LIQ-9-01/PRO-2-01 RR:IT:EC 227844 CB
U.S. Customs Service
Num. 1 Puntilla Street
San Juan, PR 00901
ATTN.: Protest Officer
RE: Protest and Application for Further Review No. 4909-97-100057; Harbor Maintenance Fee;
Exemption; 26 U.S.C. 4462(b)(1)(B) and (C); Mistake of
Fact; 19 U.S.C. 1520(c); Timeliness of
The above-referenced protest was forwarded to this office
for a determination. We have considered the points raised and a
There are two entries which are the subject of this
protest. The entries cover shipments of petroleum products
shipped from St. Croix, U.S. Virgin Islands and unloaded for
consumption in San Juan, Puerto Rico. Protestant was the
importer of record. Both entries were liquidated with the
assessment of the harbor maintenance fee (HMF). The two entries
were liquidated on June 20, 1997, and July 7, 1997.
According to the record, protestant filed a 19 U.S.C.
1520(c)(1) petition with your office on June 11, 1997, prior to
liquidation of the entries. Your denial of the petition is dated
October 20, 1997. You denied the 1520(c)(1) petition on the
grounds that liquidation resulted from a mistake of law not
correctable under 19 U.S.C. 1520(c)(1). The subject protest was
filed on November 18, 1997.
Protestant is seeking a refund of the HMF based on the
exemption provided for in 26 U.S.C. 4462. Protestant is
alleging that Customs failure to amend 19 CFR Part 24 has led
Customs officers to incorrectly interpret the statute. It is
protestant's position that this does not constitute a mistake of
law. Moreover, that because Customs has failed to amend the
applicable regulations, the statutory time limit for filing a
protest and/or section 1520(c) petition should be extended.
Should the subject protest be granted?
LAW AND ANALYSIS:
Initially, we note that while the protest was filed within
90 day of the Customs letter of October 20, 1997, and that a
denial of a request for reliquidation under 19 U.S.C. 1520(c)(1)
is protestable under 19 U.S.C. 1514(a)(7), the evidence shows
that the request for reliquidation was premature since it was
filed before liquidation of either entry. Subsequent to
liquidation no timely protest was filed on either entry.
Although we must deny the protest on procedural grounds, we are
providing comments on the issue of whether the subject
liquidation resulted from a mistake of fact or mistake of law.
Under 19 U.S.C. 1514 decisions of the Customs Service,
including the legality of all orders and findings entering into
the same, as to liquidation or reliquidation are final unless a
protest is filed within 90 days from the date of liquidation.
Similarly, 19 U.S.C. 1520(c)(1) provides for the reliquidation
of an entry to correct a clerical error, etc., thus, the statute
presupposes that a liquidation has taken place. The requirement
that a protest be filed within 90 days after but not before
notice of liquidation or reliquidation or the date of the
decision protested has been interpreted by the courts. See
generally, The Best Foods, Inc. v. United States, 37 Cust. Ct.
1, 9-10, 147 F. Supp. 749, C.D. 1791 (1956) (prematurely filed
protest, filed after a "courtesy" notice advising of scheduled
liquidation but before the date of the bulletin notice of
liquidation dismissed in appellate decision reversing lower
court's denial of motion to dismiss); and McDonnell Douglas Corp.
v. United States, 75 Cust. Ct. 6, 465 F. Supp. 1291, C.D.
4604 (1975). Unlike the situation at bar, in Best Foods Customs
did nothing after the liquidation. In the instant case, your
office purported to deny the petition after liquidation of the
More specifically, the courts have addressed the issue of
filing a premature petition. In Hensel, Bruchman & Orbacher v.
U.S., 57 Cust. Ct. 52, 53-54(1966) the sequence of events was as
follows: (1) petition on September 1, 1961; (2) liquidation on
October 25, 1961; and (3) protest filed on December 22, 1986.
