LIQ-9-01-CO:R:C:E 224385 JRS
District Director of Customs
ATTN: District Protest Review Officer
111 West Huron Street
Buffalo, New York 14202
RE: Application for Further Review of Protest No. 0901-92-101702;
One-year time requirement for filing a petition under 19 U.S.C.
1520(c)(1) statutorily mandated; Bill for duties is not "exaction"
within 19 U.S.C. 1520(c)(1); Denial of duty-free treatment for
"Amercian goods returned" provision is not a correctable error
under 19 U.S.C. 1520(c)(1); mistake of law
Dear Sir:
This is in response to your above-referenced protest which we
received in this office for further review on December 29, 1992.
We have considered the points raised and our decision follows.
FACTS:
Protestant, the importer's broker, is seeking reliquidation
of the subject entries under 19 U.S.C. 1514(a)(7) by contesting
the district director's denial of its 19 U.S.C. 1520(c) claim on
the grounds of untimeliness. The facts as we understand them
follows.
On January 2, 1991, 185 drums of metasol TK 100 powder were
imported by the broker on behalf of the Canadian exporter. The
broker filed the consumption entry for these goods on January 15,
1991, under subheading 9801.00.1035/free, Harmonized Tariff
Schedule of the United States (HTSUS), as U.S. goods returned
without having been advanced in value or improved in condition
while abroad, claiming that the material being returned to the
United States was "not as ordered."
After finding that the U.S. address on the labels was
insufficient evidence of U.S. origin because the drums were not
labeled as "Made in the U.S.A.," Customs issued on February 8,
1991, a request for information to the broker on the proof of U.S.
origin in accordance with 19 CFR 10.1; however, it was stated in
that request that Customs may consider other documents such as
Shipper's Export Declaration (CF 7525V), Certified Copy of Canada
Customs Inward Manifest (E29B), Foreign Customs Invoice and
Validated Copy of Foreign Entry, a Statement of the Person or Firm
that Produced the Merchandise in the U.S., Specifying the Plant
Location(s) or, U.S. Exporter's Commercial Invoice.
The protestant alleges that on March 21, 1991, it sent a copy
of the sales invoice between the U.S. exporter (manufacturer) and
the Canadian exporter (protestant's client) and a copy of the
credit note issued to the Canadian exporter by the U.S. exporter
authorizing the return of the merchandise. The case file does not
contain a copy of the documents which were allegedly sent to
customs in response to the request for information; also, no such
documents were attached to the entry summary in the case file.
However, these documents, evidencing a "fax code" date of "June XX
(illegible), 1992" at the top margin, were attached to the
1520(c)(1) petition.
In early April 1991, Customs issued a Notice of Action (CF
29) reclassifying the goods under subheading 2934.90.1200, HTSUS,
at 11.1 percent duty rate. Upon receipt of the CF 29, the Canadian
exporter sent to the U.S. exporter (manufacturer) a partially
completed CF 3311 for completion. The U.S. exporter failed to
complete the form and return it to the Canadian exporter for its
further submission to Customs.
On May 24, 1991, Customs liquidated the entry under subheading
2934.90.1200, HTSUS, with an assessment made that additional duties
were due in the amount of $13,088.29. A bill for these duties was
generated on July 1, 1991.
On June 24, 1992, the broker filed a petition under 19 U.S.C.
1520(c)(1) requesting that the entry be reliquidated under
subheading 9801.00.10, HTSUS, as "United States goods returned"
and duties paid refunded as an "excess deposit" under 19 U.S.C.
