Customs Ruling HQ 227594 - Application for further review of Protest No. 2304-97-100137. Post NAFTA Claims for preferential treatment; 19 U.S.C. 1520 (d); 19 U.S.C. 1514 (c); 19 U.S.C. 1520 (c); 19 U.S.C. 1487; Value Adder; Merchandise Processing Fee; 19 U.S.C. 58c(b)(10)(B).Dear Sir:

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HQ 227594
Apr 21, 1999

Type : Liquidation • HTSUS :
Related: 227127; 957575; 226567

PRO-2-02: LIQ-9
RR:CR:DR 227594 CK

CATEGORY Liquidation

Port Director of Customs
U.S. Customs Service
Attn: Protest Section
Rene Leyendecker -SIS
819 Water Street, Bldg. #6
Laredo, Texas 78040

RE: Application for further review of Protest No. 2304-97-100137. Post NAFTA Claims for preferential treatment; 19 U.S.C. 1520 (d); 19 U.S.C. 1514 (c); 19 U.S.C. 1520 (c); 19 U.S.C. 1487; Value Adder; Merchandise Processing Fee; 19 U.S.C. 58c(b)(10)(B).

Dear Sir:

The above-referenced protest was forwarded to our office for further review. We have considered the points raised by your office and the importer. Our decision follows:

FACTS:

Northern Telecom., Inc., the Protestant, made 22 entries of merchandise through Laredo during the period from November 29, 1996 to January 8, 1997. According to the file, no claim for NAFTA preference was made on any of the entries and the entries were liquidated as entered by Northern Telecom., Inc. during the period April 4, 1997 and April 11, 1997.

On April 24, 1997, this protest on Customs Form (CF) 19 was filed. As exhibit C to this submission, the Protestant included copies of NAFTA Certificates of Origin. The Protestant requested Further Review on the ground that the issues presented were not previously ruled upon by the Commissioner or the courts.

The following chart lists the protested entries, entry dates, dates of liquidation, and the refund sought:

ENTRY NUMBER DATE OF ENTRY LIQUIDATION DATE REFUND SOUGHT (Dollars) 228-xxxx671-1 11/29/96 04/04/97 132.70 228-xxxx811-3 12/01/96 04/04/97 651.28 228-xxxx945-7 01/03/97 04/11/97 568.63 228-xxxx960-6 01/03/97 04/11/97 927.37 228-xxxx961-4 01/07/97 04/11/97 385.76 228-xxxx963-0 01/07/97 04/11/97 195.06 228-xxxx215-4 01/09/97 04/11/97 927.84 228-xxxx216-2 01/09/97 04/11/97 2,959.48 228-xxxx217-0 01/09/97 04/11/97 5,319.92 228-xxxx293-1 01/09/97 04/11/97 2,959.48 228-xxxx068-0 01/07/97 04/11/97 460.02 228-xxxx069-8 01/06/97 04/11/97 850.08 228-xxxx071-4 01/06/97 04/11/97 905.92 228-xxxx072-2 01/07/97 04/11/97 552.03 228-xxxx073-0 01/07/97 04/11/97 80.55 228-xxxx076-3 01/06/97 04/11/97 83.69 228-xxxx084-7 01/07/97 04/11/97 321.54 228-xxxx085-4 01/07/97 04/11/97 287.83 228-xxxx090-4 01/08/97 04/11/97 1,274.27 228-xxxx091-2 01/08/97 04/11/97 511.55 228-xxxx092-0 01/08/97 04/11/97 77.58 228-xxxx094-6 01/08/97 04/11/97 865.62 ------------------------ ------------------------- ------------------------- 21,298.20

Copies of entry numbers 228-xxxx671-1 and 228-xxxx094-6 were received by this office on June 29, 1998. The papers relating to entry number 228-xxxx671-1 consist of the Entry Summary (CF 7501) and two invoices of Northern Telecom de Mexico: E1xxxx62 and E2xxxx89 both of November 29, 1996 and each covering two items. Three of the line items on the CF 7501 claim Mexican origin, and preferential NAFTA duty treatment.

