LIQ-10-CO:R:C:E 223694 DHS
District Director
U.S. Customs Service
Patrick V. McNamara Building
Detroit, Michigan 48266
RE: Application for further review of Protest No. 3801-1-102409;
Rescission of an allowed protest is permitted prior to
reliquidation; Automotive Products Trade Act; Subheading
8708.29.00.50, HTSUS; Subheading 5608.19.20, HTSUS;
Subheading 5608.90.3000, HTSUS; Presidential Proclamation
No. 6123
Dear Sir:
The above-referenced protest was forwarded to this office
for further review. We have considered the points raised and our
decision follows.
FACTS:
Two entries of automobile carg net assemblies were intered
on July 19, 1989 and August 7, 1989. Liquidation occurred on
November 13, 1989, classifying the merchandise under subheading
5608.90.3000, of the Harmonized Tariff Schedules of the United
States (HTSUS). On February 9, 1990, the importer timely
protested this liquidation contending that the merchandise was
properly classifiable under subheading 8708.29.00.50, HTSUS, as
parts of automobiles, or alternatively, under subheading
5608.19.20, HTSUS, subject to a reduced rate of duty under the
Canadian Free Trade Agreement (CFTA).
On March 15, 1990, Detroit Customs approved the protest
which included two entries of identical nets. One of the entries
was reliquidated under subheading 8708.29.00.50, HTSUS which
resulted in a complete refund of duties for that entry. The
second entry, however, was not reliquidated. In May, 1991, the
protestant notified your office that the merchandise had never
been reliquidated. After review, it was concluded that the
reliquidated entry was erroneously reliquidated as duty-free.
The second entry was, therefore, reliquidated on May 29, 1991,
under subheading 5608.19.20, HTSUS, subject to the reduced rate
of duty under the CFTA. This rate of duty was based upon NY
Ruling Letter 843948, dated August 8, 1989. Accordingly, a
partial refund of duties was reimbursed to the importer.
The protestant, thereafter, filed a protest, on August 29,
1991, contesting the amount of the refund upon reliquidation.
The protestant submits that the second entry of nets are entitled
to duty-free treatment in light of the duty-free treatment
accorded the first entry (under subheading 8708.29.00.50, HTSUS).
The protestant, therefore, requests a refund of all duties plus
interest under 19 U.S.C. 1520(d).
Your office contends that the protestant is not entitled to
duty-free treatment since no provision for duty-free treatment
was at issue when the protest was approved on March 15, 1990.
Furthermore, even though a retroactive application of duty-free
treatment was applicable to this class and kind of merchandise
imported on or after January 1, 1989, under Proclamation No.
6123, dated April 26, 1991, the protestant did not timely file
under 19 U.S.C. 2013(a)&(b) for its application.
ISSUES:
(1) Whether Customs is permitted to rescind or amend its
decision allowing a protest prior to reliquidation?
(2) Whether NYRL 843948, dated August 8, 1989, should have been
applied to reclassify the second entry?
(3) Whether the protestant is entitled to retroactive duty-free
treatment under the Automobile Products Trade Agreement?
LAW AND ANALYSIS:
(1) Whether Customs is permitted to rescind or amend its
decision allowing a protest prior to reliquidation?
HRL 221723, dated March 26, 1991, presents a factual
situation similar to that under consideration. In HRL 221723, a
headquarter's ruling letter was issued classifying metal frames
under item 808.00, TSUS. The frames were subsequently liquidated
classifying the merchandise in accordance with that ruling
letter. Customs reliquidated the frames a year later with an
increase in duty under 640.30, TSUS. A protest was timely filed
against this decision and affirmed. The protestant received
notice of the decision but the entry was never reliquidated to
classify the frames under item 808.00, TSUS, in accordance with
the decision. Customs rescinded the approval the following year
based upon the belief that the protest had been mistakenly
approved by the import specialist.
The discussion in this case distinguished San Francisco
Newspaper Printing Co. v. United States, 9 CIT 517, 620 F. Supp.
738 (1985), from its facts. In San Francisco, the Court
concluded that Customs cannot rescind a decision denying a
protest because the 180-day time period to file a complaint in
the Court of International Trade would be altered. Allowing a
protest, on the other hand, would not effect any procedural time
periods prescribed by statute.
