CO:R:C:E 224851 CC/SLR
District Director
U.S. Customs Service
1717 East Loop
Room 401
Houston, TX 77029
RE: Application for further review of Protest No. 5301-93-100087; 19 U.S.C. 1520(c)(1); mistake of fact; Catalyst
Dear Sir:
The above-referenced protest was forwarded to this office
for further review. We have considered the facts and issues
raised, and our decision follows.
FACTS:
This protest is against your refusal to reliquidate certain
entries, in accordance with 19 U.S.C. 1520(c)(1), of Toho THC-32A
Catalyst (THC-32A) as supported catalysts under subheading
3815.19.0000 of the Harmonized Tariff Schedule of the United
States (HTSUS).
Toho Titanium Company, Limited (Toho) is the manufacturer of
the subject catalyst. Mitsubishi International Corporation
(Mitsubishi) is the seller/shipper. Lyondell Petrochemical Co.
is the importer/protestant. Arguments were submitted by the law
firm of Givens and Kelly, counsel for the protestant.
Pertinent dates in this protest include:
Date of Date of 1520(c)(1) 1520(c)(1) 1514(a)(7)
Entry Liquidation Request Denial Protest
Filed
04/23/90 08/10/90 04/22/91 12/21/92 3/18/93
-2-
07/09/90 10/26/90 '' '' ''
08/14/90 11/30/90 '' '' ''
09/15/90 12/28/90 '' '' ''
10/09/90 01/25/91 04/26/91 '' ''
On February 13, 1989, customhouse broker Dynamic Ocean
Services (Dynamic) sent a letter to Customs Houston for a tariff
confirmation, stating that classification information regarding
catalyst THC-32A imported by its client, Mitsubishi, would be
provided at a later time.
On February 23, 1989, Dynamic sent another letter to Customs
Houston with communication from Mitsubishi that based on the
manufacturer's information, the THC-32A was classifiable under
subheading 3815.90.5000, HTSUS, and was dutiable at 5 percent ad
valorem. Subheading 3815.90.5000, HTSUS, is a residual provision
which includes unsupported catalysts.
In "Report of Classification and Value," Customs Form 6431,
the National Import Specialist (NIS) response of March 20, 1989
recommended classification of the catalyst under subheading
3815.90.5000, HTSUS. (Customs Houston had recommended subheading
2917.12.2000, HTSUS, dutiable at 17 percent ad valorem.)
On May 20, 1989 Mitsubishi wrote New York for a tariff
classification ruling. On June 15, 1989 New York Ruling Letter
(NYRL) 841976 was issued, classifying the THC catalyst under
subheading 3815.90.5000, HTSUS. According to that ruling, "[the
product] is a Ziegler-Natta type catalyst used to produce
polypropylene."
In its request for reliquidation, counsel for the protestant
writes that Customs Houston "as early as June 1989, soon after
the HTSUS was enacted, [was] notified by counsel for the
protestant respecting the mistake of fact (i.e., that the
catalyst was physically supported)." Customs Houston's "Memo to
file" dated November 18, 1991 confirms that sometime during June
1989, that office spoke with counsel for the protestant regarding
the classification of the merchandise under subheading
3815.90.5000, HTSUS. Furthermore, it states that, "[t]he
question at this time was whether this catalyst was supported or
unsupported."
Counsel indicates in the protest that in June 1989, it
apprised Customs Houston that the THC-32A catalyst was Ziegler-Natta, that all of this type of catalyst is a crystalline complex
distributed over a second crystalline complex (i.e., supported).
but that the manufacturer, Toho, had not yet confirmed for its
client the exact physical structure for this catalyst. According
to counsel, it was informed by Customs Houston that its claim
would be considered only after the manufacturer had confirmed
that physical make up of the catalyst. Counsel replied that it
would use its best efforts to obtain the information. Counsel
later informed Customs Houston that documentary supporting
evidence would be supplied just as soon as ongoing Toho-Himont
patent litigation was completed.
In a letter dated August 14, 1990, counsel informed Customs
Houston that "today's Ziegler-Natta chemical literature, from
around the world, shows the catalyst to be structurally
'supported'." Likewise, it was claimed that the Explanatory
Notes were no longer correct in stating that the Ziegler-Natta
catalysts were not supported. According to counsel, the
Explanatory Notes at issue were a carry over from the earlier
Brussels Nomenclature, and that while catalyst science has
evolved, the Notes have not kept pace.