The first line item on the CF 7501 is described as a Static Converter classifiable in subheading 8504.40.9060, HTSUS, with an entered value of $26,821.00. Based on the invoice reference, although there is a discrepancy between the invoice and entered values, this item appears to correspond to the first item on invoice E1xxxx62 and is described as Power Unit MFA 150, part no. BO234097 with an asserted Mexican origin.

The second line item on the CF 7501 is described as Boards etc, less than 1,000 volts classifiable in subheading 8537.10.9070, HTSUS, with an entered value of $3,085.00. Based on the invoice reference and value, this appears to correspond to the second item on invoice E1xxxx62 and is described as a Power Shelf, part no. AO395373, with an asserted Mexican origin.

The third line item on the CF 7501 is described as a Static Converter classifiable under subheading 8504.40.9060, HTSUS, with an entered value of $18,645.00. Based on the invoice reference, although there is a discrepancy between the invoice and entered values, this appears to correspond to the first line item on invoice E2xxxx89 and are described as Rectifiers, part no. AO408648, with an asserted Mexican origin.

The fourth line item on the CF 7501 is described as Other Articles of Wood MSPF classifiable under subheading 4421.90.9840, HTSUS, with an entered value of $280.00. Based on the invoice reference on the CF 7501 and the value, these correspond to the second item on invoice E2xxxx89 and are described as Packing Material (or wooden pallet) part no. DP099021, with an asserted Canadian origin.

Opposite each line item in block 28 of the CF 7501, the importer placed the symbols OMX, OMX, OMY, and OCA, respectively.

The papers relating to entry no. 228-xxxx094-6 consists of an almost illegible copy of what appears to be an Entry Summary (CF 7501) and invoice E1xxxx72 dated December 26, 1996 from Northern Telecom de Mexico. There are two line items on what appears to be a copy of the CF 7501.

Line item one appears to be a Static Converter classifiable in subheading 8504.40.9060 with an entered value of $38,046.00. Based on the invoice notations, line item one appears to consist of the merchandise listed in items 1 and 2 of the invoice and are described as Power Unit MFA 50, part nos. BO241221 and BO241220, respectively and are said to be of Mexican origin. There is a discrepancy between the invoice and entered values.

Line item 2 on what appears to be a CF 7501 lists Boards under 1000 volts, classifiable in subheading 8537.10.9070, HTSUS with an entered value of $1,595.00. Based on the entered value and invoice notations this corresponds to the third item listed on invoice E1xxxx72 and is described as a Power Shelf, part no. AO629976, with an asserted Mexican origin.

Although the copy of what appears to be a CF 7501 is very poor, it seems, that unlike entry no. 228-xxxx671-1, no origin notations appear next to the line items.

Also, all three of the invoices bear a stamped notation:

Values have been increased to make fair market values... letter filed with U.S. Customs, Laredo, Texas, HTS 8504.1.10. HTS 8544___. HTS 8536___.

The Protestant included copies of NAFTA Certificates of Origin with the protest. There are six certificates, although two are duplicates of each other.

The first certificate is dated November 11, 1996 and covers the period of January 1, 1996 to December 31, 1996. This certificate includes 20 pages of attachments in two sets both of which are number 1-10. The upper right hand corner of the certificate, and the heading of each page are labeled, “Power NAFTA Cert 96-1.”

The second certificate is dated December 10, 1996 and covers the period of January 1, 1996 to December 31, 1996 and lists four items relating to Millennium Keys. The upper right hand corner of the certificate is labeled “96 Millennium II.”

The third certificate is dated December 27, 1996 and covers the period of January 1, 1997 to December 31, 1997. The upper right hand corner of the certificate is labeled “NAFTA Power Cert Suppliers.” The certificate includes one page 120 with a heading labeled “INDEX NAFTA Cert V4.” Also, this certificate lists the country of origin as Canada, the USA, or both.

