LIQ-9-01 RR:CR:DR 228005 EAB
Port Director
U.S. Customs Service
511 NW Broadway
Portland, Oregon 97209
ATTN: Protest Unit
Re: Protest and Application for Further Review number 2904-98-100005; Tektronix, Inc.; Tektronix Asia, Ltd.; clerical error, mistake of fact or other inadvertence; 19 U.S.C. 1520(c)(1)
Dear Port Director:
The referenced protest was forwarded to this Office for further review. We have considered the evidence provided, the arguments made by the protestant and Customs records. Our decision follows.
FACTS:
The protest is filed against your decision to refuse to reliquidate fourteen (14) entries set out in the APPENDIX hereto. The importer of record is Tektronix Asia, Ltd. and the consignee is Tektronix, Inc.; the protest is filed on behalf of each by their attorney in fact in this case.
All entries were liquidated as entered in subheading 3707.90.3290, Harmonized Tariff Schedule of the United States (HTSUS), the provision for unsensitized emulsions, for use in color negative photographic paper, and no protest of any or all Customs matters pertaining thereto was filed.
Documentation submitted to Customs include but is not limited to Customs Forms CF-7501 (Entry Summary). Each CF-7501 appertaining to a given entry identified in the APPENDIX sets forth, at least, the following line item: “CHEM PREPS F/PHOTO USES. OTHER 3707.90.3290 . . . 7.7% . . . .” As noted also in the APPENDIX, some, but not all of the Entry Summaries set forth the following line item: “MCH PRT F/8471, N/CATH, OTHER 8473.30.5000 . . . FREE . . .”. Heading 8473, HTSUS, describes, inter alia, “Parts and accessories . . . suitable for use solely or principally with machines of headings 8469 to 8472.” Subheading 8473.30.5000, HTSUS, is the residual (“Other”) provision for “Parts and accessories of the machines of heading 8471.” Also, some, but not all Entry Summar/ies set forth the following line item: “OTHER LASER PRINTER, <=20 PG/MN 8471.60.6200 . . . FREE . . .”. Finally, heading 8471, HTSUS, describes, in part, “Automatic data processing machines and units thereof”, which description includes “printer units” (subheading 8471.60.5100 et seq., HTSUS.
All entries had been liquidated no later than September 27, 1996. On October 18, 1996, Customs issued New York Ruling Letter NY A88444 to Kyocera Electronics, Inc., concerning the classification of a toner cartridge designed and used with a computer printer. Therein Customs stated “that toner cartridges that incorporate integral, constituent, component parts of the printer (such as agitator arms, photoreceptors, etc.) are composite goods consisting of the machine part and the toner. Composite goods are classifiable pursuant to GRI-3(b). . . . In the instant case, the role of the integral, constituent component part imparts the essential character of the good.” The TK-20 toner cartridge was found to be classifiable in subheading 8473.30.5000, HTSUS.
Included as a part of this file is a copy of a facsimile transmittal dated January 2, 1997, from Mr. Terry Turner, Product Line Manager at CPID Solutions Manufacturing, to Ms. Gardner, describing the Phaser 550 Developer Unit drawing that accompanied the descriptive document.
By letter of February 28, 1997, Ms. Nancy Grader, Corporate Customs Manager, Tektronix, Inc., wrote in part as follows:
“Tektronix, Inc. and Tektronix Asia, Ltd. (collectively, Tektronix) request that you reliquidate the entries identified on the attached schedule pursuant to section 520(c)(1) and issue refunds of the excess duties deposited on entry. . . . because the situation involves a mistake of fact not amounting to an error in the construction of the law and is adverse to Tektronix.
“The imported merchandise, used with color laser printers, is described on commercial invoices as “toner cartridges.” The toner cartridges were entered under HTSUS 3707.90.3290/7.7%, chemical preparations for photographic uses. Tektronix mistakenly assumed that the laser printer toner cartridges were identical to other toner cartridges used with dye sublimation printers which do not have integral, constituent, component parts of a printer. A New York ruling, NY 88444 [sic] dated October 18, 1996, held that toner cartridges that incorporate integral, constituent, component parts of a printer are composite goods consisting of the machine part and the cartridges are properly classified 8473.30.5000/free. Upon reading the ruling, Tektronix reviewed all toner cartridges and discovered that certain Tektronix toner cartridges were identical to those described in the ruling and are therefore properly classified 8473.30.5000.”
