a "survey" is ambiguous, for none of the
documentation provided demonstrates whether the test was performed, for
example, to ascertain the extent of the known deterioration of the part,
which is dutiable, or whether the test was exclusively related to the
ABS survey. [See]{.underline} Headquarters Decision 112378, dated
November 30, 1992.

Additionally, on the drydocking invoice, the load bearing test is
numbered sequentially with the line shaft bearing (2.1-1.9(a) and (b))
indicating that these items are related. [See]{.underline} Drydocking
Spreadsheet at pp. 3. Your office held the line shaft bearing to be
dutiable and this decision was not protested. Consequently, since there
is a clear lack of probative documentation, item 2.24 is held to be
dutiable.

**Remontowa, Part 1, Item 2.66**

CBP has held that an installation, even one of a permanent nature, is
considered to be a dutiable repair rather than a modification if the
installation addresses a repair need. Thus, if an area of a vessel is
enhanced by the replacement of one permanent installation with another,
the operation is considered dutiable if evidence reveals that a defect
or wastage was present in the former installation, which condition was
cured by replacement. [See]{.underline} Headquarters Decision 110731,
dated March 29, 1990. For an item to be characterized as a non-dutiable
modification, it must encompass the installation of an item as a new
design feature, not as a replacement for, or restoration of, parts now
performing a similar function. [See]{.underline} Headquarters Decision
109971, dated June 12, 1989. Dutiable repairs include repairs or
replacements for "any wasted, deteriorated, or defective equipment,
materials, or areas of the vessels." [See]{.underline} Headquarters
Decision 108998, dated February 1, 1988.

Our review of documentation submitted to determine whether an
installation constitutes a modification depends to a great extent on the
detail and accuracy of the drawings and invoice descriptions of the
actual work performed. [See]{.underline} Headquarters Decision 111554,
dated October 11, 1991; Headquarters Decision 113233, dated February 23,
1996. Here, while the protestant claims that adapting the valve control
constitutes a modification, the invoice description is lacking
sufficient detail. The invoice merely states "old control to be modified
for new valves," making it unclear whether the valves were defective and
had to be replaced or if they constitute an improvement and therefore, a
modification. [See]{.underline} Variation Order Request ("VOR") 42 at
item 1071. Consequently, due to the insufficient documentation provided,
the work is held dutiable.

**Remontowa, Part 1, Item 2.69**

**Remontowa, Part 1, Items 2.71 and 2.72**

**Remontowa, Part 1, Item 2.85**

**Remontowa, Part 1, Item 3.16**

**Remontowa, Part 1, Item 3.21**

The protestant claims items 2.69, 2.71, 2.72, 3.16 and 3.21 were a
required part of the hull survey and item 2.85 was part of a mandatory
classification survey. [See]{.underline} Protest at 2. However, the ABS
Survey Report indicates by the letter "A" after the report number that
the items were in fact surveyed as part of the Damage-Repair Survey, not
as part of the hull survey or mandatory classification survey as
asserted. [See]{.underline} ABS Class Survey Report at 1, 4, 30-32, 40.

Under long-standing and consistently applied administrative policy, the
costs associated with a Damage-Repair Survey are dutiable since the
survey is conducted to ascertain whether repairs are necessary.
[See]{.underline} Headquarters Decision 115441, dated January 16, 2002;
Headquarters Decision 113826, dated February 20, 1997; [see]{.underline}
[also]{.underline} Headquarters Decision 111756, dated January 14, 1992.
Where an inspection or survey is conducted merely to ascertain the
extent of damages sustained or whether repairs are deemed necessary, the
costs are dutiable as part of the repairs which are accomplished.
[See]{.underline} C.I.E. 429/61; C.S.D. 79-2, 13 Cust. Bull. and Dec.
993 (1979); C.S.D. 79- 277, 13 Cust. Bull. and Dec. 1395, 1396 (1979).
Accordingly, items 2.69, 2.71, 2.72, 2.85, 3.16, and 3.21 are considered
to be dutiable.

**Remontowa, Part 1, Item 2.84**

The protestant claims that the ring of the fathometer well was
"fabricated and fitted" as part of the mandatory hull survey.
[See]{.underline} VOR 45 at item 1106; Protest at 2. Neither the invoice
nor the protest, however, states why this work was necessary or if it
was part of a non-dutiable survey, and item 2.84 is not mentioned in the
ABS survey report. Therefore, the protestant failed to meet its
documentary burden of proof that the work was performed as part of a
periodic survey. Additionally, your office held the related item 2.83,
identified only as a fathometer well, dutiable and this decision was not
protested. Since there is a clear lack of probative documentation and a
related item was held dutiable, item 2.84 is dutiable.