The court held that inasmuch as section 1520(c)(1) only supports
a claim for reliquidation, as distinguished from liquidation, no
relief can be granted in the absence of a request for
reliquidation made in conformity with the language of the
In J.S. Sareussen Marine Supplies v. U.S., 304 F. Supp.
1185, 62 Cust. Ct. 449 (1969), the court found similar facts to
the Hensel case. The request was made on April 11, 1961 but the
entries were not liquidated until 1963. The court observed, at
62 Cust. Ct. 451:
Clearly then, plaintiff has not made a proper
request for reliquidation as is contemplated
in the statute. Moreover, there is no
evidence of any request made by plaintiff
subsequent to the liquidation which would
fulfill the requirements of the statute.
The question, thus, is whether the otherwise premature
filing of a petition is cured by the post-liquidation action of
Customs. We conclude that the action by Customs was a nullity
because liquidating the entries constituted the only legal action
available to Customs.
First, the courts have held that the statutory procedures
for correction of an administrative error are binding on all
concerned. Omni U.S.A. Inc. v. U.S., 840 F. 2d. 912, 6 Fed. Cir.
99, 101 (1988), cert. den. 109 S. Ct. 56, reh. den. 109 S. Ct.
405. Second, the courts have held that all actions taken by
Customs prior to the liquidation are subsumed in the liquidation.
The rule is that all decisions of Customs involved in fixing the
duties chargeable against imported merchandise are merged in and
become part of the legal liquidation. Clover Linen Corporation
v. U.S., 26 Cust. Ct. 275 (1951). Under 19 U.S.C. 1514, a
liquidation is final and conclusive on all parties, including the
Government, absent action taken in accordance with the statutes
permitting reliquidation in specified circumstances. U.S. v.
Cherry Hill Textiles Inc., 112 F.3d 1550 (1997). The finality of
assessment, absent a timely protest, refers to the decisions on
duties and related exactions subsumed in final liquidation. U.S.
v. Utex International Inc., 857 F.2d. 1408(Fed. Cir. 1988).
The attempted denial by Customs (by the letter of October
20, 1997), which did not purport to reliquidate the liquidations
of June 20, 1997 or July 7, 1997, was a nullity. Customs could
not have acted under 19 U.S.C. 1520(c)(1) since the protestant
here did not file any petition that complied with the express
statutory requirement that such a petition, to be timely, had to
be filed after the liquidation. Likewise, Customs could not
simply treat the petition as a protest for the same reason, i.e.,
the letter even as a protest was premature under 19 U.S.C.
1514(c)(3)(A). While Customs might have acted under 19 U.S.C.
1501 to reliquidate the entry, it did not so act. Moreover,
such an action if taken on October 20, 1997, would have been
outside the time limits imposed by that statute.
Consequently, we conclude that the purported denial of
October 20, 1997, does not provide a basis for a protest. The
petition was premature under 19 U.S.C. 1520(c)(1). The
liquidations of June 20, 1997, and July 7, 1997 became final and
binding on all parties, including the Government, in the absence
of a timely protest. Any purported action by Customs on the
premature 1520(c)(1) petition for reliquidation cannot amount to
a denial of such a petition encompassed by 19 U.S.C. 1514(a)(7)
so as to confer the ability to act on the purported denial by
Customs. The action of the Customs officer here is no different
than the action of Customs that was the subject of the court's
comment in footnote 3 in Fujitsu Ten Corp. of America v.
United States, 957 F. Supp. 245 (1997), concerning actions
subject to protest. Acting on an invalid premature 1520(c)
petition did not convert the petition into a timely valid
Having said that, the statutory authority for the harbor
maintenance fee is found in the Water Resources Development Act
of 1986 (Pub. L. 99-662; 100 Stat. 4082, 4266; 26 U.S.C. 4461
et seq.) Under this statute, a fee is imposed for the use of a
port, defined as any channel or harbor or component thereof in
the United States which is not an inland waterway, is open to
public navigation, and at which Federal funds have been used
since 1977 for construction, maintenance, or operation. Pursuant
to 26 U.S.C. 4462(b), no tax shall be imposed with respect to--
. . .