This request for reliquidation was denied by you on November 5, 1997, and protest ensued on February 2, 1998.
As part of this protest file, counsel for protestant has submitted the following documentation:
Affidavit of Ms. Laura Tenny, procurement agent for the Color Printing and Imaging Division, Supply Group, Tektronix, Inc. who says, in pertinent part - “h. During the purchasing and importation process, to the best of my recollection I never received any documents with technical specifications for the products for which I placed orders, and to my knowledge the customs broker never received any technical specifications that would have provided the customs broker with detailed information to be used in classifying the Phaser 550 toner cartridges.”
Affidavit of Ms. Nancy Grader, Corporate Customs Manager, who says, in pertinent part - “2. . . . I am familiar with purchase documentation for imported shipments received by Tektronix, Inc. and Tektronix Asia, Ltd. . . . . 5. During the importation process, the documentation received by me for each shipment contained no technical specifications for the imported products. I also never received any separate documentation or information that would have informed me of the technical differences between earlier toner cartridge products . . . and subsequent toner cartridges . . . that contained integral parts of color laser printers. Moreover, to my knowledge Circle International, Inc., the customs broker . .. has at no time received any technical specifications . . . .”
Affidavit of Mr. A.G. Kroos, Director and Secretary of Tektronix Asia, Ltd., who says, in pertinent part that “Tektronix Asia, Ltd. maintains a presence in Japan for purposes of procuring components from Japanese suppliers. . . . Subsequent to import to the U.S., Tektronix Asia, Ltd. sells the components to Tektronix, Inc. . . . .”
Additional documentation contained in this protest file consists of fourteen (14) undated letters each of which references one of the entries set forth in the Appendix hereto, and which states as follows:
“Dear District Director:
“We request that liquidation of the above entry be suspended for one year pending the outcome of an issue before the Court of International Trade, the U.S. Court of Appeals for the Federal Circuit (Mita Copystar America v. U.S., No 93-1466), for the items described as Toner Cartridges (classified 3707.90.3000).
“Regards,
“[s]
“Jeff Baker
“Circle International”
The protestant states that the publication of ruling A33444 of October 18, 1996, caused it to review its entries of toner cartridges. The 14 entries were made during the period from April 8, 1996 to June 13, 1996. The entries were liquidated during the period from July 26, 1996 to September 27, 1996. The liquidations occurred months before the ruling was issued. The relevant portion of the ruling contains a description of the mechanical toner cartridge:
The TK-20 toner cartridge is a mechanical toner cartridge, that in addition to the toner in the chamber, incorporates mechanical components such as three gear wheels, agitator blades and rollers. The toner cartridge is approximately 11 inches in length, and 4.5 inches in width.
The three gear wheels that are attached to the end of the agitator system, become an integral and constituent part of the printer, since the gears do interplay with other gears of the printer while performing dispersion and distribution functions.
It is Customs position that toner cartridges that incorporate integral, constituent, component parts of the printer (such as agitator arms, photoreceptors, etc.) are composite goods consisting of the machine part and the toner. Composite goods are classifiable pursuant to GRI-3(b). Goods classifiable under GRI-3(b) “shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.” In the instant case, the role of the integral, constituent component parts imparts the essential character of the good.
A33444 dated October 18, 1996.
Correspondence from Mr. Terry Turner, the protestants’s product line manager to Ms. Nancy Grader, protestant’s customs manager, dated January 2, 1997 provided a drawing of a developer unit and the following description:
Attached is a side view of the developer unit. The critical part in question is the toner adding roller, doctor blade and developer roller assembly in the end of the unit. This part of a laser printer is often a separate assembly in the print engine. As states in our description, this function was combined in the toner cartridge to reduce service and customer interventions. This is what makes it a key part of the electro-photographic process. Let me know if you have other questions.
Turner to Grader, January 2, 1997.
ISSUE:
Whether a port director’s refusal to reliquidate entries based upon a classification ruling letter issued after liquidation is a mistake of fact correctable under 19 U.S.C. 1520(c)(1).
