Elizabeth River Terminals, Inc. v. US, Court No. 75-10-02534.

• Decision Date: 26 February 1981
• Docket Number: Court No. 75-10-02534.
• Citation: 509 F. Supp. 517
• Parties: ELIZABETH RIVER TERMINALS, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

509 F. Supp. 517

ELIZABETH RIVER TERMINALS, INC., Plaintiff, v. UNITED STATES, Defendant.

Court No. 75-10-02534.

United States Court of International Trade.

February 26, 1981.

Vandeventer, Black, Meredith & Martin, Norfolk, Va. (G. W. Birkhead, Norfolk, Va., at the trial and on the briefs), for plaintiff.

Thomas S. Martin, Acting Asst. Atty. Gen., Washington, D. C.; Joseph I. Liebman, New York City, Atty. in Charge, International Trade Field Office, Commercial Litigation Branch (Madeline B. Kuflik, New York City, at the trial and on the brief), for defendant.

RE, Chief Judge:

In this action, plaintiff sues to recover duties assessed on the cost of repairs made in a foreign country to its barge, the Cambria. The repairs, on which duties were assessed and which plaintiff seeks to have refunded, were made in Montreal, Quebec, Canada, in 1973.

Plaintiff, Elizabeth River Terminals, Inc., operates a dry bulk cargo facility. In its operation, plaintiff loads and unloads deepwater vessels, stores dry bulk materials and handles scrap metal for export.

The Cambria was purchased by the plaintiff on July 9, 1973 for use as a crane platform moored at its place of business in Norfolk, Virginia. Earlier, the Cambria was a self-propelled Great Lakes ore carrier. In 1968, it was dropped from classification as an ore carrier, and the engines were deactivated. From 1968 until its purchase by plaintiff, the Cambria was moored to the shore in Milwaukee, Wisconsin, and was used for loading, unloading and holding scrap.

After the plaintiff purchased the Cambria, it was towed from Milwaukee to Montreal for the purpose of making certain repairs. Some of the repairs were necessary for the sea portion of the tow, whereas others were made for its use in Norfolk, Virginia. In order to permit the voyage from Montreal to Norfolk, Virginia, the Cambria was registered by the United States Coast Guard. The Cambria was readmeasured as a barge, and Certificates of Registry and Inspection were issued by the United States Coast Guard. The Certificate of Inspection prohibited the carrying of cargo.

After the repairs were made in Montreal, the Cambria was towed to Norfolk, Virginia, where, pursuant to section 466(a) of the Tariff Act of 1930, as amended (19 U.S.C. § 1466(a)), duties were assessed on the cost of the foreign repairs. Section 466(a) of the statute provides for a duty of 50 per centum to be assessed on the cost of repairs made in a foreign port on a vessel documented under the laws of the United States to engage, or intended to be employed, in foreign or coasting trade. Subsection (d) of section 466 (formerly subsection (b) and redesignated (d) by Pub.L. 95-410 (1978)), not in issue in this case, provides for a remission of duties for certain "necessary repairs," i. e., repairs "compelled, by stress of weather or other casualty." See Suwannee Steamship Co. v. United States, 79 Cust.Ct. 19, C.D. 4708, 435 F.Supp. 389 (1977). On January 5, 1971, subsection (e) (formerly subsection (c) and redesignated (e) by Pub.L. 95-410 (1978)) was added which provides for an exemption from duties for "any vessel designed and used primarily for purposes other than transporting passengers or property in the foreign or coasting trade" if certain specific criteria are met. (Emphasis added.)

Plaintiff does not dispute the amount of the duties assessed, but contends that, under this court's holding in Corpus Co. v. United States, 69 Cust.Ct. 170, 176, C.D. 4390, 350 F.Supp. 1397, 1402 (1972), appeal dismissed, 60 CCPA 185 (1973), "where a vessel does not engage in trade, is not intended to engage in trade, and indeed is physically incapable of engaging in trade, its repairs are not dutiable under section 466."

Although a Certificate of Registry was issued, plaintiff nevertheless asserts that the Cambria was not used in the foreign or coasting trade, and was not intended for such use. Hence, it contends that the duties imposed by section 466(a) of the Tariff Act of 1930, as amended, do not apply. It adds that since the Cambria was used as a shore facility affixed to the pier in Milwaukee, and was intended to be affixed to the pier in Norfolk, clearly, it should be controlled by the decision in the Corpus case which dealt with vessels engaged exclusively in oceanographic research. Plaintiff states that "the CAMBRIA not only passes the Corpus test, but goes further as the CAMBRIA was arguably not even a vessel, but a floating platform or derelict." Plaintiff claims that, as a crane platform, the Cambria is not dutiable under section 466 which is intended to include only documented vessels.