On September 14, 1990 the developer of the catalyst (Toho's
Director of Catalyst Research and Development) met in New York
with the NIS and the Customs Catalyst Chemist. According to
counsel, the developer responded to all questions about the
chemical-physical structure of the catalyst. On October 14,
1990, the developer's answers and explanations were reduced to a
sworn affidavit.
In October 1990, the patent litigants came to a meeting of
the minds. According to counsel:
Even before the formal ending of the lawsuit, the
importer acted to provide personal (to New York) and
sworn written representations (to Houston and New York)
that Givens and Kelly's factual representations to
Customs (that the catalyst was, in fact, physically
supported) were in all respects complete and accurate.
These representations documented in detail chemical
terms how the active catalytic centers were physically
supported.
On October 25, 1990 counsel for the protestant wrote New
York requesting a tariff classification for Toho THC-32A catalyst
from Japan. Attached to the request was the above-mentioned
October 14, 1990 affidavit.
On November 13, 1990 NYRL 857568 was issued, classifying the
catalyst, under subheading 3815.19.0000, HTSUS, which provides
for duty free treatment. The ruling indicates that counsel's
inquiry contained specific information concerning the production
of the catalyst. Customs Houston received the ruling on November
20, 1990.
ISSUE:
Whether Customs properly denied the protestant's request to
reliquidate the subject entries under 19 U.S.C. 1520(c)(1)?
LAW AND ANALYSIS:
Under 19 U.S.C. 1520(c)(1), an entry may be reliquidated to
correct a clerical error, mistake of fact, or other inadvertence
not amounting to an error in the construction of the law. The
error must be manifest from the record or established by
documentary evidence and brought to the attention of the
appropriate Customs officer within one year from the date of
liquidation.
Counsel asserts that the subject merchandise was classified
as an unsupported catalyst when it should have classified as a
supported catalyst. The mistake of fact which resulted in the
incorrect classification "concerned the single factual question
of whether the catalyst was in fact physically supported." In
addition, counsel argues that there was a mistake of fact due to
factual errors in the Explanatory Notes.
A mistake of fact occurs when a person understands the facts
to be other than what they really are and takes some action based
on that erroneous belief, whereas a mistake of law occurs when a
person knows the true facts of the case but has a mistaken belief
as to the legal consequences of those facts. See, e.g., C.J.
Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17,
21, C.D. 4327, 336 F. Supp. 1395 (1972), aff'd, 61 CCPA 90,
C.A.D. 1129, 499 F.2d 1277 (1974); Hambro Automotive Corp. v.
United States, 81 Cust. Ct. 29, 458 F.Supp. 1220 (1978), aff'd,
66 CCPA 113, 603 F.2d. 850 (1979); and PPG Industries, Inc. v.
United States, 7 CIT 118 (1984).
Clearly the protestant understood at the time of liquidation
and even prior to that time, that the subject merchandise was, in
fact, supported. As indicated above, protestant's counsel
advised Customs of the supported characteristic of the subject
catalyst as early as June 1989. In a letter dated August 14,
1990 to the district director of Customs in Houston, protestant's
counsel gave specifics as to the physical make-up of the catalyst
and also described relevant manufacturing processes. According
to the letter, "[t]his document has been reviewed and approved
for factual and technical accuracy by TOHO's knowledgeable patent
counsel in the United States...." On September 14, 1990, the
developer of the catalyst (an employee of TOHO) met in New York
with the NIS and Customs Catalyst Chemist and responded to all
questions about the chemical-physical structure of the catalyst.
On October 17, 1990 the developer reduced his answers and
explanations to a sworn affidavit. The affidavit was attached to
a letter dated October 29, 1990 to Customs Houston and to
protestant's binding ruling request of October 25, 1990.
Since the protestant clearly knew of the nature of the
merchandise at the time of liquidation, the proper remedy would
have been to file a 19 U.S.C. 1514 protest. The courts have
found that the relief provided for in 19 U.S.C. 1520(c)(1) is not
an alternative to the relief provided for in the form of protests
under 19 U.S.C. 1514; 19 U.S.C. 1520(c)(1) only offers "limited
relief in the situations defined therein" (Phillips Petroleum
Company v. United States, 54 CCPA 7, 1, C.A.D. 893 (1966), quoted
in Godchaux-Henderson Sugar Co., Inc., v. United States, 85 Cust.