1520(a)(1). Enclosed with the petition was documentary evidence
consisting of a completed CF 3311, a copy of a Canadian Entry, and
the commercial invoice evidencing the import into Canada from the
United States and indicating the country of origin as the United
States. The petitioner's arguments are essentially twofold:
(1) that the failure of the U.S. exporter to submit the
necessary CF 3311 to the petitioner was merely a clerical error or
other inadvertence. The petitioner asserts that this was clerical
error because the U.S. exporter's employee responsible for
completing the form had left the company and no further action was
taken, and as such, the failure of the U.S. exporter's employee to
complete the CF 3311 and return it was out his (the petitioner's)
control; and
(2) that a mistake of fact occurred because the goods are in
fact of U.S. origin as established by the documentary evidence
provided with the petition and should have been given duty-free
treatment. Additionally, petitioner alleges that a mistake of fact
occurred on U.S. Customs behalf because the exporter's commercial
invoice was submitted in response to the initial request for
information.
On September 17, 1992, Customs denied the request to
reliquidate because the petition was not received within one year
of the date of liquidation as required by statute. On October 21
1992, the broker filed a timely protest under 19 U.S.C. 1514(a)(7)
against Customs refusal to reliquidate the entry under 19 U.S.C.
1520(c). In the protest, the broker's position is that a valid
section 1520(c) claim was made on June 24, 1992, because Customs
billed (exacted) for additional duties on July 1, 1991, and that
the one-year time period under 19 U.S.C. 1520(c)(1) would thus not
expire until June 30, 1992.
ISSUES:
(1) Whether the petition filed under 19 U.S.C. 1520(c)(1) in
this case was untimely.
(2) Whether the denial of duty-free treatment under the
"American goods returned" provision of subheading 9801.00.10,
HTSUS, is correctable under 19 U.S.C. 1520(c)(1) as a mistake of
fact.
LAW AND ANALYSIS:
Section 514 of the Tariff Act of 1930, as amended, 19 U.S.C.
1514, sets forth the proper procedure for an importer to protest
the classification and appraised value of its merchandise when it
believes Customs has misinterpreted the applicable law and
incorrectly classified the imported merchandise. A protest must
be filed within 90 days after notice of liquidation or
reliquidation. 19 U.S.C. 1514(c)(2). Otherwise, failure to file
a timely protest renders the liquidation binding on the importer
and government.
Section 520(c)(1) of the Tariff Act of 1930, as amended, 19
U.S.C. 1520(c)(1) is an exception to the finality of section 514.
19 U.S.C. 1520(c)(1) provides that Customs may reliquidate an entry
to correct:
a clerical error, mistake of fact, or other inadvertence not
amounting to an error in the construction of a law, adverse
to the importer and manifest from the record or established
by documentary evidence, in any entry, liquidation, or other
customs transaction, when the error, mistake, or inadvertence
is brought to the attention of the appropriate customs officer
within one year after the date of liquidation or exaction;
19 U.S.C. 1520(c)(1)(Emphasis added.)
This reliquidation provision, however, is not intended to be
a simple alternative for importers who fail to file timely
protests. 19 U.S.C. 1520(c)(1) "is not remedial for every
conceivable form of mistake or inadvertence adverse to an importer
but rather the statute offers 'limited relief'." Godchaux-
Henderson Sugar Co., Inc. v. United States, 85 Cust. Ct. 68, 74,
C.D. 4874, 496 F. Supp. 1326 (1980).
We reject the protestant's contention that the applicable time
period for filing a section 1520(c)(1) petition commences on the
billing date, which protestant coins as a "final exaction," rather
than the date of liquidation, which is the date the bulletin notice
of liquidation is posted in the customhouse. In Penrod Drilling
Co. v. United States, 13 CIT 1005, 1009, 727
F. Supp. 1463 (1989), the plaintiff (importer) asked the court to
treat the date of the receipt of the Customs bill as the proper
date of notice of liquidation (i.e., 42 days after the date the
bulletin notice was posted). The court rejected this argument as
untenable. It is well-settled that proper notice of liquidation
refers to the bulletin notice of liquidation as the only notice
that is statutorily mandated. Goldhofer Fahrzeugwerk GmbH & Co.
v. United States, 13 CIT 54, 706 F. Supp. 892, aff'd, 885 F.2d 858
(Fed. Cir. 1989). If proper notice is given, there is no basis of
extending the period in which a party may file a protest.