The fourth and fifth certificates are duplicates of each other and their attachments. They are dated January 24, 1997 and cover the period of January 1, 1997 to December 31, 1997. The upper right hand corner of the certificate is labeled “97- Power” and item 5 of the certificate refers to “Power NAFTA Cert 97-2.” The certificates include a two-page attachment with a heading labeled, “Sheet 1.”

The sixth certificate is dated December 27, 1996 and covers the period from January 1, 1997 to December 31, 1997. The upper right hand corner of the certificate is labeled “Power NAFTA Cert 97-1" with the same reference in item 5 of the certificate. The certificate includes pages 1-10. The headings of each page is labeled “Power NAFTA Cert 96-1.” However, the pages are not duplicates of either set of the 10 pages included with the first certificate, but is labeled “Power NAFTA Cert 96-1.”

The attachments to the first, third, fourth, and fifth certificates list the parts in a descending alpha-numeric order. The attachment to the second and sixth certificate list the part numbers randomly.

The following charts consist of the information provided by Protestant on worksheets, and attached to the Protest as Exhibit “A.”

ENTRY 228-xxxx671-1:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin AO395373 8537.10. 9070 MX8504.40.9060 $6.48 $7.08 Item 11 pg. 2 of first set of 1-10, and as item 15 of pg. 2 of second set, of Certificate 1. AO408648 8504.40. 9060 No change sought $39.16 $38.90 Not claimed BO234097 8504.40. 9060 No change sought $56.33 $55.96 Not claimed DP099021- Packing material 4421.90. 9840 No change sought $.59 $.58 Not claimed * Merchandise processing fee.

ENTRY 228-xxxx811-3:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin AO663737 8517.19. 8080 MX8517.19.8080 $25.00 $21.00 Item 3 on Certificate 2. * Merchandise processing fee.

ENTRY 228-xxxx945-7:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO234097 8504.40. 9060 MX8504.40.9060 $56.33 $50.96 Item 19 on pg 1 of attachment to Certificates 4 and 5. * Merchandise processing fee.

ENTRY 228-xxxx960-6:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO226671 8504.40. 9060 MX8504.40.9060 $91.86 $83.11 Item 26 on pg 8 of first set of 1-10 and item 31 of pg 8 of second set of 1-10, of Certificate 1. * Merchandise processing fee.

ENTRY 228-xxxx961-4:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO242140 8504.40. 9060 MX8504.40.9060 $38.21 $34.57 Item 22 on pg 1 of attachment to Certificates 4 and 5. * Merchandise processing fee.

ENTRY 228-xxxx963-0:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO242140 8504.40. 9060 MX8504.40.9060 $25.00 $21.00 Item 22 on pg 1 of attachment to Certificates 4 and 5. * Merchandise processing fee.

ENTRY 228-xxxx215-4:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin AO408648 8504.40. 9060 No change sought $83.13 $78.97 Not claimed BO233358 8504.40. 9060 MX8504.40.9060 $91.91 $87.32 Items 20 and 21 on pg 9, of first set of 1-10, and items 25 and 26 on pg 9 of second set of 1-10 of Certificate 1. * Merchandise processing fee.

ENTRY 228-xxxx216-2:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin AO659511 8504.40. 9060 MX8504.40.9060 $293.16 $265.24 Item 16 on pg 1 of attachment to Certificates 4 and 5. * Merchandise processing fee.

ENTRY 228-xxxx217-0:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin AO659511 8504.40. 9060 MX8504.40.9060 $485.00 $400.00 Item 16 on pg 1 of attachment to Certificates 4 and 5. * Merchandise processing fee.

ENTRY 228-xxxx293-1:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin AO659511 8504.40. 9060 MX8504.40.9060 $485.00 $400.00 Item 16 on pg 1 of attachment to Certificates 4 and 5. * Merchandise processing fee.

ENTRY 228-xxxx068-0:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin AO407851 8504.40. 9060 MX8504.40.9060 $45.57 $41.23 Item 21 on pg 4 of first set of 1-10, and item 25 on pg 4 of second set of 1-10, of Certificate 1. Also item 2 on pg 3 of Certificate 6. * Merchandise processing fee.