LAW AND ANALYSIS:
Reliquidation of an entry may be had to correct a mistake of fact (19 U.S.C. 1520(c)(1)), and, as a general matter, the refusal to reliquidate is a protestable decision. 19 U.S.C. 1514(a)(5). Customs decision not to reliquidate any or all of the entries that are the subject of this protest was made November 5, 1997; whereas 19 U.S.C. 1514(c)(3) requires that a protest shall be filed with the Customs Service within ninety days after the date of the decision protested, we note that this protest was timely filed on February 2, 1998.
Entries for which reliquidation is sought must constitute circumstances adverse to the importer and must be manifest from the record, or established by documentary evidence, and must be brought to the attention of the Customs Service within one year after the date of liquidation. 19 U.S.C. 1520(c)(1). Since the earliest liquidation underlying this protest occurred July 26, 1996, and the request for reliquidation was made by letter to Customs dated February 28, 1997, the request for reliquidation also was timely filed.
Congress, by amending 19 U.S.C. 1484 (Act of December 7, 1993, 107 Stat. 2057, Pub.L. 103-182), required importers to exercise reasonable care in providing the initial classification and appraisement information to Customs. At page 136 of H.Rpt. 103-361, Part 1 (November 15, 1993), the change is discussed:
The requirement that importers use reasonable care in making entry establishes a “shared responsibility” between Customs and the trade community, and allows Customs to rely on the accuracy of the information submitted by importers and, in turn, streamline entry procedures. Under this new provision, the importer will have responsibility to use reasonable care when providing the initial classification and appraisement. In the view of the Committee, it is essential that this “shared responsibility” assure that, at a minimum, “reasonable care” is used in discharging those activities for which the importer has responsibility. These include, but are not limited to: furnishing of information sufficient to allow Customs to fix the final classification and appraisal of merchandise; taking measures that will lead to and assure the preparation of accurate documentation and providing sufficient pricing and financial information to permit proper valuation of merchandise. Section 621 above elaborates on the criteria used in evaluating whether a “reasonable care” standard is achieved.
H.Rpt. 103-361, Part 1 (November 15, 1993 at 136.
Similarly, Customs brokers must exercise responsible supervision and control over the Customs business that the broker conducts, by virtue of 19 U.S.C. 1641(b)(4).
The entry papers for the 14 entries show that the protestant and the foreign supplier were related. Presumably, as a related party, the protestant knew the merchandise it bought. The affidavit of Ms. Grader is silent on whether she viewed the imported merchandise in issue. As the protestant’s customs manager, in order to have met the protestant’s obligation to exercise reasonable care in making the initial classification, presumably, she would have had to have at least viewed that merchandise.
The text of the classification ruling shows that the component parts which imparted the essential character to the toner cartridge would have been apparent in any visual examination. Likewise, Mr. Turner’s description and attached drawing show that the component parts on which classification turned were readily visible to any observer. Consequently, it is unclear how the absence of technical information misled any person who observed the cartridges in light of ruling A33444. Moreover, none of the affidavits identify the missing technical information which caused the alleged mistake of fact. The case of ITT Corp. v. US, 812 F. Supp. 213, 17 CIT 26 (1993), rev’d 24 F. 3d 1384 (Fed. Cir., 1994) also involved a mistake in the nature of the merchandise. There, at 17 CIT 29, the lower court held that the importer’s agent, in preparing the entry, used company records applicable to parts which were finished to a greater degree and which were to be sent to a different customer than the parts at issue. The appellate court found, at 24 F. 3d 1387, the proper tariff classification would not be apparent from a visual examination of the samples of ITT’s entries submitted to Customs. Here, the relevant text of ruling A33444, the drawing and description of the toner cartridge provided by Mr. Turner show that the essential character would be apparent on visual examination.