To further clarify the procedural affect of rescinding a
decision of the district prior to reliquidation, HRL 304019,
dated February 15, 1977, was introduced into the analysis. We
stated in that ruling that Customs cannot alter a decision
granting a section 520(c) claim once the claimant has been
notified of the decision and more than 90-days has passed since
the original liquidation. Up until the 90-day period, the
district director may decide to change his decision and
reliquidate the entry accordingly under 19 U.S.C. 1501 and 19 CFR
173.3. The claimant would still have the right to file a protest
under 19 U.S.C. 1514 and 19 CFR 174 within 90 days from the date
of the voluntary reliquidation under 19 U.S.C. 1501.
We, therefore, concluded that "a decision to allow a protest
issued in error, can be rescinded if the allowance was rescinded
before reliquidation." The rationale for this conclusion was
that the importer would not be prejudiced by the rescission of
the allowance as he would be by the rescission of the denial
since the 180-day denial period would begin to run from the
denial.
(2) Whether NYRL 843948 should have been applied to reclassify
the nets?
Under the facts provided, the import specialist who granted
the protest did not know NYRL 843948, dated August 8, 1989,
classifying the nets had been issued. Therefore, upon the
request to reliquidate the second entry, it was appropriate for
the concerned import specialist to apply the New York ruling
letter. "There is no legal or equitable reason which would
compel Customs to perpetuate an error to the further detriment of
the revenue." C.S.D. 82-44, October 23, 1981. The
classification under subheading 5608.19.20, HTSUS, was,
therefore, correct.
(3) Whether the protestant is entitled to retroactive duty-free
treatment under the Automobile Products Trade Agreement?
Presidential Proclamation No. 6123, dated April 1, 1989,
provides retroactive duty-free treatment to this class and kind
of merchandise (nets subject to the 5608.19.20, HTSUS) imported
on or after January 1, 1989.
The power to proclaim modifications to the Tariff Schedules
of the United States to provide for duty-free treatment of any
Canadian article which is original motor-vehicle equipment can be
found in 19 U.S.C. 2011(b).
Section 2013 sets forth the effective date of any
proclamation issued under 19 U.S.C. 2011. This section provides:
(a) Subject to subsection (b) of this section, the
President is authorized, notwithstanding section 1514
of this title or any other provision of law, to give
retroactive effect to any proclamation issued pursuant
to section 2011 of this title ....
(b) In the case of liquidated customs entries, the
retroactive effect pursuant to subsection (a) of this
section of any proclamation shall apply only upon
request therefor filed with the customs officer
concerned on or before the 90th day after the date of
such proclamation and subject to such other conditions
as the President may specify. (emphasis added)
The language utilized in the protest suggests that the
protestant's claim is based upon the duty-free treatment accorded
under subheading 8707.29.00.50, HTSUS. The submission does not
set forth distinctly and specifically a claim for duty-free
treatment based upon the proclamation. See, 19 U.S.C. 1514(c).
In the event, however, that such a claim is being requested, we
are in agreement with your office, that since the protestant did
not file a request for the retroactive application of the duty-
free treatment to the nets within the 90 day statutory period the
protestant may not benefit from the proclamation. It was
necessary that the protestant file a request for the retroactive
application of the duty-free treatment to the nets under
subheading 5608.19.20, HTSUS, with Customs by July 26, 1991, in
accordance with 19 U.S.C. 2013, even though he had appropriately
filed a protest under 19 U.S.C. 1514.
HOLDING:
Based upon the foregoing, the decision to allow the protest
was properly rescinded prior to the reliquidation. The
protestant is not entitled to duty-free treatment under the
Presidential Proclamation since he did not timely file for such
treatment in accordance 19 U.S.C. 2011. The reliquidation under
subheading 5608.19.20, HTSUS, as stipulated in NYRL 843948, is
therefore, proper. The protest should be DENIED.
A copy of this decision should be attached to the CF 19 and
provided to the protestant as part of the Notice of Action on the
protest.
Sincerely,
John Durant, Commercial
Rulings Division