ENTRY 228-xxxx069-8:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO226671 8504.40. 9060 MX8504.40.9060 $84.21 $76.19 Item 26 on pg 8 of first set of 1-10 and item 31 of pg 8 of second set of 1-10, of Certificate 1. * Merchandise processing fee.

ENTRY 228-xxxx071-4:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO224921 8504.40. 9060 MX8504.40.9060 $89.74 $81.19 Item 17 on pg 1 of attachment to Certificates 4 and 5. * Merchandise processing fee.

ENTRY 228-xxxx072-2:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin AO407851 8504.40. 9060 MX8504.40.9060 $54.61 $49.47 Item 21 on pg 4 of first set of 1-10, and item 25 on pg 4 of second set of 1-10, of Certificate 1. Also item 2 on pg 3 of Certificate 6. * Merchandise processing fee. ENTRY 228-xxxx073-0:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO226671 8504.40. 9060 MX8504.40.9060 $25.00 $21.00 Item 26 on pg 8 of first set of 1-10 and item 31 of pg 8 of second set of 1-10, of Certificate 1. * Merchandise processing fee.

ENTRY 228-xxxx076-3:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin PO844879 8544.41. 0000 CA 8544.41. 0000 $25.00 $21.00 Items 23 and 27 of the attachment to Certificate 3. * Merchandise processing fee.

ENTRY 228-xxxx084-7:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO243478 8504.40. 9060 MX8504.40.9060 $31.85 $28.82 Item 12 on pg 10 of first set of 1-10, and item 16 on pg 10 of second set of 1-10 of Certificate 1. Also item 11 on pg 10 of Certificate 6. * Merchandise processing fee.

ENTRY 228-xxxx085-4:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO245700 8504.40. 9060 MX8504.40.9060 $28.51 $25.80 Item 3 on pg 2 of attachment to Certificates 4 and 5. * Merchandise processing fee.

ENTRY 228-xxxx090-4:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO241639 8504.40. 9060 MX8504.40.9060 $74.58 $67.47 Item 31 on pg 9 of first set of 1-10, and Item 2 of second set of 1-10 of Certificate 1. Also item 5 on pg 10 of Certificate 6. BO241640 8504.40. 9060 MX8504.40.9060 $51.64 $46.72 Item 32 on pg 9, of first set of 1-10, and item 2 on pg 10 of second set of 1-10 of Certificate 1. Also item 27 on pg 10 of Certificate 6. * Merchandise processing fee.

ENTRY 228-xxxx091-2:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO241220 8504.40. 9060 MX8504.40.9060 $28.59 $25.87 Item 21 on pg 1 of attachment to Certificates 4 and 5. BO241221 8504.40. 9060 MX8504.40.9060 $22.08 $19.98 Item 29 on pg 9, of first set of 1-10, and item 33 on pg 9 of second set of 1-10 of Certificate 1. * Merchandise processing fee.

ENTRY 228-xxxx092-0:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin BO241221 8504.40. 9060 MX8504.40.9060 $25.00 $21.00 Item 29 on pg 9, of first set of 1-10, and item 33 on pg 9 of second set of 1-10 of Certificate 1. * Merchandise processing fee.

ENTRY 228-xxxx094-6:

Part Number Original HTSUS Sought HTSUS Original MPF* Sought MPF* Certificate of Origin AO629976 8537.10. 9070 MX8504.40. 9060 $3.35 $3.33 Item 5 on pg 7 of first set of 1-10, and item 9 on pg 7 of second set of 1-10 of Certificate 1. Also item 2 on pg 2 of Certificate 6. BO241220 8504.40. 9060 MX8504.40.9060 $28.59 $25.87 Item 21 on pg 1 of attachment to Certificates 4 and 5. BO241221 8504.40. 9060 MX8504.40.9060 $22.08 $19.98 Item 29 on pg 9, of first set of 1-10, and item 33 on pg 9 of second set of 1-10 of Certificate 1. * Merchandise processing fee.