The defendant disagrees, and maintains that the duties were properly assessed upon the repairs performed in Montreal on a vessel documented under the laws of the United States. First, defendant maintains that the Congressional intent underlying section 466 is to assist and protect American shipyards and labor from the competition of foreign shipyards and that this is a long-standing policy with national defense implications. Second, defendant contends that with the addition of subsection (e) to section 466 in 1971, Congress made it clear that "any vessel designed and used primarily for purposes other than transporting passengers or property in the foreign or coasting trade," is subject to duties for foreign repairs unless the specific statutory criteria for exemption are met. Third, defendant contends that at the time the foreign repairs were performed upon the Cambria, it was a vessel documented under the laws of the United States to engage in foreign or coasting trade. It also contends that the fact documentation was required to transport the Cambria to Montreal for the purpose of repairs does not exempt the Cambria from the provisions of section 466(a). Defendant maintains that the action by the plaintiff, in transporting the barge to a foreign port for repairs to be performed in a foreign shipyard with foreign labor and materials, is equivalent to an intent to engage in foreign trade within the meaning of section 466(a) (19 U.S.C. § 1466(a)). Finally, defendant stresses that the Corpus decision interpreted and applied section 466 of the Tariff Act of 1930 as it read prior to the 1971 amendment and the addition of subsection (e).

At the outset, plaintiff's claim depends upon whether the Cambria is a "vessel" within the intendment of 19 U.S.C. § 1466(a), and therefore subject to the customs duties for foreign repairs. Plaintiff indicates that if the Cambria is not a "vessel," it would not be subject to the imposition of duties, and plaintiff would be entitled to judgment in its favor.

The statutory definition of vessel, in the Tariff Act of 1930, as amended, is found in 19 U.S.C. § 1401, which provides that:

"(a) 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."

It is also pertinent that the heading of section 3 of 1 U.S.C. (Rules of Construction) states the following:

"`Vessel' as including all means of water transportation."

These provisions expressly state that "vessel" encompasses "every description of water craft or other contrivance used, or capable of being used, as a means of transportation in water," "including all means of water transportation." (Emphasis added.) Numerous cases have interpreted the meaning of the word "vessel." See The Conqueror, 166 U.S. 110, 17 S.Ct. 510, 41 L.Ed. 937 (1897); United States v. Seagull Marine, 67 CCPA ___, C.A.D. 1251, 627 F.2d 1083 (1980). See also Hitner Sons Co. v. United States, 13 Ct.Cust.App. 216, T.D. 41175 (1925). Cf. United States v. Bethlehem Steel Co., 53 CCPA 142, C.A.D. 891 (1966) (midbodies), cert. denied, 386 U.S. 912, 87 S.Ct. 865, 17 L.Ed.2d 786 (1967); Todd Shipyards Corp. v. United States, 63 Cust.Ct. 165, C.D. 3891 (1969) (midbodies).

An examination of some early cases reveals that a barge without power of selfpropulsion was held to be a "vessel," and therefore subject to the navigation laws. Disbrow v. The Walsh Bros., 36 F. 607 (S.D. N.Y.1888). A similar holding is found in The Old Natchez, 9 F. 478 (C.C.S.D.Miss. 1881), in which an old dismantled hull of a river steamboat, being refitted for use as a wharf boat in loading passengers and merchandise, was held to be a "vessel."

In Hitner Sons Co. v. United States, 13 Ct.Cust.App. 216, T.D. 41175 (1925), a former Canadian armored cruiser was classified as manufactures of metal, and although originally designed and intended for use as a means of transportation in water, its substantial structural alteration rendered the design useless as a means of transportation in water. Hence it was held not to be a "vessel."

In the present case, the evidence offered by the plaintiff is that the Cambria had originally been used as an ore carrier and later as a barge used as a crane platform. It had undergone no major structural alterations as had the cruiser before the court in the Hitner case. Although there was testimony to the effect that the Cambria had been permanently moored at a scrap terminal, prior to plaintiff's purchase, the record leaves no doubt that it is a barge capable of being towed from its moorings in Milwaukee without any difficulty. The voyages undertaken clearly refute plaintiff's assertion of a "permanent" mooring. Regardless of any "permanent" mooring, the Cambria is a barge capable of being used as a means of transportation, and is therefore a vessel within the meaning of the pertinent provisions of law.

The authorities teach that the term "vessel" includes all types of watercraft or contrivance that can be used as a means of transportation in water. The test is not merely size and structure, or self-propulsion, but rather capability and design to serve as a means of transportation in water. In United States v. Seagull Marine, 67 CCPA ___, C.A.D. 1251, 627 F.2d 1083 (1980), which dealt with...