LIQ-11-CO:R:C:E 221886 JR
Assistant Regional Commissioner of Customs (Operations)
Southwest Region
5850 San Felipe Street, Suite 500
Houston, Texas 77057-3012
RE: Application for further review of Protest Nos. 2604-2-
000005, 2604-2-000006, 2406-2-000007, and 2604-2-000009;
justification for extension of liquidation; failure to
notify surety of extension of liquidation; 19 U.S.C.
1504(b)(1); 19 CFR 159.12(a)(1)(i), (b), and (d)(1).
Dear Sir:
The above-referenced protests were forwarded to this office
for further review. We have considered the arguments raised by
your office and the protestant/surety. Our decision follows.
FACTS:
Customs extended the period of liquidation under 19 U.S.C.
1504(b)(1) on the basis that the importer failed to provide value
information on the U. S. components in the entry of "parts of
automatic data processing machines" (which were assembled in
whole or in part of fabricated components, the product of the
U.S.) and "parts of game machines." The dates of entries
involved here are from April 2, 1980 to February 20, 1981. Thus,
liquidation of the entries with increases in duty occurred just
under two years after the date of entry because the import
specialist had to establish appraised values with the assistance
of Regulatory Audit. 17 liquidations took place on February 19,
1982, 84 on February 26, 1982, and 2 on March 26, 1982.
On April 30 and May 28, 1982, the U.S. Customs Service
issued the initial demand for payment on the surety because the
importer/principal had gone out of business due to bankruptcy.
On July 26, 1982, the surety of the importer filed the four
above-referenced protests as a "protective" measure under section
514(c)(2) of the Tariff Act of 1930, as amended (19 U.S.C.
1514(c)(2)).
The protestant/surety contends that the untimely
liquidations are null and void because they had been made after
the expiration of the one-year limitation on liquidation under 19
U.S.C. 1504(a)(1). Secondly, the protestant claims that the
extension of liquidation was not based in fact or in law upon any
one of the three lawful grounds for extending liquidation set
forth in 19 U.S.C. 1504(b)(1)-(3). Specifically, the protestant
argues that Customs had adequate classification and value
information to timely liquidate the entries within one year.
Protestant also argues that the liquidations were void ab initio
because Customs failed to notify the surety of its decision to
extend liquidation, and therefore, each entry should be
liquidated "as entered" by operation of law one year following
the date of each entry.
It is the opinion of the district director that the
extensions of liquidation under 19 U.S.C. 1504(b)(1) were proper
and the liquidations were timely as Customs was in the process of
establishing appraised values in conjunction with Regulatory
Audit. Furthermore, as the surety was routinely advised of
extensions subsequent to June 26, 1981, the district believes
that while the surety was not notified of extensions of all the
protested entries, that the notices of extensions it did receive
would make it aware of potential changes at liquidation on all
the entries. The district recommends denial of the protest.
ISSUE:
The issues are (1) whether (assuming notice of extension was
given in this case) there was a proper basis for an extension of
liquidation under 19 U.S.C. 1504(b) and (2) whether notice of the
extension must be provided to the surety under 19 U.S.C.
1504(b)(1)?
LAW AND ANALYSIS:
By virtue of section 504(a), Tariff Act of 1930, as amended
(19 CFR 1504(a)(Supp. 1990), if Customs fails to liquidate an
entry within one year from the date of entry or final withdrawal
from warehouse, that entry is deemed liquidated at the rate of
duty, value, quantity, and amount of duties asserted at the time
of entry by the importer. See American Permac, Inc. v. United
States, 10 CIT 535, 642 F. Supp. 1187 (1986) n. 12 at 1195: "The
amount of duties "asserted at the time of entry by the importer",
within the meaning of section 1504(a) and (d), is not what the
importer desires to assert upon entry, but what the importer is
required by Customs officers to assert when filing the entry
summary. (Emphasis added by the court.) See 19 CFR 159.11(a) and
159.12(f); Detroit Zoological Society v. United States, 10 CIT
133, 630 F. Supp. 1350, 1355 n.9 (1986)."
However, the statutory provision of 19 U.S.C. 1504(b)
permits Customs to extend the one-year liquidation period, by
providing notice to the importer, on any of the three grounds:
(1) if "information needed for the proper appraisement or
classification of the merchandise is not available to the
appropriate customs officer" (19 U.S.C. 1504(b)(1)); (2) if
"liquidation is suspended as required by statute or court order"
(19 U.S.C. 1504(b)(2)); or (3) if "the importer of record
requests such extension and shows good cause therefor." (19
U.S.C. 1504(b)(3)). Please note that section 159.12(e) of title
19, Customs Regulations (19 CFR 159.12(e)) states that the total
time for which extensions may be granted by the district director
may not exceed 3 years.
