PRO-5-09 CO:R:C:E 223835 C
District Director of Customs
U.S. Customs Service
40 South Gay Street
Baltimore, MD 21202
RE: Protest and application for further review no. 1303-91-
100183; reliquidation with an increase after protest denial; 19
U.S.C. 1501; 19 U.S.C. 1514
Dear Sir:
This responds to the referenced protest. We have reviewed
all relevant materials and our response follows.
FACTS:
On October 19, 1989, the Court of International Trade (CIT)
decided the case of Eastalco Aluminum Co. v. United States, 13
CIT 864, 726 F. Supp. 1342 (1989). The court held that certain
carbon blocks (used to line an aluminum reduction cell in which
aluminum is produced) were properly classifiable under item
517.91 of the Tariff Schedules of the United States (TSUS),
contrary to the classification urged by Eastalco Aluminum Co.
(Eastalco) or the classification set by Customs at liquidation.
Subsequently, on January 2, 1991, various protests that had been
filed prior to the court's decision protesting Customs earlier
classification of the merchandise under item 517.61, TSUS, were
denied. These denials were based on the above court opinion. On
February 15, February 22, and March 1, 1991, thirty entries
covered by these denied protests were reliquidated at the duty
rate applicable to item 517.91, TSUS, and Eastalco, PROTESTANT in
the instant protest, was charged for increased duties relative
thereto. PROTESTANT now protests Customs reliquidation of these
thirty entries at rates higher than those set at the original
liquidations. You contend that, with respect to seven of these
thirty entries, the reliquidations with an increase were proper
for the reason that they were covered by the Eastalco case and
were reliquidated with an increase in accordance with that
decision. PROTESTANT asserts that they were not covered by the
Eastalco case and should not have been reliquidated with an
increase.
ISSUE:
On the facts of this case, were the reliquidations of the
thirty entries in question improper?
LAW AND ANALYSIS:
Initially, we note that this protest was timely filed on
April 26, 1991 under 19 U.S.C. 1514(a)(5). The Customs decisions
protested, the reliquidations of thirty entries, occurred on
February 15, February 22, and March 1, 1991. This protest was
filed within 90 days of those decisions in accordance with 19
U.S.C. 1514(c)(2)(A).
Under 19 U.S.C. 1514, various Customs decisions are deemed
final and binding on both importers and the Government unless
they are formally objected to by the filing of a protest. Among
the decisions that can be protested under section 1514 are
decisions that are made in the liquidation of entries:
classification, duty rate, valuation, etc. If the protest is
filed within 90 days of the liquidation, and Customs finds that
the objection is valid, the original liquidation can be
reliquidated. A reliquidation performed pursuant to a protest
decision in favor of a protesting party will often result in a
refund of duties paid to that party. Unless the reliquidation
pursuant to a protest decision that is unfavorable to a
protesting party occurs within 90 days of the original
liquidation, Customs cannot reliquidate with an increase in
duties. This is so because Customs authority to reliquidate an
entry with an increase in duties is limited (with the exception
of 19 U.S.C. 1521 pertaining to fraud) to action taken under 19
U.S.C. 1501. Under this statute, Customs may voluntarily
reliquidate an entry, with an increase or reduction in duties,
for any reason within 90 days of the original liquidation,
whether or not a protest has been filed. With the passage of
that 90 day period, Customs authority to reliquidate with an
increase terminates. Thus, Customs, in a protest action that
extends beyond that 90 day period, can only deny a protest; it
cannot determine that a higher duty rate should have been applied
and then reliquidate accordingly, issuing a bill for increased
duties.
The protests covering the thirty entries in question in the
instant protest were denied, and Customs reliquidated the entries
with an increase in duties. These reliquidations were performed
after expiration of the 90 day period within which Customs is
authorized to reliquidate with an increase. This is contrary to
the general scheme explained above. Yet, you have contended that
seven of the thirty entries were properly reliquidated with an
increase, not because they were reliquidated within the 90 day
period, as above, but because they were covered by the Eastalco
case and the court's decision permits reliquidation with an
increase in that instance. In other words, an exception to the
general scheme exists: When protested entries are "covered" by a
case being heard by the CIT, and the CIT's decision is against
the protestant and holds that a classification carrying a higher
duty rate applies to the contested entries, then, in accordance
with the court's ruling, Customs may reliquidate such "covered"
entries with an increase.
First, it is true that such an exception exists. Second,
this exception does not apply to the thirty entries covered by
the instant protest.
When entries covered by a protest are, by explicit
inclusion, made part of the summons filed with the court, they
may be reliquidated with an increase in accordance with the final
judgment, depending on certain circumstances including whether or
not there is a final judgment and what that judgment is. We have
been advised by the Office of the Assistant Chief Counsel for
International Trade Litigation, the office that handled the
Eastalco litigation for the Customs Service, that two entries
have been reliquidated with an increase as a direct consequence
of the court's Eastalco decision and that various others are
presently subject to an appeal of that decision. These latter
entries may yet be reliquidated with an increase, depending on
the outcome of that appeal. However, we are advised that the
thirty entries subject of the instant protest were not placed in
the appropriate status to be either reliquidated in accordance
with the Eastalco decision or to be subject of the pending
appeal. Therefore, the exception to the general scheme discussed
above is inapplicable to these thirty entries and they should not
have been reliquidated with an increase. In accordance with that
general scheme, the protests should have been denied without
reliquidation of the entries.
You cited a January 18, 1984, letter from the Assistant
Chief Counsel for International Trade Litigation as evidence that
the seven entries subject of protests 1303-3-000390 and 1303-3-
000420 had been made part of the Eastalco litigation. We have
been advised that the action referenced in that letter -
administrative suspension of those protests - did not have the
effect of placing those entries in the appropriate status to
permit their being reliquidated with an increase in accordance
with the Eastalco decision or made subject of the pending appeal.
Based on the foregoing, we must conclude that the protests
covering the thirty entries in question should simply have been
denied; the entries should not have been reliquidated with an
increase.
HOLDING:
The thirty entries subject of this protest should not have
been reliquidated with an increase since they had not been placed
in the appropriate status to be made a part of the litigation and
thus subject to the authority of the court to order reliquidation
at the higher duty rate.
You are hereby instructed to grant this protest and
reliquidate the entries accordingly. Any appropriate refunds of
duties should be made.
Sincerely,
John Durant, Director
Commercial Rulings Division