ISSUES:

1. Whether the liquidation, as entered, of an entry that was not the result of a decision of the Customs Service is protestable?

2. Whether an entry may be reliquidated under 19 U.S.C. 1520 (d) if the reliquidation request is filed within one year of importation on a protest form Customs Form 19?

3. Whether a failure to include an additional amount to show the correct entered value of imported merchandise on an entry is correctable by a reliquidation request under 19 U.S.C. 1520 (d)?

4. Whether Customs assessed the correct Merchandise Processing Fees?

LAW/ANALYSIS:

Issue # 1:

Under 19 U.S.C. §1514, (with certain exceptions not applicable in this matter) certain listed decisions (including the legality of all orders and findings entering into the same) of the Customs Service are final and conclusive on all persons unless a protest is filed in accordance with section 1514, or unless a civil action contesting the denial of a protest, in whole or in part, is commenced in the United States Court of International Trade in accordance with chapter 169 of Title 28, United States Code. The decisions (listed in section 1514(a); also listed in 19 C.F.R. §174.11 as "[m]atters subject to protest") are:

(1) the appraised value of merchandise;

(2) the classification and rate and amount of duties chargeable;

(3) all charges or exactions of whatever character within the jurisdiction of the Secretary of the Treasury;

(4) the exclusion of merchandise from entry or delivery or a demand for redelivery to customs custody under any provision of the customs laws, except a determination appealable under [19 U.S.C. §1337];

(5) the liquidation or reliquidation of an entry, or reconciliation as to the issues contained therein, or any modification thereof;

(6) the refusal to pay a claim for drawback; or

(7) the refusal to reliquidate an entry under [19 U.S.C. §1520(c)]. (Emphasis added)

The procedures for filing a protest of one of the above decisions are provided in 19 U.S.C. §1514(c). Section 1514(c)(1) provides that only one protest may be filed for each entry of merchandise (with certain exceptions inapplicable in this matter). Section 1514(c)(3) provides that a protest of a decision, order, or finding described in section 1514(a) shall be filed with Customs within 90 days after but not before the notice of liquidation or reliquidation or the date of the decision as to which protest is made (if the requirement for filing within 90 days before the notice of liquidation or reliquidation is inapplicable).

The Customs Regulations pertaining to protests, issued under the above statutes, are found in 19 C.F.R. Part 174. Under 19 C.F.R. §174.24, further review (as provided for in 19 U.S.C. §1515) shall be accorded a party when the decision against which the protest was filed, among other things, 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. Under 19 C.F.R. §174.26(b), a protest with an application for further review shall be reviewed (as pertinent to the grounds under which further review was requested in this matter) by the Commissioner of Customs or his designee if the protest and application for further review raise an issue involving questions which have not been the subject of a Customs ruling or court decision.

The first requirement for filing a protest with Customs under 19 U.S.C. 1514 (see also, 19 CFR § 174.26) is that the protest must be based on, or in response to, a decision made by the Customs Service. In both Taban Co. v. United States, 960 F. Supp. 326 (1997), and Zaki Corp. v. United States, 960 F. Supp. 350 (1997), the Court of International Trade was presented with the refusal of Customs to reliquidate certain merchandise entered into the U.S. Plaintiffs, in both cases, contended its brokers were mistaken as to the physical nature of the subject merchandise, and, as a result, incorrectly entered the merchandise under the wrong subheading of the Harmonized Tariff Schedule of the United States (HTSUS). Plaintiff argued that Customs should reliquidate under 19 U.S.C. 1520(c)(1), because the liquidation of the merchandise under the wrong classification is a mistake of fact, since, the original classification was determined when the true nature of the merchandise was unknown. Customs argued that the classification of merchandise involves a mistake in the application of law, not of fact, and is not remedial under 19 U.S.C. 1520(c)(1). In both cases, Plaintiffs’ brokers determined, and entered the merchandise under the Harmonized Tariff Schedule of the United States according to their understanding of the nature of the merchandise, and it was so liquidated by Customs. In both cases descriptions of the merchandise were wrong, these incorrect descriptions were relied upon by Plaintiff’s broker, and presented to Customs, who accepted them. The court, in both cases, quoted Executone Information Systems v. United States, 95 F.3d 1383, 1388 (Fed. Cir. 1996), noted, “This case does not present a typical challenge to a Customs classification where Customs evaluated the merchandise and, based on its construction of the tariff schedule, determined into which of two categories the merchandise must be placed, . . . . . In such a case, there is no dispute that the only proper course of action would have been to file a timely protest under section 1514.”

