PRO 2-05
OT:RR:CTF:ER
H242318 MES
Port Director
U.S. Customs and Border Protection
1000 Second Avenue, Suite 2100
Seattle, Washington 98104-1020
Attn: Mr. Scott Johnson, Import Specialist
Re: Application for further review of protest 3001-13-100107 regarding an application for duty-free treatment of entered merchandise
Dear Port Director:
This letter is in response to the application for further review (AFR) of Protest 3001-13-100107 filed with U.S. Customs and Border Protection (CBP) on behalf of FEI Company (FEI), which we received on May 22, 2013. We apologize for the delay in our response.
FACTS:
FEI Company imported and entered a transmission electron microscope and its accompanying components in entries XXX-XXXX562-5, XXX-XXXX569-0, and XXX-XXXX823-5. These entries were made on October 30, 2011, October 30, 2011, and December 27, 2011, respectively, and were liquidated on September 14, 2012, September 21, 2012 and November 9, 2012, respectively. FEI submitted a “Request for Duty-Free Entry of Scientific Instruments or Apparatus” on CBP form 6445A, which was received on November 5, 2012.
CBP responded to FEI’s November 5, 2012, request on December 13, 2012, and stated that the instrument was not eligible for duty-free treatment. CBP stated the following in the denial letter:
It is our determination that this instrument is not eligible for duty-free treatment due to late filing. Pursuant to 15 CFR§ 301.8(c), “any document, form, or statement required by regulations in this section to filed in connection with the entry may be filed at any time before liquidation of the entry becomes final.” Your entry liquidated on September 14, 2012.
(Original emphasis included). On March 12, 2013, FEI filed a protest and application for further review. In its protest, FEI states that “[t]he timely filing of this protest, therefore, as accompanied by the attached application for HTSUS Tariff Item 9810.00.6000 treatment, qualifies the underlying merchandise for eligibility under this tariff provision…” Therefore, FEI argues that the liquidations of the entries were not final because of the timely filed protest, and therefore, FEI claims that its application should be accepted.
ISSUE:
Whether the filing of the Request for Duty-Free Entry of Scientific Instruments or Apparatus will be accepted and considered.
LAW AND ANALYSIS:
As an initial matter, we note that the liquidation of an entry is a protestable issue and that the protest was timely filed within 180 days of liquidation. See 19 U.S.C. § 1514(a)(2) and 19 U.S.C. § 1514(c)(3)(A). Here, the subject entries liquidated on September 14, 2012, September 21, 2012 and November 9, 2012, and this protest was filed on March 12, 2013. Further, the protestant requests further review per 19 CFR § 174.23 and 174.24(b). CBP’s regulations provide for further review of a protest when, inter alia, the decision against which the protest was filed:
(b) Is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts.
19 C.F.R. § 174.24(b). Upon review of the application for further review, we find that these facts have not been the subject of a Headquarters ruling. See 19 CFR § 174.24(b) and 19 CFR § 174.26(b)(1)(iv). Specifically, FEI argues that the application for duty-free entry under subheading 9810.00.60 should be accepted because it was submitted before liquidation became final due to its timely filed protest. Accordingly, further review is warranted.
The procedures for applying for duty-free entry of otherwise dutiable scientific instruments and apparatus under subheading 9810.00.60 of the Harmonized Tariff Schedule of the United States (HTSUS) are found in Section 301 of Title 15 of the Code of Federal Regulations. These joint regulations of the Department of Commerce (Commerce) and CBP govern the duty-free entry of scientific instruments under subheading 9810.00.06 HTSUS. The regulations allow for an applicant to apply for duty-free entry of merchandise on Form ITA-338P. See 15 CFR § 301.3(b). If CBP approves the application, a copy is then forwarded to Commerce for its determination. Both CBP and Commerce must approve the application, otherwise the merchandise is dutiable. See 15 CFR § 301.4(b) and 301.5(f).
An applicant desiring duty-free entry of an instrument may make a claim at the time of entry of the instrument into the Customs territory of the United States (as defined in 19 CFR § 101.1) that the instrument is entitled to duty-free classification under subheading 9810.00.60, HTSUS. 15 CFR § 301.8(a)(1). In general, the time of entry will be the time the appropriate CBP officer authorizes the release of the merchandise or any part of the merchandise covered by the entry documentation. See 19 CFR § 141.68(a)(1).
In this case, the merchandise was released by CBP for entries XXX-XXXX562-5, XXX-XXXXX569-0, and XXX-XXXX823-5 on October 31, 2011, October 31, 2011, and December 27, 2011, respectively. Therefore, those dates are the time of entry. FEI filed the application on November 5, 2012, which is after the time of entry.