Tropicana Products, Inc. v. United States, 13 CIT 390, 395, 713 F.
Supp. 415 (1989).
Protestant's argument that the Customs bill is a "final
exaction," and therefore, the one-year time period runs from that
date (July 1, 1991) lacks merit because the bill is merely the
means by which the amount of duties owing on the liquidated entry
is collected by Customs. "Charges" and "exactions" are viewed by
the court to be "actual assessments of specific sums of money
(other than ordinary customs duties) on imported merchandise."
Alberta Gas Chemicals, Inc. v. Blumenthal, 82 Cust. Ct. 77, 81-2,
C.D. 4792, 467 F. Supp. 1245, 1249-50 (1979). By reading the plain
language of the statute cited by the protestant (19 U.S.C. 1520(a)
and (c)), a charge or exaction is distinct from "duties and taxes."
Congress thus did not intend that ordinary customs duties on
imported merchandise be considered a charge or exaction. Please
note that the term "exaction" involves only those situations where
there is a demand for or the compelling of payment. See
Carlingswitch, Inc. v. United States, 85 Cust. Ct. 63, C.D. 4873,
500 F. Supp. 223 (1980), aff'd, 68 CCPA 49, C.A.D. 1264, 651 F.2d
768 (1981).
Since the Customs bill is not an exaction within the meaning
of 19 U.S.C. 1520(a)(2) or (c)(1), the applicable time period for
filing a petition under 19 U.S.C. 1520(c)(1) expired in this case
on May 23, 1992, one year after the posting of the notice of
liquidation on May 24, 1991, regardless of when the bill for
additional duties payable may have been generated. 19 CFR 159.9.
It is our opinion that the Customs district office was correct in
finding that the 1520(c)(1) petition was untimely filed. As the
procedural requirements of the 19 U.S.C. 1520(c)(1) has not been
met, the protest must be denied.
For the sake of argument, however, even assuming that the
1520(c)(1) petition was timely filed, we do not find any clerical
error, mistake of fact or other inadvertence which is correctable
under 19 U.S.C. 1520(c)(1) since the protestant has also failed in
satisfying the first two conditions listed below. As stated by the
Court of International Trade in PPG Industries, Inc. v. United
States, 7 CIT 118, 124 (1984), three conditions must be satisfied
under 19 U.S.C. 1520(c)(1): 1) a mistake of fact must exist; 2)
the mistake of fact must be manifest from the record or established
by documentary evidence; and 3) the mistake of fact must be brought
to the attention of the Customs Service within the time
requirements of the statute.
Correctable errors under section 1520(c)(1) are defined in
T.D. 54848. See 94 Treas. Dec. 244 (1959). A mistake of fact
occurs when a person believes the facts to be other than what they
really are and takes action based on that erroneous belief. The
reason for the belief may be that a fact exists but is unknown to
the person or he may believe that something is a fact when in
reality it is not. Clerical error occurs when a person intends to
do one thing but does something else, including mistakes in
arithmetic and the failure to associate all the papers in a record
under consideration. Inadvertence connotes inattention, oversight,
negligence, or lack of care. These errors are not necessarily
mutually exclusive. However, errors in the construction of a law
are not correctable under this section. Those occur when a person
knows the true facts of a case but has a mistaken belief of the
legal consequences of those facts and acts on that mistaken belief.
See 94 Treas. Dec. 244, 245-246 (1959). The Customs Service has
held that the submission of incorrect or incomplete documentation
and the failure to submit, or late submission, of "correct"
documentation are not correctable errors under 19 U.S.C.
1520(c)(1). See HQ 222610, dated November 7, 1990; HQ 221590,
dated October 30, 1989; and HQ 221680, dated October 16, 1989.