In all three cases, Taban, Zaki, and Executone, the merchandise was liquidated as entered by Customs, based on the tariff classifications made by the Plaintiffs’ brokers. In Taban and Zaki, Plaintiff’s brokers relied on incorrect descriptions of the merchandise, which mistook the nature of the merchandise, and at the time of entry presented these incorrect descriptions to Customs. In Executone, the Plaintiff’s broker inadvertently failed to file with the entry documents the A forms which would have qualified the merchandise for duty-free treatment as CERBA entries. The merchandise was liquidated as entered, without the A Forms needed to qualify for duty-free importation. The CIT states in Executone, which it also cites in Taban and Zaki, that where Customs makes a decision, a determination of tariff classification, it is protestable only under section 1514. In all three cases, the CIT found that the Plaintiffs could protest under section 1520 (c)(1) instead. The court’s analysis turns on whether Customs made a decision, if Customs made the classification determination, or if the Plaintiff made the classification, and therefore, can claim a mistake of fact. The court found that these three cases were correctable under 19 U.S.C. 1520(c)(1). Section 1514, which is the only section available to seek recourse if Customs was responsible for determining the classification, and evaluation of the merchandise, was not at issue in the three cases, nor is it at issue in the present case, since no evidence has been presented that Customs made any determinations or decisions.

In this case, Northern Telecom., as did the Plaintiffs in Taban, Zaki, and Executone, determined the HTSUS classification of its imported merchandise, and Customs liquidated the entry as it was entered. Therefore, based on the precedent set by the Court of International Trade, that such an issue is unprotestable under 19 U.S.C. 1514, Customs did not appraise or classify the merchandise in this case, and did not make a determination, instead they acted in a ministerial function by liquidating the merchandise as Northern Telecom entered it. We conclude that since Customs did not make a determination regarding the merchandise entered by Northern Telecom, they did not make a decision that is protestable under section 1514.

Issue # 2:

The second issue raised is whether the entry may be reliquidated to claim preferential NAFTA reduced duty treatment after entry and liquidation under 19 U.S.C. 1520 (d) if the request is filed within one year of the importation on a protest form (Customs Form 19). In this case, the protest was filed within the 90-day statutory time limit of section 1514, well within the one year requirement of section 1520 (d). However, as stated under Issue 1, only a “decision of the Customs Service” may be protested under § 1514. Frequently, as is the case here, the entry was liquidated as entered because the importer lacked a valid Certificate of Origin and could not claim NAFTA preference. The importer’s failure to claim NAFTA preference when the entry is liquidated as entered does not give rise to an erroneous Customs decision protestable under § 1514. Subsection 1520 (d) provides the exclusive remedy for their predicament. However, Customs will consider a so-called protest that is a timely § 1520 (d) request, if filed “within 1 year after the date of importation” and accompanied by the statutorily required information. This claim is timely filed under 19 U.S.C. 1520(d).

19 U.S.C. 1520 (d), which concerns post-importation duty refund claims for goods qualifying under the NAFTA rules of origin, provides as follows:

(d) Notwithstanding the fact that a valid protest was not filed, the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to refund any excess duties paid on a good qualifying under the rules of origin set out in section 202 of the North American Free Trade Agreement Implementation Act for which no claim for preferential tariff treatment was made at the time of importation if the importer, within 1 year after the date of importation, files, in accordance with those regulations, a claim that includes (1) a written declaration that the good qualified under those rules at the time of importation; (2) copies of all applicable NAFTA Certificates of Origin (as defined in section 508(b)(1)); and (3) such other documentation relating to the importation of the goods as the Customs Service may require.