**Remontowa, Part 1, Item 2.88**

Dutiable repairs include repairs or replacements for "any wasted,
deteriorated, or defective equipment, materials, or areas of the
vessel." [See]{.underline} Headquarters Decision 108998, dated February
1, 1988. In this case, the variation order request for the watertight
door chalk test states that "the surface around door frames to be
chipped, grinded and brush painted." [See]{.underline} VOR 44 at item
1075. Although the protestant claims that item 2.88 was performed as
part of the mandatory hull survey, it appears that the work was actually
performed to repair deteriorated surfaces. [See]{.underline} Protest at
2. As insufficient documentation was provided to establish that the test
was in fact part of the survey and there is an indication that dutiable
repairs were performed, the work is held dutiable.

**Remontowa, Part 1, Item 3.03**

Item 3.03 is described as "cargo hold bilge well inspection" and it is
asserted that this inspection was conducted as part of the mandatory
hull survey. [See]{.underline} Protest at 2. Upon examining the invoice
for other costs related to cargo hold bilges, it is clear that several
dutiable repairs were performed on this area of the vessel.
[See]{.underline} Remontowa, Part 2, Item 57; Remontowa, Part 2, Item
58; Remontowa, Part 3, Item 1; Remontowa, Part 3, Item 105. All of these
costs were held to be dutiable in the original application for relief
and have not been protested. Since dutiable work was performed in the
cargo hold bilges and it cannot be proven that the work in item 3.03 was
part of the non-dutiable survey, this work is dutiable.

**Remontowa, Part 1, Item 3.04**

It is claimed that the lifeboat pin inspection, item 3.04, was conducted
due to the non-dutiable hull survey. [See]{.underline} Protest at 2.
However, your office has already allowed duty-free treatment for
services associated with a lifeboat survey including disconnecting and
connecting the lifeboat motors, and removing and reinstalling the
wireropes. [See]{.underline} VOR 3 at item 1; VOR 8 at item 2.1-15. In
fact, no evidence has been provided to show that the work performed in
item 3.04 was done pursuant to the hull survey. The protest merely
states that the inspection is part of the survey but no documentation is
provided to substantiate this claim. [See]{.underline} Protest at 2.
Consequently, the cost of this item is dutiable.

**Remontowa, Part 2, Item 30**

The protest states that it was necessary to shift the anchor chain in
order to facilitate the required ABS inspection. Specifically, it is
contended that the anchor chain had to be shifted out of the chain
locker and lay on the ground to allow the surveyor to have access.
[See]{.underline} Protest at 2. Yet it was also necessary to take the
anchor chain out of the chain locker in order to perform dutiable
repairs as the "owner's representative elected to renew five (5) shots
of anchor chain at this time." [See]{.underline} ABS Class Survey Report
at 40. The United States Court of Appeals for the Federal Circuit has
ruled that CBP's method of prorating duties based on the ratio of
dutiable work versus non-dutiable work in regard to dual-purpose
expenses is consistent with the \"but for\" test and section 1466(a).
[SL Service, Inc. v. United States]{.underline}, 357 F.3d 1358 (Fed.
Cir. 2004), panel reh'g and reh'g en banc denied, 2004 U.S. App. LEXIS
10322 (April 19, 2004). Accordingly, in view of the fact that the
evidence submitted indicates that the anchor chain shifting costs in
item 30 can be attributed to both dutiable and non-dutiable costs, the
cost of this item is prorated.

**Remontowa, Part 2, Item 31**

If the work performed involves an element of repair due to damages,
deterioration or wear and tear, then it is a dutiable repair**.**
[See]{.underline} Headquarters Decision 110569, dated April 12, 1990.
Item 31 entails shifting the anchor chain around so that the portion of
the chain that usually stayed in the chain locker would be at the
operating end of the anchor chain and vice versa. [See]{.underline}
Protest at 2. There is no reason stated for such a change except a claim
that no repairs were made. [See]{.underline} [id.]{.underline} It
appears that while no actual repairs were made, the only reason the
anchor chain was flipped around is to allow for even wear and tear. For
that reason, item 31 is considered to constitute maintenance and
therefore is held to be a dutiable repair.