(B) cargo loaded on a vessel in Alaska,
Hawaii, or any possession of the United
States for transportation to the United
States mainland, Alaska, Hawaii, or such a
possession for ultimate use or consumption
in the United States mainland, Alaska,
Hawaii, or such a possession,
(C) the unloading of cargo described in
subparagraph (A) or (B) in Alaska, Hawaii,
or any possession of the United States, or
in the United States mainland, respectively,
or . . .
The Customs Regulations implementing this provision are found at
19 CFR Part 24. The applicable regulation provides that
"possessions" of the United States include Puerto Rico and the
U.S. Virgin Islands. See 19 CFR 24.24(c)(4)(ii)(C).
As indicated in the FACTS portion of this ruling, the
consumption entries under protest covered merchandise loaded on a
vessel in the U.S. Virgin Islands and unloaded in San Juan,
Puerto Rico. Thus, both movements (i.e., the loading and
unloading) are exempt from the HMF pursuant to 26 U.S.C.
According to information provided by your office, the port
determined that such movements between insular possessions were
subject to the HMF based on your reading of the applicable
regulation and required that the HMF be paid. The regulation (19
CFR 24.24(c)(4)(i)(B)) was not amended to conform to the 1988
statutory change which exempts such movements from the HMF. A
regulatory provision does not override statutory language. Thus,
the fact that the regulation has not been amended to include
movements for ultimate consumption in an insular possession does
not negate the fact that statutorily these movements are exempt
from the HMF.
We disagree with protestant's contention that the Customs
officer's failure to follow 26 U.S.C. 4662(b) is not a mistake
of law. The courts have defined mistake of law as mistakes which
occur "... where the facts are known, but their legal
consequences are not known or are believed to be different than
they really are" (Executone Information Systems v. United States,
96 F. 3d 1383, 1386 (Fed. Cir. 1996) (emphasis in original),
citing Hambro Automotive Corporation v. United States, 66 CCPA
113, 118, C.A.D. 1231, 603 F. 2d 850 (1979); see also, Degussa
Canada Ltd. v. United States, 87 F. 3d 1301 (Fed. Cir. 1996)).
The instant protest falls squarely within that definition.
Customs was aware that the entries covered movements between two
insular possessions but incorrectly believed that these movements
were subject to the HMF. This is a mistake of law which is not
correctable under 19 U.S.C. 1520(c)(1).
Finally, protestant contends that the erroneous deposits of
the HMF were made because the ABI program was erroneous. It
appears that protestant is misinformed as to the nature of the
ABI filing process. The software program used by ABI filers is
not provided by Customs; rather, the software is sold by private
vendors. Thus, protestant is incorrect when it alleges that
Customs required the payment of the HMF through the ABI program.
The onus is on the ABI filer to know when it is appropriate to
pay the HMF. If the software program being used by the filer
requires that the HMF be calculated then it is up to the filer to
discuss this problem with the software vendor.
The subject protest against the denial of a 19 U.S.C.
1520(c)(1) petition should be DENIED for the reasons set forth
in the LAW AND ANALYSIS section. The petition involves the
construction of the statute imposing the harbor maintenance fee
and, as such, is outside the subject matter that can be covered
by a petition to reliquidate under 19 U.S.C. 1520(c)(1).
Finally, the failure to file a timely protest against two
liquidations makes those liquidations final and binding on all
In accordance with Section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by your office, with
the Customs Form 19, to the protestant no later than 60 days from
the date of this letter. Any reliquidation of the entry in
accordance with the decision must be accomplished prior to
mailing of the decision. Sixty days from the date of the
decision the Office of Regulations and Rulings will take steps to
make the decision available to Customs personnel via the Customs
Rulings Module in ACS and the public via the Diskette
Subscription Service, Freedom of Information Act, and other
public access channels.
John A. Durant, Director
Commercial Rulings Division