The regulation issued under 19 U.S.C. 1520 (d) can be found in 19 CFR, Part 181, Subpart D.

In a response to a request for Internal Advice, this office in HQ 227127, stated that Customs may reliquidate an entry to refund duties pursuant to 19 U.S.C. 1520 (d) only for claims which bear directly on the issue of preferential treatment for the goods in question. The response went on to say that 1520 (d) permits Customs to reliquidate an entry to correct a limited situation which otherwise could not be corrected -- to refund excess duties paid on qualifying goods “for which no claim for preferential tariff treatment was made at the time of importation.” This section allows Customs to reliquidate an entry where, for example, an importer fails to claim NAFTA preferential treatment due to a classification error. See HQ 957575, dated July 10, 1995; HQ 226567, dated June 14, 1996. Furthermore, the legislative history of the North American Free Trade Agreement Implementation Act, indicated that the cause of the excess duty payment specified in 1520 (d) must be the failure to confer preferential treatment to the goods. The House Ways & Means Committee Report, 103d Congress, 1st Session, Rept. 103-361, Part 1 (November 15, 1993), provides that “[s]ection 206 H.R. 3450 [the North American Free Trade Agreement Implementation Act] amends section 520 of the Tariff Act to authorize the Customs Service to reliquidate an entry to refund any excess duties paid and provide NAFTA treatment to the entry.” Therefore, a post-importation duty refund claim may be granted where the claim involves classification, valuation, or other issues that bear directly on the issue of whether the good would have qualified as an originating good.

Northern Telecom.’s claim for 20 of the 22 entries is that the goods should have been granted NAFTA preferential treatment. Not included are entries 228-xxxx671-1 and 228-xxxx094-6 which were not part of the 1520(d) issue, instead they raised a different classification issue that was resolved outside this protest. Entry 228-xxxx671-1 is only included in this protest for purposes of Issue # 3 in regards to valuation, discussed below. Northern Telecom. also attached 6 Blanket Certificates of Origin to its protest claim, for the years 1996 and 1997, covering all imports from Mexico. For each entry worksheet submitted by Protestant listing part numbers, each part number was found on the Certificates of Origin. Also, each Certificate of Origin was timely for each imported part number. Northern Telecom.’s claim for re-classification of their goods to receive preferential NAFTA duty reduction treatment is the situation that § 1520 (d) corrects. Therefore, in regard to the goods claimed in 20 of the 22 entries solely involving the issue of Mexican origin (not including entries 228-xxxx671-1 and 228-xxxx094-6), Northern Telecom.’s has met the requirement’s of 19 U.S.C. 1520 (d).

However, we note that entry number 228-xxxx076-3 lists part number PO844879 with an USA/Canadian origin. Additionally, blanket Certificate of Origin number 3 covers imports from Canada and the USA, and in some cases the country of origin is listed as both USA and Canada, as it was listed for the part number in this entry. The Port may require the Protestant to submit a new Certificate of Origin for this entry. A Certificate of Origin may not list the country of origin as both USA/Canada. If the country of origin is the USA, then the claim should be under chapter 9802, HTSUS, American Goods Returned. If the country of origin is Canada then the port may require the Protestant to submit a corrected Certificate of Origin, and supply the name of the Canadian producer. The Port should allow the Protestant to submit a corrected Certificate of Origin for this part number, if one is not submitted, then the protest should be denied for this part number found in entry number 228-xxxx076-3.