**Remontowa, Part 2, Items 37, 38, and 39**

Items 37, 38 and 39 are the costs of filling the vessel's tanks with
ballast water and fresh water at the conclusion of the drydocking
period. The protestant claims that all the tanks were drained prior to
entering the drydock to lessen the weight of the vessel; however,
numerous dutiable repairs were performed to the tanks while in drydock.
[See]{.underline} Protest at 3; ABS Survey Report at 4-28, 36. Since the
repairs to the tanks necessitated them being drained and no evidence is
offered to the contrary, items 37, 38 and 39 are held dutiable.

**Remontowa, Part 2, Items 55 and 56**

Pursuant to 19 U.S.C. § 1466(d)(1), a duty may be remitted if good and
sufficient evidence is furnished establishing that the vessel was
compelled by stress of weather or other casualty to enter into a foreign
port to make repairs to secure the safety and seaworthiness of the
vessel to enable her to reach her port of destination. It is CBP's
position that \"port of destination\" means a port in the United States.
The statute thus sets a three-part test which must be met in order to
qualify for remission:\
\
1. The establishment of a casualty occurrence.\
\
2. The establishment of unsafe and unseaworthy conditions.\
\
3. The inability to reach the port of destination without obtaining
foreign repairs.

[See]{.underline} Headquarters Decision 111539, dated December 11, 1991;
Headquarters Decision 116426, dated March 23, 2006.

The term \"casualty\" has been interpreted as something which, like
stress of weather, comes with unexpected force or violence, such as
fire, or spontaneous explosion of such dimensions as to be immediately
obvious to ship\'s personnel, or as a collision. [See]{.underline}
[Dollar Steamship Lines, Inc. v. United States]{.underline}, 5 Cust. Ct.
23, 28-29 (1940). In the absence of evidence of a casualty event, we
must consider the foreign repair to have been necessitated by normal
wear and tear. [See]{.underline} Headquarters Decision 106159, September
8, 1983.

It is the long-standing position of CBP that single acts of negligence
of crewmembers which cause damage to vessels, whether attributable to
officers or not, will be considered \"other casualties\" within the
meaning of § 1466(d)(1), provided no evidence of owner direction or
inducement is present. [See]{.underline} C.S.D. 82-42;
[see]{.underline}, [e.g.]{.underline}, Headquarters Decision 103765,
dated January 26, 1979; Headquarters Decision 112065, April 15, 1992;
Headquarters Decision 112914, January 21, 1994. The petitioner claims
that items 55 and 56, the flooding of three cargo holds, was caused when
the ballast system valves leaked due to the negligence of the shipyard
workers.

The protest does not contain sufficient documentary evidence that the
flooding was due to the shipyard workers' negligence. One variation
order request from the shipyard states that there was a valve leakage
"due to ballast system was not in orde\[r\]," which caused flooding of
the cargo holds. [See]{.underline} VOR 38 at Section 1. However, another
variation order request from the shipyard states that the cargo hold
tank tops were reblasted due to rains. [See]{.underline} VOR 8 at item
3.2-6. The costs associated with Item 56 include jet washing,
gritsweeping, gritblasting, and painting. This constitutes dutiable
painting and not a casualty. In view of the lack of good and sufficient
evidence justifying the granting of relief for a casualty claim under 19
U.S.C. § 1466(d)(1), items 55 and 56 are held to be dutiable.

**Remontowa, Part 2, Items 117, 118 and 119**

CBP has held that the cleaning of a switchboard unrelated to any
dutiable repair work does not constitute a dutiable maintenance
operation. [See]{.underline} Headquarters Decision 116492, dated June
27, 2005, [quoting]{.underline} Headquarters Decision 115603, dated May
16, 2002. The protestant cites this precedent and claims that these
items are clearly non-dutiable yet the only description provided of the
work performed is "main-cleaning, switchboard; emergency-cleaning,
switchboard; and HV switchboard-cleaning." [See]{.underline} Drydocking
Spreadsheet at pp. 9. It is unclear, based on the limited description
provided, whether the switchboard cleaning is related to a dutiable
repair or maintenance operation. Items 117, 118 and 119 are grouped
together on the drydocking invoice under Section 4.1-5.2, Main and
Emergency Switchboards (Terasaki), with the fourth item in the group
being "alternator-repair," an item which the protestant has conceded is
dutiable. [See]{.underline} Drydocking Spreadsheet at pp. 9. Since these
four items appear to be related and the protestant has provided
insufficient documentation to demonstrate that items 117, 118 and 119
are unrelated to dutiable repair work, all three items are considered
dutiable.

