Protest 897168-G of Standard Oil Co.

DISSENTING OPINION

Evans, Judge:

I regret that I am unable to agree with the majority opinion in this ease. As I read section 466 of the Tariff Act of 1930, amending sections 3114 and 3115 of the Revised Statutes, it provides, among other things, that the equipment purchased in foreign countries for American vessels therein described shall be assessable on the first arrival of such vessel in a port of the United States at the rate of 50 percent ad valorem based on the cost of such equipment in such foreign country.

Section 3114 of the Revised Statutes was enacted in 1866. Originally this section imposed duty at the rate of 50 percent ad valorem upon the cost of equipment purchased in foreign countries for American vessels documented under the laws of the United States to engage in the foreign or coasting trade on the northern, northeastern, and northwestern frontiers of the United States, or a vessel intended to be employed in such trade. Congress in the Tariff Act of 1922 (section 466) for the first time incorporated this section in a tariff act and amended it by deleting ijie words “on the northern, northeastern, and northwestern frontiers of the United States.” The section thereafter applied to all vessels documented under the laws of the United States to engage in the foreign or coasting trade, and vessels intended to be employed in such trade. The Tariff Act of 1930 further amended said section by adding a provision that compensation paid to members of the regular crew in connection with the installation of such equipment or repairs should not be included in the cost of said equipment or repairs.

In my opinion the law as originally enacted in 1866 was intended for the protection of American industry, viz, American shipyards in the case of repairs, and other industries in the case of equipment, which might include a number of industries. By providing for a duty upon such equipment and repairs it seems safe to assume that the legislative body had in mind the fact that American vessels might be laid up for the winter in Canadian waters and obtain the needed *748equipment or repairs in Canadian ports, thus depriving the American shipyards'- and industries of a source of revenue.

This view of the intent of Congress is borne out by the legislative history of said section 466, which to my mind indicates that the legislative body provided for a-duty of 50 percent on the cost of such equipment and repairs for American vessels.

An examination of that history discloses that when H. R. 2667, which later became the Tariff Act of 1930, was reported from the Committee on Ways and Means the report thereon contains on p, 171 thereof the following in regard to section 466:

Section 466. Equipment and Repairs of Vessels

Sections 3114 and 3115 of the Revised Statutes are set out in section 466 of the 1922 Act as amended by that Act. Section 3114 places a duty of 50 percent on the cost of equipment and repairs purchased for or made upon vessels of the United States in foreign countries. A clarifying amendment to this section has been made in the bill, recognizing the construction placed by the Attorney General upon the section to the effect that any compensation paid to the members of the regular crew of a vessel in connection with the installation of equipment or.the making of repairs abroad shall not form anj*- part of the dutiable cost of such equipment or repairs.

By section 3115 it is provided that any duties upon equipment or repairs under the preceding section may be remitted or refunded upon proof to the Secretary of the Treasury that the vessel while in the regular course of her voyage was compelled by stress of weather or other casualty to’ put in to a foreign port and purr chase the equipment or make the repairs in question to secure the safety of the vessel to enable her to reach her port of destination. Your committee believes that the limitations of this section are too strict and result in an unnecessary burden on American shipping.

The section as construed does not permit the remission or refunding of duties in the case of equipment purchased or repairs made in the ordinary course of the voyage to replace wornout equipment or to repair minor damages or ordinary wear and tear. The bill, therefore, amends the section to provide that equipment purchased or repairs made in a foreign country in order to maintain the vessel in a seaworthy condition, or to repair damages suffered or to replace equipment worn out during the voyage, or to maintain the vessel in a sanitary and proper condition, shall not be dutiable. It is, of course, not contemplated that general overhauling or reconditioning, alterations, or improvements, done or made abroad, shall be exempt from duty under the provisions of this section.

It sometimes occurs that the owner of a vessel finds it desirable to put her up for the winter or to place her in dry dock in near-by foreign territory. In some eases American parts and equipment are readily available and may be easily installed by American labor during such period. The mere fact that the work is actually done and the equipment or repair parts installed in a foreign country should not, it is believed, result in the imposition of duty. A further amendment to section 3115 has, therefore, been made to cover such cases.

When the bill was before the Committee on Finance of the Senate, the following report was mSade by that committee in regard to said section 466.

Section 466. Equipment and Repair of Vessels.

Section 466 of the 1922 Act amended sections 3114 and 3115 of the Revised Statutes, relating to equipment and repairs of vessels. Section 3114 as so amended provided for the payment of a duty of 50 per cent of the cost of equipment purchased or repairs made in a foreign country by a United States vessel. Section 3115 provided for the remission or refund of such duties upon showing that the vessel, while in the regular course of her voyage, was compelled by stress of weather or other casualty to put into a foreign port and purchase such equipment or make such repairs to enable her to reach her destination in safety. The House bill rewrote this provision so as to allow a greater latitude in the making of repairs and purchase of equipment abroad and subsequent entry thereof free of duty. In effect the provision as rewritten would permit almost any sort of operation short of general overhauling or reconditioning to be carried on in a foreign port without the payment of duty upon entry of the vessel in the United States. Your committee believes that such a provision would be too much of a *749detriment to American shipyards, and that the present law affords sufficiently generous treatment to American shipping interests. Accordingly, in the bill as reported, the provision in the 1922 Act has been restored.

The House bill carries an additional amendment exempting from duty equipment purchased or repairs made in a foreign port, where it is shown that the equipment or repair parts were manufactured in the United States and were installed by American labor. This provision has been retained in the bill as reported by your committee. (Report of the Committee on Finance to accompany H. R. 2667, p. 71.)

In the Conference Report (p. 109) we find that the Senate amendment was accepted by the House and the section was finally enacted as thus amended.

Inasmuch as the legislative history clearly indicates an intention on the part of Congress to give special consideration and protection to shipyards and those persons engaged in the manufacture and sale of ships’ stores and equipment, the court should hold that such merchandise when bought for and put to the use so mentioned in section 466, supra, should be held to be set' apart from ordinary merchandise imported and entered in the commerce of the country. If these repair parts had been installed abroad I assume no question would be raised but what said section 466 would apply. The fact that the steamship company in question brought the engine parts to this country on its own vessel and installed them in this country can make no difference .in the character or kind of merchandise involved. That is to say, that it is still equipment and repair parts for vessels documented under the laws of the United States, described in said section 466, and as such should be held dutiable under that section. If merchandise of the character and kind imported for the purpose herein established can be permitted to land and pay the ordinary duty, then the way is open to evade the plain purpose and intent of said section 466.

I therefore think that the action of the collector in assessing duty under said section at 50 percent ad valorem upon the cost of the engine parts in question was in accordance with-the wording of the statute and the intent of Congress and that the plaintiff’s claim should be overruled.