Bethlehem Steel Company v. United States

• Decision Date: 30 December 1964
• Docket Number: C.D. 2500.
• Citation: 238 F. Supp. 483
• Parties: BETHLEHEM STEEL COMPANY, Maryland Shipbuilding & Drydock Co. v. UNITED STATES.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

238 F. Supp. 483

BETHLEHEM STEEL COMPANY, Maryland Shipbuilding & Drydock Co. v. UNITED STATES.

C.D. 2500.

United States Customs Court, Second Division.

December 30, 1964.

Sharretts, Paley & Carter, New York City (Joseph F. Donohue and David O. Elliott, New York City, of counsel), for plaintiffs.

John W. Douglas, Asst. Atty. Gen., Richard J. Kaplan, Brooklyn, N. Y., Trial Attorney, for defendant.

Before LAWRENCE, RAO, and FORD, Judges.

LAWRENCE, Judge.

The Bethlehem Steel Company and the Maryland Shipbuilding & Drydock Co., plaintiffs herein, brought into the United States at the port of Baltimore, Md., two so-called "midbodies."

They were classified by the collector of customs within the provision for "Articles or wares not specially provided for, * * * whether partly or wholly manufactured * * * in chief value of steel" in paragraph 397 of the Tariff Act of 1930 (19 U.S.C. § 1001, par. 397), as modified by the Sixth Protocol of Supplementary Concessions to the General Agreement on Tariffs and Trade, 91 Treas. Dec. 150, T.D. 54108, and duty was imposed thereon at the rate of 19 per centum ad valorem.

Pursuant to the provisions of section 514 of said act (19 U.S.C. § 1514), the plaintiffs filed protests 63/17334 and 63/19252, respectively, which have been consolidated for trial.

Plaintiffs rely upon the claim that the midbodies are not "Articles or wares" within the meaning of paragraph 397, supra, but are "vessels," as defined in section 401(a) of said act (19 U.S.C. § 1401(a)); also section 3, 1 U.S.C., and, as such, under the time-honored doctrine announced in The Conqueror case, 166 U.S. 110, 17 S.Ct. 510, 41 L.Ed. 937 (1897), are exempt from customs duties. That decision will be reviewed, infra. The claim was also made for classification as structural shapes within the purview of paragraph 312 of said act (19 U.S.C. § 1001, par. 312), as modified.

The statutory definitions above referred to read as follows:

Section 401(a) of the Tariff Act of 1930:

"VESSEL. — The word `vessel' includes every description of water craft or other contrivance used, or capable of being used, as a means of transportation in water, but does not include aircraft."

Section 3, 1 U.S.C.:

"Vessel" as including all means of water transportation.

"The word `vessel' includes every description of water craft or other artificial contrivance used, or capable of being used, as a means of transportation on water."

The differences in the phraseology of the definitions are insignificant and unimportant here.

Our first inquiry, therefore, is whether said midbodies are "vessels" within the meaning of that word, as judicially interpreted.

A careful review of the evidence and the numerous judicial authorities cited by the parties in their well-prepared briefs leads us to the conclusion that the question posed above must be answered in the affirmative.

The following three witnesses were called at the trial all of whom testified on behalf of the plaintiffs: John D. Frack, vice president in charge of the engineering and estimating division of the Maryland Shipbuilding & Drydock Co.; Lester Rosenblatt, president and naval architect of the firm of M. Rosenblatt & Son, Inc.; and Ralph A. Leaf, assistant manager of the Baltimore yards of the shipbuilding division of the Bethlehem Steel Company.

These witnesses were exceptionally well informed highly trained experienced experts in the field of naval engineering and architecture. Their testimony was without conflict. It was clear, concise, and convincing.

It appears from the evidence that the midbodies in controversy were constructed in European shipyards in accordance with conventional designs, plans, and specifications prepared by naval architects which conformed to the accepted standards in the construction of watercraft generally and approved by governing bodies, such as the American Bureau of Shipping, the United States Coast Guard, and the United States Public Health Service.

The midbodies were over 500 feet in length and had a cargo capacity of between 12,000 and 14,000 tons. In order to facilitate their transatlantic voyage, they were equipped with a temporary bow and additional stiffeners were used to strengthen the stern. Furthermore, each craft had sleeping accommodations for a crew of eight men, each of whom had signed ships' papers for the crossing. They were equipped with light, heat, power, food, radio facilities, and navigational lights and signals in order to comply with navigational rules of the road and to indicate that the craft were under tow, as required by law for vessels only. (33 U.S.C. §§ 144(c) (i), 145(b), and 145c(a)).

