Mount Washington Tanker Co. v. US

• Decision Date: 05 December 1980
• Docket Number: Court No. 73-6-01399.
• Citation: 505 F. Supp. 209
• Parties: MOUNT WASHINGTON TANKER COMPANY, a Subsidiary of Victory Carriers, Inc., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

505 F. Supp. 209

MOUNT WASHINGTON TANKER COMPANY, a Subsidiary of Victory Carriers, Inc., Plaintiff, v. UNITED STATES, Defendant.

Court No. 73-6-01399.

United States Court of International Trade.

December 5, 1980.

Rode & Qualey, New York City (John S. Rode and David C. Williams, New York City, on briefs), for plaintiff.

Alice Daniel, Asst. Atty. Gen., Washington, D. C., Joseph I. Liebman, Atty. in Charge, Field Office for Customs Litigation, New York City (Susan C. Cassell, New York City, on the brief), for defendant.

RE, Chief Judge:

In this action, plaintiff seeks summary judgment of its claim alleging that the Customs Service incorrectly denied it remission of certain duties assessed on repairs to a vessel. Asserting that the assessment of duties was proper, defendant has cross-moved for summary judgment.

The repairs were performed on plaintiff's tanker, the T/S Mount Washington, a vessel documented under the laws of the United States. At the time of the repairs, the vessel was engaged in transporting oil between various Pacific ports. The repairs, which consisted of overhauling the main generator, were not occasioned by stress of weather or other casualty at sea, and, therefore, would not qualify for the remission of duties under 19 U.S.C. § 1466(b). See Suwannee Steamship Co. v. United States, 79 Cust.Ct. 19, C.D. 4708, 435 F.Supp. 389 (1977).

In the making of the repairs, plaintiff did not use regular members of the ship's crew. Instead, plaintiff hired employees of a Swedish corporation who were flown from Sweden to the Philippines to join the tanker. These repairmen, signed on as special members of the crew, were on the T/S Mount Washington for about a month and a half.

During most of this time, the ship was on the high seas. For brief periods, however, the ship put into the ports of Subic Bay, Singapore and Bahrein. Although the T/S Mount Washington was not brought into a shipyard on these occasions, the Swedish employees performed repairs while the ship was at those ports. Upon completion of their work, the Swedish employees disembarked at the port of Manila and were flown back to Sweden.

Upon the tanker's return to the United States port of Honolulu, the Customs Service assessed duties on the expenses of the repairs pursuant to 19 U.S.C. § 1466(a). Under that section, a duty of 50 percent is assessed on "the expense of repairs made in a foreign country upon a vessel documented under the laws of the United States to engage in the foreign or coasting trade." In computing the duties, Customs included not only the cost of the repairs performed in port, but also the cost of the work performed at sea. Customs also included the compensation paid to the repairmen for the time spent traveling between Sweden and the T/S Mount Washington.

Plaintiff, whose petition for remission of the repair duties was denied, has brought this action to recover the duties paid alleging that none of the repairs fall within the meaning of 19 U.S.C. § 1466(a). Additionally, as a first alternative claim, plaintiff urges that any duties assessed should be limited to the cost of repairs actually performed while the ship was at port. As a second alternative claim, plaintiff maintains that, even if both the repairs performed at sea as well as those in port are to be included in computing the dutiable expenses, the travel compensation of the repairmen, i. e., the $1.60 per hour paid the workers during their journeys, should not be included.

The facts are not in dispute. What is in issue is the interpretation and application of section 1466(a),¹ which reads, in pertinent part:

"§ 1466. Equipment and repairs of vessels

(a) Vessels subject to duty; penalties

The equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States to engage in the foreign or coasting trade, or a vessel intended to be employed in such trade, shall, on the first arrival of such vessel in any port of the United States, be liable to entry and the payment of an ad valorem duty of 50 per centum on the cost thereof in such foreign country...." (Emphasis added.)