In this case, it appears that Customs had justification to
delay the liquidation of the importer's entries under 19 U.S.C.
1504(b)(1) since the importer did not provide the necessary value
information with his entry summaries, and due to this lack of
information, Customs had to research the value information.
Although the protestant believes that the Customs Service had
sufficient information to liquidate the entries during the one-
year period following the importation and entry of the
merchandise, the surety has not presented any evidence to support
its position or, for that matter, to prove that Customs had no
valid grounds for the extension. We, accordingly, hold that the
extension granted under 19 U.S.C. 1504(b)(1) was a proper
exercise of the district director's discretion. See Detroit
Zoological Society, supra, 10 CIT 133 at 138; Headquarters Ruling
Letter, HQ 222321, dated August 15, 1990; 19 CFR 159.12(e).
Furthermore, contrary to protestant's contention, a "deemed
liquidation" is inapplicable in this case (assuming that proper
notice of extension was given), because the extension under 19
U.S.C. 1504(b)(1) was valid (i.e., Customs officers still lacked
necessary information to assess value) and because the
administrative extension did not exceed the statutory four years.
See 19 U.S.C. 1504(d);but see Pagoda Trading Co. v. United
States, 9 CIT 407, 617 F. Supp. 96 (1985), aff'd, 804 F.2d 665
(Fed. Cir. 1986)(Since the time for liquidation was not properly
extended after revocation of the CVD order within one year of the
date of entry, the court held the entries were deemed liquidated
by operation of law pursuant to 19 U.S.C. 1504(a) when Customs
failed to liquidate within the one year of entry); see Canadian
Fur Trappers Corp. v. United States, 12 CIT 612, 691 F. Supp. 364
(1988), aff'd, 23 Cust. B. & Dec. No. 39, 884 F.2d 563 (Fed. Cir.
1989)(liquidations which are suspended by court order or statute
beyond the four year time limit of 19 U.S.C. 1504(d), are not
deemed liquidated, as set forth in 19 U.S.C. 1504(a), within 90-
days after the expiration of the suspension or extension because
the 90-day time frame for liquidation under section 1504(d) is
discretionary, not mandatory).
The district director contends that when Customs extends the
liquidation period under 19 U.S.C. 1504(b)(1), the law does not
require notice be given to the surety, but rather to the importer
of record (in 1982, the law stated the importer, his consignee or
agent). In Old Republic Insurance Co. v. United States, 10 CIT
589, 596, 645 F. Supp. 943 (1986), the court opined that Congress
intentionally omitted sureties from the list of parties who must
receive notice as a precondition to a valid extension under
section 1504(b) when Congress amended, in 1984, the various
sections of 19 U.S.C. 1504. Congress changed section 1504(b)(1)
from "the importer, his consignee or agent" to "the importer of
record", while explicitly leaving untouched the requirement of
notice to the surety in addition to the importer of record in
section 1504(c), if a suspension of liquidation has occurred.
We agree with the district office that notice to the surety
is not required under section 1504(b)(1). We cannot ascertain
from the information contained in the file whether the importer,
his consignee or agent was actually notified of the extension.
However, there is a "presumption of regularity" that public
officials have discharged their duties in accordance with the
applicable laws and regulations, and the burden rests upon the
importer to rebut that presumption by competent evidence. See
Tropicana Products, Inc. v. United States, 13 CIT ___, Slip Op.
89-64, 23 Cust. B. & Dec., No. 24, p. 16, 18 (June 14, 1989)
citing State Metals, Inc. v. United States, 82 Cust. Ct. 91, 98,
C.D. 4793 (1979). The surety has not presented any proof or
"competent evidence" to rebut this presumption and the file is
silent as to whether notice was issued. Field personnel indicate
that they were in contact with the importer after entry summary
in order to resolve the valuation problem. It is reasonable for
us to conclude that proper notification was issued to the
importer, his consignee or agent. Therefore, the protest must be
denied as the time for liquidation was properly extended.
HOLDING:
(1) Assuming, in this case, that notice of an extension was
given, Customs had a proper basis pursuant to 19 USC 1504(b)(1)
to extend the time for liquidation since no information relating
to the proper appraisement of the merchandise was available to
the Customs officer at the presentation of the entry summaries.
(2) Under 19 U.S.C. 1504(b)(1)(1982), notice of an extension
need only be given to the importer, his consignee, or agent, not
the surety. Old Republic Insurance Co., supra. As the surety
has not rebutted the "presumption of regularity" for the issuance
of extension notices, we find in this case that the importer was
properly notified of the extension of liquidation.
You are instructed to deny the protest and hold the surety
responsible for the increase in duties. You may furnish a copy
of this decision to the protestant.
Sincerely,
John Durant, Director