CBP Revokes Ruling on Horizon Dutiable Repairs Following CAFC Decision

CBP revoked a ruling that imposed duties for repairs to a cargo ship following a Nov. 9 Court of Appeals of the Federal Circuit (CAFC) decision against CBP. The original ruling, HQ H015615, found repairs made to the Horizon Crusader, a cargo ship, to be dutiable. The CAFC ruled against CBP, agreeing with the CIT that the replacement of new anti-fouling coatings on a vessel's underwater hull that was performed overseas is not a dutiable foreign repair.

The new ruling, HQ H025902, is (here). The revoked ruling is (here).

The CIT found that such work is non-dutiable because the hull's paint system prior to replacement was in good order and was performed solely in order to comply with international anti-fouling rules. Therefore, the CIT stated that any repair was incidental to Horizon's intent for compliance. The CIT entered judgment in favor of Horizon and ordered CBP to reassess the duties at issue in accordance with the judgment. CBP was also ordered to refund Horizon all excess duties together with interest as provided by law.

(In 2001, the International Maritime Organization (IMO) adopted the International Convention of the Control of Harmful Anti-Fouling Systems on Ships which banned tin-based anti-fouling coatings after January 1, 2003 and required that the tin-based anti-fouling coatings on existing vessels be removed or sealed by January 1, 2008.)

(See ITT's Online Archives 11112208 for summary of the CIT decision. The CAFC ruling is here.)

Horizon Hawaii Protest Also Revised

The Nov. 9 CAFC decision also affected Horizon's protest of repair duties on another of its ships, the Hawaii, said CBP in a separate ruling. "Based upon examination and review of the subject Entry and Protest submitted, the facts and circumstances regarding the modifications required for compliance with the anti-fouling agreement for the [Crusader] and the [Hawaii] are similar and not significantly distinguishable," the ruling said. "Therefore, we find the Court’s findings for the [Crusader] are applicable to the subject entry and protest for the [Hawaii]."

The CBP ruling on the Horizon Hawaii, HQ H098068, is (here).

(See ITT's Online Archives 10121418 for summary of the Court of Appeals for the Federal Circuit's ruling that the government owed Horizon Lines a refund for duties imposed for its replacement of a ship's entry guides while the ship was overseas. See ITT's Online Archives 10090814 for summary of the CIT ruling that Horizon's decision to lay-up the Crusader in Indonesia was not dutiable as part of certain repairs that were later performed in Singapore.)