Regarding the late filing of applications for duty free entry i.e., applications that are not filed at the time of entry, 15 CFR § 301.8(c) reads as follows:
(c) Late filing. Notwithstanding the preceding provisions of this section any document, form, or statement required by regulations in this section to be filed in connection with the entry may be filed at any time before liquidation of the entry becomes final, provided that failure to file at the time of entry or within the period for which a bond was filed for its production was not due to willful negligence or fraudulent intent. Liquidation of any entry becomes conclusive upon all persons if the liquidation is not protested in writing in accordance with 19 CFR part 174, or the necessary document substantiating duty-free entry is not produced in accordance with 19 CFR 10.112. Upon notice of such final and conclusive liquidation, the Department of Commerce will cease the processing of any pending application for duty-free entry of the subject article. In all other respects, the provisions of this section do not apply to Department of Commerce responsibilities and procedures for processing applications pursuant to other sections of these regulations.
Therefore, late filings submitted after the time of entry will be accepted at any time before liquidation of the entry becomes final, provided that the failure to file at the time of entry was not due to willful negligence or fraudulent intent. Accordingly, we will discuss the finality of liquidation and willful negligence.
Liquidation becomes final unless a timely protest is filed. See 19 U.S.C. § 1514(a). As stated above, liquidation of the entries occurred on September 14, 2012, September 21, 2012 and November 9, 2012, and the protest was timely filed, within 180 days, on March 12, 2013. The date CBP highlighted in its December 13, 2012, letter informing FEI that its instrument was not eligible for duty-free treatment, September 14, 2012, was the date of liquidation for the first entry, not the date liquidation became final. FEI’s application was submitted on November 5, 2012, which was after liquidation, but before liquidation became final. Accordingly, pursuant to 15 CFR § 301.8(c), FEI’s application will be accepted and considered provided that failure to file at the time of entry was not due to willful negligence or fraudulent intent.
CBP has discussed what is needed for a finding of willful negligence in prior rulings. In HQ 559609, dated October 3, 1996, CBP dealt with the issue of whether certifications required for duty-free treatment may be submitted by an importer subsequent to the filing of a timely protest. In that ruling, CBP found no evidence that demonstrated the delay was the result of willful negligence or fraudulent intent and we stated that, absent specific proof showing that the failure to file the documents at the time of entry was deliberate, Customs may not conclude that the protestant's failure was due to willful negligence. Therefore, because liquidation was timely protested and the required certifications were submitted before liquidation of the entries became final, we determined that the subject merchandise was entitled to the duty exemption. See also, HRL 555269, (December 20, 1990) (where Customs recognized that if liquidation was timely protested, the protestant should be afforded an opportunity to submit documentation establishing free or reduced duty entry where there is no evidence of willful negligence or fraudulent intent). In HQ 238490, dated September 2, 2014, a ruling regarding the classification of merchandise, CBP dealt with the issue of whether certifications could be submitted in a format different than what is provided for in the regulations. In that case, we discussed Mattel, Inc. v. United States, 67 C.C.P.A. 74 (1980), where the Court of Customs and Patent Appeals (“CCPA”) set forth the standard for willful negligence and fraudulent intent under 19 C.F.R. § 10.112 (which is referenced in 15 CFR § 301.8(c)). The CCPA in Mattel stated that “positive action demonstrating absence of willful negligence” meets the burden of proof. In the case of HQ 238490, we found no evidence of willful negligence when the importer submitted the required certifications in a different format than the one provided for in the regulations. Moreover, we found positive action in the importer’s actions of providing the information in response to requests from CBP. Further, we stated that “[w]hile the entry could have been more expeditiously processed had the documents been provided with the entry documentation, this delay does not evidence “bad purpose or evil motive.” Therefore, CBP has held that the delayed filing of documentation does not equate to willful negligence and positive action can overcome the burden of proof regarding willful negligence.
In this case, FEI claims that its filing was not late because it was done prior to liquidation becoming final, and as such, it did not address whether or not its late filed application was due to willful negligence or fraudulent intent. However, as discussed above, providing documentation after the time of entry does not, absent specific proof, equate to willful negligence. Here, we find no evidence that the failure to submit the application at the time of entry demonstrated willful negligence or fraudulent intent. In this case, CBP’s December 13, 2012, letter informed FEI that its instrument was not eligible for duty-free treatment due to late filing. CBP’s letter quoted 15 CFR § 301.8(c) in part, highlighted the fact that required documents may be filed at any time before liquation of the entry becomes final, stated that its entry liquidated on September 14, 2012, and informed FEI of its right to protest. FEI timely protested, thereby taking measures to ensure that liquidation did not become final. Therefore, FEI’s November 5, 2012, application for duty-free treatment was submitted before liquidation became final. Moreover, the protest filed in response to CBP’s December 13, 2012, letter and the submission of the application and documentation constitutes positive action sufficient to meet the burden of proof regarding willful negligence. Accordingly, FEI’s application will be accepted and processed as it was submitted in accordance with the late filing procedures of 15 CFR § 301.8(c), i.e., after the time of entry but before liquidation became final.
HOLDING:
The Request for Duty-Free Entry of Scientific Instruments or Apparatus will be accepted and processed. Therefore, the protest should be GRANTED. No later than 60 days from the date of this letter, the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon,
Director
Commercial and Trade Facilitation Division