Section 1466(b) provides for the remission of duties for certain necessary repairs. It states that:

"If the owner or master of such vessel furnishes good and sufficient evidence that—

(1) such vessel, while in the regular course of her voyage, was compelled, by stress of weather or other casualty, to put into such foreign port and purchase such equipments, or make such repairs, to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination;

(2) such equipments or parts thereof or repair parts or materials, were manufactured or produced in the United States, and the labor necessary to install such equipments or to make such repairs was performed by residents of the United States, or by members of the regular crew of such vessel; or

(3) such equipments, or parts thereof, or materials, or labor, were used as dunnage for cargo, or for the packing or shoring thereof, or in the erection of temporary bulkheads or other similar devices for the control of bulk cargo, or in the preparation (without permanent repair or alteration) of tanks for the carriage of liquid cargo;

then the Secretary of the Treasury is authorized to remit or refund such duties, and such vessel shall not be liable to forfeiture...." (Emphasis added.)

Although the claim appears to be cast in terms of a remission of duties, it is clear that the claim is not based on section 1466(b), but, rather, upon the contention that the repairs were not subject to the foreign repair duties imposed by section 1466(a). It may nevertheless be noted that the exercise of the authority by the Secretary of the Treasury to remit foreign repair duties is subject to judicial review. Judicial review of discretionary administrative action is available to assure that the action is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Judicial decisions teach that in cases of express delegation of discretionary authority, the courts have held the scope or standard of judicial review to be limited. If the administrative decision has a rational basis in fact and is not contrary to law, the courts will not substitute their discretion for that of the administrator. See cases cited in Suwannee Steamship Co. v. United States, 79 Cust.Ct. 19, 24, C.D. 4708, 435 F.Supp. 389 (1977).

Plaintiff's claim for remission or refund of duties on the cost of repairs performed while the T/S Mount Washington was in port at Subic Bay, Singapore and Bahrein is without merit. It has not claimed that those repairs were necessitated "by stress of weather or other casualty." Since they were clearly "made in a foreign country," the repair duties were lawfully imposed, and the Secretary's refusal to remit or refund those duties was entirely proper.

The question presented by plaintiff's alternative claim is whether the repairs made on the high seas were dutiable within the meaning of section 1466(a) which provides for the imposition of duties on the "expenses of repairs made in a foreign country." The court must also determine whether the amount paid the Swedish employees for travel to and from Sweden and the Philippines to perform the repairs was properly included as an expense of the repairs.

It is plaintiff's contention that the requirement in section 1466(a) that repairs be performed in a foreign country "necessarily limits the applicable area to the sovereign territory of a particular state and does not extend to every area outside of the United States." Thus, it maintains that "repairs performed outside a sovereign territory are not performed in a foreign country," and, therefore, are not dutiable. Since the repairs, except for those made at the ports of Subic Bay, Singapore and Bahrein, were made on the high seas, outside the sovereign territory of any state, plaintiff concludes that they were not performed "in a foreign country."

Plaintiff further contends that, since the meaning of the term "foreign country" is plain on its face, it is improper to consult legislative history to determine its meaning. Were legislative history to be consulted, however, plaintiff suggests that the legislative purpose of the statute is to protect American shipyards. It asserts that the statutory protection for American shipyards should not be extended to include on board repairs.

On the facts presented, it is the determination of the court that the ordinary repairs made on the high seas by employees of a Swedish corporation, flown from Sweden and signed on as special members of the crew for the special purpose of making repairs, are dutiable within the meaning of section 1466(a).

It has been stated that "when aid to construction of the meaning of words, as used in the statute, is available, there certainly can be no `rule of law' which forbids its use, however clear the words may appear on `superficial examination.'" United States v. American Trucking Associations, 310 U.S. 534, 543-44, 60 S.Ct. 1059, 1063-64, 84 L.Ed. 1345 (1940). It cannot be questioned that the courts must in all cases interpret a statute to give effect to the statutory purpose and legislative intent. Sandoz Chemical Works, Inc. v. United States, 43 CCPA 152, C.A.D. 623 (1956); Schmidt, Pritchard & Co., Inc., et al. v. United States, 77 Cust.Ct. 1, C.D. 4666 (1976). Hence, it has been held that when "it appears that a literal interpretation of the statute involved would produce a result contrary to the apparent legislative intent, then the letter of the statute must yield and the legislative intent be carried out. Cases cited." Procter & Gamble Manufacturing Co. v. United States, 19 CCPA 415, T.D. 45578, cert. denied, 287 U.S. 629, 53 S.Ct. 82, 77 L.Ed. 546 (1932). See also S & T Imports, Inc....