The protestant's allegation that a mistake of fact existed as
to the U.S. origin of the merchandise is simply rejected because
it does not fall within definitional meaning of a mistake of fact
as defined above. Both the Customs officer and the importer were
aware that the origin of the goods was in question. The importer
himself knew the goods' true origin but he failed to present the
proper documentation establishing that fact at the time of entry
to Customs.
The petitioner also alleges that a mistake of fact occurred
on U.S. Customs behalf because the exporter's commercial invoice
was submitted in response to the initial request for information.
From the case file, it is unclear what documentation was actually
presented in response to Customs' informational request. Assuming
that the invoice was actually submitted to Customs, the import
specialist made a legal determination as to the classification of
the merchandise on the basis of the documentation provided when he
rejected the duty-free claim. Even if the import specialist erred
in thinking the commercial invoice insufficient proof for U.S.
origin, an erroneous classification of merchandise is not remedial
as a clerical error, mistake of fact or inadvertence under 19
U.S.C. 1520(c)(1), as it is a conclusion of law which may only be
corrected by the filing of a protest. Cavazos v. United States,
9 CIT 628, 631 (1985); Mattel, Inc. v. United States, 72 Cust. Ct.
257, 262, C.D. 4547, 377 F. Supp. 955, 960 (1974).
We reject protestant's argument that its inability to obtain
the necessary certification from the U.S. manufacturer for its
"American goods returned" claim was a result of clerical error or
other inadvertence because the actions of the responsible employee
of the U.S. manufacturer was out of its control. In Occidental Oil
& Gas Co. v. United States, 13 CIT 244 (1989), the court addressed
the question of whether the delay by the plaintiff in obtaining
certain documents to support its "American goods returned" claim
for duty-free entry of oil well equipment was an error remediable
under 19 U.S.C. 1520(c)(1). In that case, the plaintiff was aware
at the time of entry and liquidation that the documents requested
by Customs were missing and the plaintiff failed to obtain the
necessary manufacturer's affidavit in a timely manner. The court,
following Cavazos, supra, stated that the plaintiff's allegation
of a mistake of fact or inadvertence was actually a challenge to
the legal conclusion of the Customs Service, and held that the
proper course of action was to challenge the classification of the
merchandise as dutiable through a protest under 19 U.S.C. 1514
within 90 days of the liquidation. The court also found that the
delay was not mere inadvertence correctable under 19 U.S.C.
1520(c)(1).
We find that the outcome in this case is controlled by
Occidental, supra and Cavazos, supra. The denial of duty-free
treatment under the "American goods returned" provision of
subheading 9801.00.10, HTSUS, is a legal determination which is
not correctable under 19 U.S.C. 1520(c)(1) as a mistake of fact
since it is instead a mistake of law. Occidental, supra; Cavazos,
supra. Although it appears from the documents submitted with this
protest that the goods were in fact of U.S. origin, we cannot
remedy this legal error under the reliquidation provisions of 19
U.S.C. 1520(c)(1). Concentric Pumps, Ltd. v. United States, 643
F. Supp. 623, 626, 10 CIT 505 (1986); Godchaux, supra.
HOLDINGS:
(1) The petition filed under 19 U.S.C. 1520(c)(1) is untimely
in this case because it was filed beyond one year from the date of
liquidation. 19 CFR 159.9. The Customs billing of the duties owed
on entry at the time of liquidation is not an exaction within the
meaning of 19 U.S.C. 1520. The Customs district office properly
denied the petition on the statutorily mandated procedural grounds.
(2) Even if the petition under 19 U.S.C. 1520(c)(1) had been
timely, Customs nevertheless would have denied it on the merits
since the denial of duty-free treatment under the "American goods
returned" provision of subheading 9801.00.10, HTSUS, is a legal
determination correctable only under the protest procedure of 19
U.S.C. 1514.
You are instructed to deny the protest. A copy of this
decision should be attached to the CF 19, Notice of Action, to be
sent to the protestant in accordance with the notice requirement
of 19 CFR 174.30.
Sincerely,
John Durant, Director