**Remontowa, Part 2, Items 173, 175 and 178**

If shipyard services are sought in order to address a deficiency in a
vessel then the fact that the component replaced is of improved design
or results in increased efficiency or performance is not relevant. In
order to qualify as a modification rather than a repair, the replaced
part must be in full working order at the time of the enhancement.
[See]{.underline} Headquarters Decision 114140, dated November 18, 1997.
The protestant asserts that items 173, 175 and 178 are the costs
associated with modifications to the hatch cover landing, are not
associated with repairs and that the work performed is being done to all
vessels of a certain class. [See]{.underline} Affidavit at Exhibit B.

While the affidavit states that no stress repairs were performed on the
particular hatch covers in question, repairs are shown on the relevant
variation order requests. For item 173, the work performed includes
"stainless steel mating plates renewal," "scaled (cleaned) & grinded,
pitts welded," "repairs to item 3.5-2," "cracks rewelded," and "cleat
holder fabricated & replaced." [See]{.underline} VOR 31 at Section
7.1-1. These are all dutiable repairs that indicate a deficiency and
deterioration of the hatch covers, therefore, this work does not
constitute a modification. While we note that only part of item 173
constitutes dutiable repairs, there is only one price listed for the
item. CBP will not grant relief where there is not a sufficient
breakdown between dutiable and non-dutiable costs. [See]{.underline}
C.I.E. 565/55; C.I.E. 1325/58; C.D. 1836. Accordingly, this item is
dutiable in its entirety.

Item 175 is described as "stainless steel mating plates renewal."
[See]{.underline} VOR 31 at Section 7.1-1. A renewal typically
constitutes a dutiable repair, therefore, item 175 is held to be
dutiable. Item 178 indicates that the work performed included "after old
landing plates removal the surfaces on hatch coamings were chipped &
scaled. Pitts were grinded, rewelded & finally grinded."
[See]{.underline} VOR 46 at item 1110. This demonstrates deterioration,
as a result, item 178 is held to be fully dutiable.

**Remontowa, Part 2, Items 179 to 183**

The protestant provided insufficient documentation in support of the
work performed on the stern seal being a modification. It is claimed
that the existing stern seal was not in need of repair and that this was
a modification of the type of stern utilized. [See]{.underline} Protest
at 3. The variation order requests and protest do not provide enough
detail in their descriptions of the work performed to determine whether
the factors necessary for a non-dutiable modification are met. In fact,
item 183 described the work performed as "copper pipe renewed," a
dutiable repair. [See]{.underline} VOR 42 at item 1073. Under
long-standing and consistently applied administrative policy, an
installation, even one of a permanent nature, is considered to be a
dutiable repair rather than a modification if the installation addresses
a repair need. [See]{.underline} Headquarters Decision 110731, dated
March 29, 1990. Consequently, since there is a clear lack of probative
documentation, the work performed on the stern seal covered by these
items is held to be dutiable.

**Remontowa, Part 3, Items 16 to 19**

In order to qualify as a non-dutiable modification, the item must, among
other factors, be permanently incorporated into the hull or
superstructure of a vessel. The permanent incorporation factor should
not be given undue weight in view of the fact that vessel components
must be welded or otherwise \"permanently attached\" to the ship as a
result of constant pitching and rolling. [See]{.underline} Headquarters
Decision 112525, dated April 15 1993; Headquarters Decision 112945,
dated May 31, 1994; [see]{.underline} [also]{.underline} Headquarters
Decision 112378, dated November 30, 1992. In this case, the garbage
container was "fastened by crew using standard container fittings."
[See]{.underline} VOR 17 at Section H-18. Since the garbage container
was merely fastened in place, as would be any other piece of equipment
which must be secured from potential shifting and movement aboard a
vessel, it is not permanently incorporated. Accordingly, items 16 to 19
do not constitute a modification and are held dutiable.

