A vessel puts into the port of Kobe, Japan, to discharge cargo. The vessel contracts a local shipyard to have the hull chipped and scaled. If the vessel provides the primer and paint, which statement is TRUE?

Correct Answer: Option C — You MUST declare the cost of labor and pay duty.

Under 19 U.S.C. 1466, repairs made to U.S.-flagged vessels in foreign ports are subject to a 50% ad valorem duty. This duty applies to the total cost of both materials and labor. Exemptions only apply if the work is deemed necessary for seaworthiness due to casualty, which routine maintenance is not.