HQ 227073

March 18, 1998

VES-13-18-RR:IT:EC 227073 CC

CATEGORY: Carriers

Chief, Liquidation Branch

U.S. Customs

P.O. Box 2450

San Francisco, CA 94126

RE: Vessel Repair Entry No. 110-6461840-5; SEA-LAND TRADER; V-90; 19
U.S.C. § 1466; Modifications; Application for

Relief

Dear Sir:

This is in response to your memorandum dated June 18, 1996,

which forwarded the application for relief submitted by Sea-Land

Service, Inc. (applicant), with respect to the above-referenced

vessel repair entry.

FACTS:

The SEA-LAND TRADER is a U.S.-flag vessel operated by Sea-Land Service,
Inc. (Sea-Land). Subsequent to completion of

foreign shipyard work, the vessel arrived at the port of Tacoma,

Washington, on January 12, 1996. A vessel repair entry was filed

on January 22, 1996.

Pursuant to an authorized extension of time, an application

for relief with supporting documentation was timely filed. You

have asked for our determination with respect to the following

items:

Item No. Description

3.2-2 Rudder Pintle Bushing to Thordon

3.2-7 Stern Tube Seal

3.2-8 Main Reduction Gear Box End Covers

8.1-1 Centerline Transverse

Hatch Coaming Brackets

8.1-3 Transverse Coaming Stiffeners

8.1-5 Container Entry Guides Hatch #4

8.1-12 Hatch Cover Guides

8.1-13 Hatch Cover Bearing Pads

8.1-21 Drain Well

8.1-22 Manhole Cover Access

4001 Accommodation Ladder Turn table

4007 Main Circulating Suction Valve

4008 Chlorpac Dispersal Tube Bracketing

4018 Overboard Piping and Insert Plate

in E/R Port Side

4047 Bow Thruster Tunnel\'s Plate Covers

ISSUE:

Whether evidence is presented sufficient to prove that the

work covered by the subject items constitutes modifications to

the hull and fittings of the vessel so as to render the work

nondutiable under 19 U.S.C. § 1466.

LAW AND ANALYSIS:

Title 19, United States Code, § 1466, provides in pertinent

part for 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 foreign or coastwise

trade, or vessels intended to engage in such trade.

In its application of the vessel repair statute, the Customs

Service has held that modifications, alterations, or additions to

the hull and fittings of a vessel are not subject to vessel

repair duties. Over the course of years, the identification of

modification processes has evolved from judicial and

administrative precedent. In considering whether an operation

has resulted in a modification that 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, 18 C.C.P.A. 137 (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. This element should not be given

undue weight in view of the fact that vessel components must

often be welded or otherwise \"permanently attached\" to the

ship because ships are subject to constant pitching and

rolling. In addition, some items, the cost of which are

clearly dutiable, operate with other vessel components,

resulting in the need, possibly for that purpose alone, for

a fixed and stable attachment to those vessel parts. It

follows that a \"permanent attachment\" may take place that

does not necessarily involve a modification to the hull and

fittings.

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.

Our determinations on the subject items are as follows:

3.2-2. Rudder Pintle Bushing to Thordon. The applicant

states that the ruddle pintle bushing was modified with a

specially designed polymer, Thordon material. The ABS survey

states that the housing for the rudder lower pintle bush was

found wasted and was re-bored and fitted with a new bushing.

Consequently, we find that this item was a repair, and,

therefore, the costs are dutiable.

3.2-7. Stern Tube Seal. The applicant states that this

work was done to \"enhance the running time of the vessel without

having problems of the stern tube seals leaking and causing

environmental damage to the environment.\" The ABS survey states

that the \"complete aft seal assembly (outboard) was replaced

using a KOBELCO type simplex seal under supervision of maker\'s

representative.\" An invoice shows that before the stern tube

seals were converted they were inspected and found to be in good

condition. Thus, we find the work was done to convert the seals

to make them more efficient and not to repair an item not in good

working order. Therefore, this item is not dutiable.

3.2-8. Main Reduction Gear Box End Covers. The applicant

states that the existing covers were removed and larger covers

were installed in order that ABS requirement to inspect these

areas at regular intervals could be met. The applicant has

provided no evidence that this work was done incident to a

nondutiable ABS survey; consequently, this item is dutiable.

8.1-1. Centerline Transverse Hatch Coaming Brackets. The

applicant states that this work was done to prevent future

cracking. Some of this work consists of renewing existing

coaming brackets. Consequently, this item is a dutiable repair.

8.1-3. Transverse Coaming Stiffeners. The applicant states

that this work was done to prevent future cracking. Some of this

work relates to renewing existing coaming stiffeners; therefore,

this item is a dutiable repair.

8.1-5. Container Entry Guides Hatch #4. The applicant

states that this work was done to increase the productivity of

the longshoremen in loading the vessel. This item is a

modification and is nondutiable.

8.1-12. Hatch Cover Guides. The applicant states that 6 new

hatch cover guides were installed on top of existing guides which

were too short to help in lowering the hatch covers back into

position. This work is a modification and is nondutiable.

8.1-13. Hatch Cover Bearing Pads. The applicant states that

the existing bearing pads were not holding up. Thus, according

to the applicant, certain coaming pads were completely renewed

and new coaming pads were installed. Some of this work relates

to the repair of existing articles. Therefore, this item is

dutiable.

8.1-21. Drain Well. The applicant states that the cargo

holds, originally designed as large refrigerated spaces and

completely insulated with thick foam, have been converted to

normal container cargo holds. The foam was removed to allow

water to drain properly to the bilge well. This work is a

modification and is nondutiable.

8.1-22. Manhole Cover Access. The applicant states that

manhole covers were modified by removing sections of the coaming

dam to allow water to drain correctly. This work is a

modification and is nondutiable.

4001\. Accommodation Ladder Turn Table. The applicant

states that the accommodation ladder turn tables were modified

from hydraulically actuated to manually operated by removing all

hydraulics and electrical equipment. This was done to prevent

oil spills and environmental damage. This work is a modification

and is nondutiable.

4007\. Main Circulating Suction Valve. The applicant

states that the main circulator suction valve was required to be

removed by the USCG for inspection and survey. We find no

evidence that shows this work was done incident to a required

survey, and, therefore, this item is dutiable.

4008\. Chlorpac Dispersal Tube Bracketing. The applicant

states that the piping bracket broke and was corrected with new

modified bushing and material. This work constitutes a repair

and is therefore dutiable.

4018\. Overboard Piping and Insert Plate in E/R Port Side.

The applicant states that the piping was removed as a result of

the survey showing a possible safety hazard. This item consists

of a repair the result of the survey. Consequently, this item is

a repair that is dutiable.

4047\. Bow Thruster Tunnel\'s Plate Covers. The applicant

states that one of the plates was modified by installing a small

2-inch threaded plug to facilitate inspections. This item is a

nondutiable modification.

HOLDING:

The subject items are dutiable in part and nondutiable in

part as detailed in the Law and Analysis portion of this ruling.

Sincerely,

Jerry Laderberg

Chief

Entry Procedures and Carriers

Branch