**Remontowa, Part 3, Item 48**

The protestant claims that item 48, for work done on the hatch coaming,
is a modification and is part of the work performed on the hatch cover
landing pads in items 173, 175 and 178. As stated above, we have held
that the work related to those items does not meet the requirements for
a modification and therefore, constitutes dutiable repairs.
Additionally, the hatch coaming work in item 48 involved the
"reinforcement of longitudinal stiffeners," cleaning, and brash
painting. [See]{.underline} VOR 22 at Section H-40. This work appears to
constitute dutiable repairs. Your office held that the other two items
under the broad heading of H-40 Hatch Coamings, items 47, hatch coaming
long stiff, and 49, hatch coaming repairs, dutiable and this decision
was not protested. Therefore, since there is a clear lack of probative
documentation to demonstrate that item 48 is a non-dutiable
modification, this item is held dutiable.

**Remontowa, Part 3, Item 51**

The protestant asserts that item 51 involved the flooding of cargo hold
number 3 and is related to the casualty claim asserted in Part 2, items
55 and 56. [See]{.underline} Protest at 3. Upon further examination, it
is revealed that there were two different instances of cargo hold
flooding. The first instance was the casualty claim for items 55 and 56
which involved cargo holds number 8 and 12 and occurred on August 8,
2004. [See]{.underline} VOR 38 at Sec. 1. The second instance involved
cargo hold number 3 and occurred on August 24, 2004. [See]{.underline}
[id.]{.underline} Item 51 involves the second instance of cargo hold
flooding. As stated above, we held that there was insufficient evidence
that items 55 and 56 constituted a casualty event. The protestant
provided even less documentation for item 51's casualty claim than was
provided for items 55 and 56. The relevant variation order request
merely mentions that there was "flooding of cargo hold Gr. #3" without
disclosing why or how this flooding occurred. Consequently, due to the
lack of good and sufficient evidence that a casualty event occurred, we
hold that item 51 is dutiable.

**Remontowa, Part 3, Item 53**

CBP has long-held that consumable items are duty-free when not used in
connection with dutiable repairs. [See]{.underline} C.I.E. 196/60;
Headquarters Decision 113404, dated April 21, 1995. The courts have
defined consumable items as \"supplies for the consumption, sustenance,
and medical needs of the crew and passengers during the voyage.\"
[See]{.underline} [H.E. Warner, Trustee, American Mail Line, Ltd. v.
United States]{.underline}, 28 C.C.P.A. 143, 150 (1940)
[quoting]{.underline} [Southwestern Shipbuilding Co. v. United
States]{.underline}, 13 Ct. Cust. App. 74, 78 (1925). Consumable items
also refer to other goods, such as fuel, that are wholly consumed in
their first use. [See]{.underline} [Atlas Marine Supply Co. v. United
States]{.underline}, 29 C.C.P.A. 20, 26-27 (1941).

When an item is purchased for repair purposes, even if it would
otherwise qualify as a consumable good, it is considered dutiable.
[See]{.underline} Treasury Decision (T.D.) 40934 (1925). The new CO2
that the protestant claims is a consumable item was only purchased due
to a dutiable repair. Your office held that item 52, the CO2 hydo-piping
renewal, was a dutiable repair. The relevant variation order request
indicates that the CO2 in question was removed in order to perform the
dutiable repairs on the piping and then refilled with new CO2.
[See]{.underline} VOR 2 at item 2.

The United States Court of Appeals for the Federal Circuit has ruled
that expenses that would not have been incurred \"but for\" the dutiable
repair work done are themselves dutiable, and, conversely, expenses that
would not have been incurred but for the non-dutiable work done are
themselves non-dutiable. [Texaco Marine Services, Inc. v. United
States]{.underline}, 44 F.3d 1539 (Fed. Cir. 1994). Accordingly, item 53
is dutiable since the CO2 would not have been needed to be refilled but
for the pipe renewal.

**Remontowa, Part 3, Items 152 and 153**

If a permanent addition is a first-time installation, or if it replaces
an existing structure that is in good working order at the time of its
replacement and an enhancement in operating efficiency is provided, the
operation may be considered a non-dutiable modification.
[See]{.underline} Headquarters Decision 111224, dated Feb. 19, 1991. CBP
has held that for an item to be characterized as a non-dutiable
modification, it must encompass the installation of an item as a new
design feature, not as a replacement for, or restoration of, parts now
performing a similar function. [See]{.underline} Headquarters Decision
109971, dated June 12, 1989.