Issue # 3:

As to the issue of whether a failure to include an additional amount to show the correct entered value of imported merchandise on an entry is correctable by a reliquidation request under 19 U.S.C. 1520 (d), from the above discussion of the issues that § 1520(d) corrects, it is clear that a mistake in valuation is a correction that can be requested under this section. In regard to amending the value of a good at entry, 19 U.S.C. 1487 states that the importer of record or his agent may, under such regulations as the Secretary of the Treasury may prescribe, at the time entry is made, make in the entry such additions to or deductions from the cost or value given in the invoice as, in his opinion, may raise or lower the same to the value of such merchandise. In this case Northern Telecom. supplied Laredo with a letter, dated January 26, 1996, stating that they entered the shipment under Computed Value, using the Computed Value adder factor of the applicable Canadian or U.S. location for the sale transaction of the imported product. The letter further states that these Computed Values acknowledge the Maquila content as part of the total product costs which, in turn, are contained in the Computed Value compilation. Additionally, the U.S. Customs invoice for entry 228-xxxx671-1 is stamped, “Values have been increased to make fair market values...letter filed with U.S. Customs, Laredo, Texas, HTS 8504.1.10. HTS 8544___. HTS 8536___.” Northern Telecom. claims that the value was increased by 10% in order to raise the value to fair market value, that 10% is the adder percentage for this location, as it is the future sale location. Therefore, with their letter explaining the adder factor, Northern Telecom.’s claim that part number AO395373, was incorrectly valued at $3084.93, rather than the correct value of $3393.42 is justified. Furthermore, according to 19 U.S.C. 1487, it is acceptable for Northern Telecom. to add this 10% in order to raise the entry value to fair market value, and the petition should be granted as far as the adder to part number AO395373, from entry number 228-xxxx671-1 is concerned.

Issue # 4:

Regarding Northern Telecom.’s claim for reduced Merchandise Process Fee (MPF) for each entry, we find that their calculations are correct. On each of their entry worksheets, Northern Telecom. calculated a lower MPF than was assessed by Customs at liquidation. Northern Telecom used as a minimum, maximum, and percentage, $21.00, $400.00, and .19%, respectively. Customs mistakenly used the wrong minimum, maximum, and percentage, using the new higher limits set by the Uruguay Round Agreements. The percentage, and limits were changed statutorily by the Uruguay Round Agreements Act, Pub.L. 103-65 (1993), to a minimum of $25.00, a maximum of $485.00, and a percentage of .21%.

However, 19 U.S.C. 58c(b)(10)(B), states that, “for goods qualifying under the rules of origin set out in section 3332 of this title, a fee under subsection (a)(9) or (10) of this section-- (ii) may not be increased after December 31, 1993, and may not be charged after June 29, 1999, with respect to goods that qualify to be marked as goods of Mexico pursuant to such Annex 311, for such time as Mexico is a NAFTA country. Additionally, T.D. 92-89 (1992), set the limits at $21.00, $400.00, and .19%, which was in effect through December 31, 1993. Therefore, these are the limits that Customs must use for a NAFTA good of Mexican origin. Additionally, these are the limits that should be applied to Northern Telecom.’s imports, therefore, its appeal should be granted in regards to a refund in Merchandise Processing Fees.

HOLDINGS:

1. The liquidation as entered of an entry that was not the result of a decision of the Customs Service is not a protestable issue under 19 U.S.C. 1514.

2. An entry should be reliquidated where the importer on a CF 19 seeks preferential NAFTA duty reduction treatment, under 19 U.S.C. 1520 (d): where the claim is timely filed, where the protest involves classification of a good that bears directly on the origination of the good, and where timely Certificates of Origin are attached as evidence of origin, and the claim for NAFTA treatment.

Please note that in the Law and Analysis section, Issue # 2, the Port should allow the Protestant to submit a corrected Certificate of Origin for entry number 228-xxxx076-3 which lists part number PO844879. A Certificate of Origin may not list the country of origin as USA/Canada. If the corrected Certificate of Origin is not submitted by the Protestant to the Port, then the protest is denied for entry number 228-xxxx076-3.

3. A failure to include an additional amount to show the correct entered value of imported merchandise on an entry is correctable by a reliquidation request under 19 U.S.C. 1520 (d), where the Protestant provided evidence that an increase in value is justified to show the fair market value of the merchandise.

4. Customs assessed incorrect Merchandise Processing Fees to the entries, and a refund should be granted.

The reliquidation request should be ALLOWED. 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. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the 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,

John Durant, Director
Commercial Rulings Division