Upon their arrival in this country, the midbodies were suitable for use as vessels of the barge type for commercial use in the transportation of cargo. They were designed for ultimate use as cargo sections of self-propelled ore carriers on the Great Lakes.

The evidence also discloses that each craft carried marine insurance (plaintiffs' exhibit 7) which was secured for protection against damage or loss of the craft in transit and which also served as coverage for the crew of eight who manned the craft while crossing the ocean. In addition to the foregoing, the midbodies were equipped with liferafts, life preservers, anchor and chain, and a generator for light, heat, and messing.

With these considerations in mind, we turn now to The Conqueror case, in which the Court thoroughly examined pertinent statutes relating to the administration of customs as early as the Tariff Act of 1789, noting that —

"* * * By the very first act passed by Congress in 1789, subsequent to an act for administering oaths to its own members, a duty was laid upon `goods, wares and merchandise,' imported into the United States, in which no mention whatever is made of ships or vessels; but by the next act, entitled `An act imposing duties on tonnage,' a duty was imposed `on all ships or vessels entered in the United States' * *."

Further, the Court observed—

"* * * This distinction between `goods, wares and merchandise' and `ships or vessels' has been maintained ever since, * * *."

The Court was there considering whether the foreign-built yacht, "The Conqueror," owned by an American citizen, was subject to an imposition of customs duties pursuant to the Tariff Act of 1890 upon its arrival in the United States.

In a thorough and well-considered opinion, after reviewing legislation, the Court remarked —

"* * * It is scarcely possible that if congress had chosen to impose duties upon such yachts, or had supposed them subject to duty as imported articles, it would have also discriminated against them by requiring them to pay tonnage fees. In this, the latest expression of the legislative will, congress seems to have recognized the theory, which we have already gathered from the prior course of legislation, that vessels should be treated as a class by themselves, and not within the general scope of the tariff acts.

"In view of the elaborate opinion of the district judge upon this branch of the case, it is unnecessary to extend this discussion further. We think that the liability of ships and vessels to tonnage dues and to light money, except where a certain class of vessels is specially exempted, shows that it was not the intention of Congress to treat them as dutiable articles. * * *"

It having been definitely determined that vessels are not goods, wares, or merchandise, which latter are subject to customs duties, we come to the point where we must decide whether midbodies of the type above described are "vessels," as that term is defined in the statute and as construed by the courts.

In order to support their contention that the midbodies in controversy are vessels, plaintiffs have cited several decisions of this court and other Federal courts which point up the distinguishing marks and characteristics which identify a "vessel."

One of the earlier cases is that of The International, 3 Cir., 89 F. 484 (1898), where a dredge and two scows were held to be vessels and not subject to customs duties. In the opinion of the court, it was unimportant that the dredge was not designed to carry passengers or cargo for hire. As stated by the court —

"The fact that dredges and scows are not subject to all the regulations and provisions of law applicable to vessels carrying passengers or merchandise for hire and engaged in foreign or domestic commerce, cannot affect their legal status as vessels or render them dutiable. * *"

In J. G. Hitner v. United States, 21 Treas.Dec. 275, T.D. 31898 (1911), this court, then known as the Board of General Appraisers, was concerned with the question whether the steamship "Altenburg," which traveled self-propelled from Havana to Philadelphia, was subject to customs duties which had been imposed by the collector of customs. In the course of its opinion, the court noted that the vessel appeared—

"* * * to have been properly entered and the usual tonnage and port dues paid. * * *"

The craft could not be sold as a vessel because it had been broken up into scrap. Further, the court said —

"* * * That a vessel afloat is not `merchandise' under our tariff law and not an imported article was settled in the case of The Conqueror (166 U.S., 110 17 S.Ct. 510, 41 L. Ed. 937). Duties attach on imported goods according to their condition at the time of their importation. United States v. Irwin (2 Cir., 78 Fed.Rep., 799). The use to which an article will be ultimately put is not to be considered unless a statute so provides, and articles legally brought into the country may not be followed for the purpose of learning their use and with the purpose of assessing a duty in accordance with such use unless the particular provision of the law would require such action. United States v. Wotton (1 Cir. 53 Fed.Rep., 344)."

The court held that the Altenburg was a vessel at the time it arrived in the United States and, consequently, not subject to customs duties...