In his affidavit, the port engineer states that items 152 and 153 were
for a "purifier controller installation, where there was not
\[previously\] a purifier controller." [See]{.underline} Affidavit at
Exhibit B. Additionally, the protestant claimed that the purifier
controller will remain onboard during any extended lay-up.
[See]{.underline} Protest at 4. In the protest, it is asserted that the
purifier controller is permanently incorporated into the hull of the
vessel since the controller's installation required new wiring,
foundation, piping, and valves. [See]{.underline} Protest at 4. The
relevant variation order request substantiates this claim, it states
that existing electric cables and control boxes were removed, a
foundation was built, new control and transformer boxes, emergency
buttons and valves were installed, and the purifier was connected.
[See]{.underline} VOR 15 at item M-57. The work performed demonstrates
that no equipment performing a similar function existed previously;
therefore, the purifier controller constitutes a new design feature.
Accordingly, we find that item 152 constitutes a non-dutiable
modification.

The United States Court of Appeals for the Federal Circuit has ruled
that expenses that would not have been incurred \"but for\" the dutiable
repair work done are themselves dutiable, and, conversely, expenses that
would not have been incurred but for the non-dutiable work done are
themselves non-dutiable. [Texaco Marine Services, Inc. v. United
States]{.underline}, 44 F.3d 1539 (Fed. Cir. 1994). Item 153 is for the
labor, travel and hotel accommodations for an Alfa Laval technical
representative to assist in the installation of the controller.
[See]{.underline} VOR 49 at Item M-57. Consequently, item 153 is
non-dutiable since the Alfa Laval Service technical representative would
not have needed but for the installation of the purifier controller.

**Remontowa, Part 3, Items 159 and 160**

CBP has held that sludge removal is non-dutiable as long as it is not
performed in connection with dutiable repairs. [See]{.underline}
Headquarters Decision 111039, dated October 4, 1990; Headquarters
Decision 116088, dated March 3, 2004. The protestant claims that items
159 and 160, for the removal and storage of fuel oil, should similarly
be held non-dutiable. However, those decisions explicitly state that
such a removal will only be held non-dutiable if unrelated to dutiable
repairs. In this case, there have been extensive repairs made to the
fuel oil and diesel oil tanks. [See]{.underline} ABS Class Survey Report
at 28-29. The protestant did not sufficiently demonstrate that the
removal and storage of the fuel oil was unrelated to the dutiable
repairs.

The United States Court of Appeals for the Federal Circuit has ruled
that expenses that would not have been incurred \"but for\" the dutiable
repair work done are themselves dutiable, and, conversely, expenses that
would not have been incurred but for the non-dutiable work done are
themselves non-dutiable. [Texaco Marine Services, Inc. v. United
States]{.underline}, 44 F.3d 1539 (Fed. Cir. 1994). As a result, items
159 and 160 are held to be dutiable since the fuel oil would not have
needed to be removed and stored but for the dutiable repairs performed
on the fuel oil and diesel oil tanks.

**Remontowa, Part 3, Item 161**

The protestant claims that item 161, the cost of an assistance car with
fire equipment, should at most be considered a dual-purpose item, one
that contains dutiable and non-dutiable expenses, and should be
prorated. [See]{.underline} Protest at 4. However, these costs appear to
be directly associated with items 159 and 160, which we have held fully
dutiable. Items 159, 160 and 161 are all grouped together on the
drydocking invoice, therefore, giving the appearance that the assistance
car is a cost directly related to the transfer of the fuel oil.
[See]{.underline} Drydocking Spreadsheet at pp. 16. Since the protestant
did not meet its burden of proof in demonstrating that item 161 also
contains non-dutiable expenses, the item is held to be fully dutiable.

**HOLDING**

After a thorough review of the record, the protest is denied in part and
granted in part as detailed above.

In accordance with the Protest/Petition Processing Handbook (CIS HB,
January 2002, pp. 18 and 21), you are to mail this decision, together
with the Customs Form 19, to the protestant no later than 60 days from
the date of this letter. Any reliquidation of the entry in accordance
with the decision must be accomplished prior to mailing of the decision.
Sixty days from the date of the decision the Office of Regulations and
Rulings will make the decision available to CBP personnel, and to the
public on the CBP Home Page on the World Wide Web at www.cbp.gov, by
means of the Freedom of Information Act, and other methods of public
distribution.

Sincerely,

Glen E. Vereb, Chief

Cargo Security, Carriers and Immigration Branch