Ct. 68, 69, C.D. 4874 (1980); see also, Computime, Inc. v. United
States, 9 CIT 553, 555, 622 F. Supp. 1083 (1985), and Concentric
Pumps, Ltd. v. United States, 10 CIT 505, 508, 643 F. Supp. 623
(1986)).
Regarding this matter the case of Universal Cooperatives,
Inc., v. United States, 13 CIT 516, 715 F. Supp. 1113 (1989) may
be helpful. In that case the court distinguishes between
decisional mistakes, "in which a party may make the wrong choice
between two known alternative set[s] of facts... [which] must be
challenged under [19 U.S.C. 1514]" and ignorant mistakes, "in
which a party is unaware of the existence of the correct
alternative set of facts...[which] must be remedied under [19
U.S.C. 1520]" (Universal Cooperatives, Inc., supra). In holding
that the plaintiff protestant was not entitled to relief under 19
U.S.C. 1520, the court stated:
Here... all relevant positions as to the facts were
known prior to the original liquidation an it would
have been no hardship, and certainly no impossibility,
for plaintiff to have made a timely protest against
that liquidation.
As in the above-cited case, according to the protestant's
submissions, all the relevant facts were known prior to
liquidation. It would have been no hardship for the protestant
to have timely filed protests against the liquidations.
Counsel for the protestant has also claimed that there was a
mistake of fact based on factual errors in the Explanatory Notes,
e.g., including Ziegler-Natta catalysts as unsupported. Counsel
for the protestant has failed to cite, nor are we aware, of any
precedent that states that 19 U.S.C. 1520(c)(1) is the legal
basis for correcting alleged errors (or rewriting) the
Explanatory Notes or any statute relating to Customs law. In
addition, the court has found that an error in classification
resulting from the application of the Explanatory Notes by
Customs is a legal determination, and not a mistake of fact
correctable by 19 U.S.C 1520(c)(1). Boast, Inc. v. United
States, Slip Op. 93-20 (Ct. Int'l Trade Feb. 10, 1993).
Consequently, there is no basis here to find a mistake of fact
existed based on any application of the Explanatory Notes.
Three of the subject entries were liquidated after NYRL
857568 was issued. The protestant has indicated that there was a
mistake of fact in not applying that ruling to those entries.
The courts have taken the position that generally an error
in the classification of merchandise is not a clerical error,
mistake of fact, or inadvertence within the meaning of 19 U.S.C.
1520(c)(1), but is an error in the construction of the law. See,
e.g., Cavazos v. United States, 9 CIT 628 (1985); Mattel, Inc. v.
United States, 72 Cust. Ct. 257, C.D. 4547, 377 F.Supp. 955
(1974); and Fibrous Glass Products v. United States, 63 Cust. Ct.
62, C.D. 3874 (1969), appeal dismissed, 57 CCPA 141 (1970).
Customs has found that an exception exists and reliquidation is
proper when a Customs officer is not aware of a classification
ruling. ORR Ruling 75-0026, dated January 24, 1975. That ruling
also states, however, that if an import specialist takes note of
a Headquarters ruling, and decides it is not applicable to the
merchandise, that decision is an error in the construction of the
law, excluded from relief under section 520(c)(1).
As stated above, a mistake of fact must be must be manifest
from the record or established by documentary evidence. See, ITT
Corp. v. United States, 24 F. 3d 1384, 1387 (Fed. Cir. 1994),
Mistakes of fact that are not manifest from [the] record ... must
be established by documentary evidence"; see also, United States
v. Lineiro, 37 CCPA 5, 10, C.A.D. 410 (1949), "[d]etermination of
issues in customs litigation may not be based on supposition."
The protestant has provided no documentary evidence to show that
the responsible import specialist was unaware of NYRL 857568.
Therefore, no mistake of fact was present in this case under ORR
Ruling 75-0026.
HOLDING:
No mistake of fact was present under 19 U.S.C. 1520(c)(1) in
an alleged error in the tariff classification of the subject
entries. Consequently, the protest should be denied in full.
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 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.
Sincerely,
John Durant, Director
Commercial Rulings Division