Protestant claims that it was a mistake of fact that adversely resulted in entry of the merchandise under subheading 3707.90, HTSUS, as certain photographic chemicals bearing duty at the rate of 7.7 percent ad valorem, rather than under subheading 8473.30, HTSUS, as certain machine parts to be entered free of duty. The mistake alleged is that neither the protestant nor the broker knew or understood the true nature of the merchandise, and that Customs rulings, e.g. HQ 089122 dated November 5, 1991, and HQ 089260 dated August 12, 1991, classifying similar merchandise as parts of subheading 8473.30, HTSUS, were ignored. In particular, by New York Ruling Letter A88444 dated October 18, 1996, Customs ruled that toner cartridges that incorporate integral, constituent, component parts of a printer are classified in subheading 8473.30.5000, HTSUS, as parts and accessories of the machined of heading 8471, not incorporating a cathode ray tube.
This same approach has been made and rejected by the courts:
“Plaintiff argues that the incorrect classification occurred because the Detroit District Director was unaware of certain facts, i.e., that an Application for Further Review with respect to the Buffalo entries was pending before Customs Headquarters. Degussa claims that if the Detroit District Director had been aware of this fact he would have waited for Headquarters to act on the AFR before liquidating the entries. There, the classification of the entries by the Detroit District Director resulted from a clerical error, mistake of fact, or other inadvertence. . . .
“It is fundamental that a determination by the Customs Service that the imported merchandise is covered by a particular provision or item of the tariff schedules is a conclusion of law. See Mattel, Inc. v. United States, 72 Cust. Ct. 257, 262, 377 F.Supp. 955, 960, Cust. Dec. 4547 (1974). Therefore, an erroneous classification of imported merchandise is not remediable as a clerical error, mistake of fact, or inadvertence under section 1520(c)(1).
“In this case, notwithstanding some of plaintiff’s factual allegations, it is eminently clear that the determination by the Customs Service in Detroit that the imported merchandise was classifiable under the dutiable automobile parts provision . . . is a determination of law. Consequently, it is equally clear that plaintiff’s allegation of a mistake of fact or inadvertence is actually a challenge to the legal conclusion of the Detroit District Director. The fact that a series of other entries covering identical merchandise had been made at the port of Buffalo and that a timely protest with application for further review was filed on these Buffalo entries, and subsequently approved, established that an alleged error was made in the classification of the merchandise and therefore an error in the construction of law.
“This Court finds that plaintiff’s claim cannot properly be classified as a mistake of fact which would allow plaintiff to avail itself of the application of § 1520(c)(1).”
Degussa Canada Ltd. v. US, 19 C.I.T. 864, 889 F.Supp. 1543 (CIT 1995), aff’d Id., 87 F.3d 1301 (Fed. Cir. 1996).
We are of the opinion that the protestant has not established a mistake of fact in the liquidation of the subject entries, in view of which, reliquidation of the entries is not available under 19 U.S.C. 1520(c)(1).
HOLDING:
The protestant has not established a mistake of fact in the liquidation of the subject entries and reliquidation of the entries is not available under 19 U.S.C. 1520(c)(1).
The protest should be DENIED. In accordance with section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1992, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter.
Sixty days from the date of this decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
[William G. Rosoff, for]
John A. Durant, Director Commercial Rulings Division
APPENDIX
BILL OF ENTRIES (14)
Redacted Entry No. Date of Entry Date of Liquidation
004-NNNN102-21 08 APR 96 26 JUL 96
004-NNNN944-01,3 18 APR 96 02 AUG 96
004-NNNN986-71,2,3 29 APR 96 16 AUG 96
004-NNNN919-31,3 30 APR 96 16 AUG 96
004-NNNN770-51,3 10 MAY 96 30 AUG 96
004-NNNN766-31,3 24 MAY 96 13 SEP 96
004-NNNN050-91,3 28 MAY 96 13 SEP 96
004-NNNN026-91 28 MAY 96 13 SEP 96
004-NNNN887-41,2,3 29 MAY 96 13 SEP 96
004-NNNN068-41,3 22 MAY 96 20 SEP 96
004-NNNN503-51,2,3 21 MAY 96 20 SEP 96
004-NNNN795-71 02 JUN 96 20 SEP 96
004-NNNN633-91,2 03 JUN 96 20 SEP 96
004-NNNN841-01,2 13 JUN 96 27 SEP 96
1. Line item for certain chemical preparations of heading 3707, HTSUS.
2. Line item for certain automatic data processing units of heading 8471, HTSUS.
3. Line item for certain machine parts of heading 8473, HTSUS.