LIQ-11-CO:R:C:E 954219
District Director
U.S. Customs Service
#1 La Puntilla Street
Room 203
San Juan, PR 00901
RE: Protest and Application for Further Review No. 4909-93-
100010; Deemed liquidation of entry; 19 U.S.C. 1504;
improper extension of liquidation
Dear Sir:
The above-referenced protest and application for further
review was forwarded to this office for further review. We have
considered the points raised and our decision follows.
FACTS:
An entry of athletic shoes bearing the "Converse" brand was
made on January 10, 1989 by protestant. Protestant provided a
sample shoe from the entry to Customs. A laboratory analysis of
the shoe was made on November 15, 1989.
There was a question of admissibility, however. The record
shows that the protestant in 1987 was investigated for importations
of shoes that involved possible violations of the Converse
trademark. Those shoes apparently were permitted to be exported
in order to avoid seizure. During the period from March 21, 1990
to August 9, 1991, San Juan Customs officers were informed of
criminal proceedings against protestant at another district that
also involved shoes imported in violation of the Jordache
trademark. In that case, the protestant pleaded guilty to
violations of 18 U.S.C. 2, 542 and 1956 which resulted in a
forfeiture of those shoes. That conviction was reported on an
investigative report dated August 9, 1991.
Although the date is uncertain, the responsible Customs
officer was informed by the Converse trademark owner that the
trademark owner had never authorized the protestant to import
Converse brand shoes. Consequently, these shoes should have been
inadmissible. Nevertheless, by liquidating the entry on November
6, 1992, Customs decided the question of admissibility in the
protestant's favor.
Customs records show that extension notices were issued three
times, the last extension notice being issued on October 12, 1991.
The entry was liquidated on November 6, 1992. The four-year period
set in 19 U.S.C. 1504(d) would expire on January 10, 1993.
The protestant claims that it never received any extension
notice. It does admit that it received the Notice of Action (CF
29) on the rate increase on October 20, 1992.
ISSUE:
Did the subject entry deem liquidate at the rate of duty
asserted at the time of entry?
LAW AND ANALYSIS:
The entry was liquidated on November 6, 1992. The protest
was filed on January 25, 1992. The protest is timely and a protest
challenging the legality of a liquidation, as here, is authorized
under 19 U.S.C. 1514(a)(5).
The protestant's primary claim is that the entry was deemed
liquidated on January 10, 1990, by virtue of 19 U.S.C. 1504(a).
It alleges that liquidation was never extended. The protestant
alleges that it received no extension notice. With respect to that
allegation, the protestant provided no evidence. In the absence
of any evidence there is nothing to rebut the presumption of
correctness by the involved Customs officers. See Enron Oil
Trading and Transportation Co. v. U.S., 988 F.2d 130 (CAFC App.
92-1089, 1993); International Cargo & Surety Insurance Co. v. U.S.,
15 CIT 541 (1991); Star Sales & Distributing Corp. v. U.S., 10 CIT
709, 663 F. Supp. 1127 (1986); Bar Bea Truck Leasing Co. v. U.S.,
5 CIT 124 (1983) and HQ 224397.
Protestant claims that it "heard nothing concerning this entry
from Customs until October 20, 1992 when a CF 29 Notice of Action
was issued announcing a rate increase." There is a presumption
that government officials perform their duties in the manner
required by law. Star Sales, 10 CIT at 710, 663 F. Supp. at 1129
(1986). And, proof of mailing raises a presumption of delivery.
F.W. Myers & Co. v. United States, 6 CIT 215, 216, 574 F. Supp.
1064, 1065 (1983). Once those presumptions are established, the
importer has the burden of rebutting those presumptions. In the
instant case, Customs Automated Commercial System ("ACS") record
indicates that there were three extension notices issued with the
final extension notice being dated October 12, 1991. Regarding
the subject protest, the protestant has failed to present evidence
negating the presumption of receipt of the notice. Therefore, the
protestant's claim that entry was deemed liquidated by virtue of
a failure to extend properly must fail.
The protestant, in its application for further review, alleges
that there were no grounds or reason to extend liquidation of the
entry. Under 19 U.S.C. 1504(b), Customs may extend the one-year
liquidation period, by providing notice to the importer, on any of
the following three grounds: (1) if "information needed for the
proper appraisement or classification of the merchandise is not
available to the appropriate customs officer"; (2) if "liquidation
is suspended as required by statute or court order"; or (3) if "the
importer of record requests such extension and shows goods cause
therefor." Section 159.12(e), Customs Regulations, states that
extensions may be granted by the district director for a total not
to exceed 3 years. Therefore, liquidation of an entry must take
place within 4 years from the time of entry unless liquidation
continues to be suspended by court order or if required by statute.
In order to determine whether the subject entry deemed
liquidated we must look at two questions: (1) did Customs have
grounds on which to extend liquidation; and (2) were the subsequent
one-year extensions invalid?
First, did Customs have grounds on which to extend
liquidation? It appears that Customs had justification for
delaying liquidation of the subject entry. The record indicates
that at the time of entry a sample shoe was forwarded to the Office
of Laboratory Services to determine the components of the shoe.
In the meantime, the protestant became the subject of an
investigation for importing counterfeit athletic shoes.
Previously, the protestant had been investigated for shoes imported
in violation of the trademark laws with the same brand as involved
here. Therefore, Customs had grounds to extend liquidation of the
subject entry. There were questions concerning the admissibility,
classification and appraisement of the subject merchandise. The
courts have concluded that Customs decision to extend liquidation
will be upheld if it is proper under the statute, and is not
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law. See International Cargo & Surety Ins. Co. v.
United States, 15 CIT 541, 779 F. Supp. 174 (1991); Detroit
Zoological Society, supra, 10 CIT at 137-138. We, accordingly,
conclude that the extensions issued under 19 U.S.C. 1504(b)(1)
were a proper exercise of the district director's discretion. See
Detroit Zoological Society, supra, 10 CIT at 138; 19 CFR 159.12(e).
Having concluded that there were valid grounds to extend the
entry and that protestant has failed to substantiate its claim that
it did not receive any notice of extensions, there remains the
question of whether protestant has demonstrated that the subsequent
one-year extensions were invalid? The Court of Appeals for the
Federal Circuit recently held that: "Customs may, for statutory
purposes and with the requisite notice, employ up to four years to
effect liquidation so long as the extensions it grants are not
abusive of its discretionary authority." St. Paul Fire & Marine
Ins. Co. v. U.S., 6 F.3d 763, 768 (Fed. Cir. 1993). In St. Paul,
the court upheld Customs periodic extensions of liquidation, made,
in accordance with 19 U.S.C. 1504(b)(1) and Customs regulations.
In the instant case, Customs record indicates that three extension
notices were properly issued, with the final extension dated
October 12, 1991. Liquidation occurred on November 6, 1992 (within
the four year period).
The St. Paul case settled the issue of whether Customs broad
discretion to extend up to the four year limit to obtain needed
information can be abused. Specifically, the court held: "Such
an abuse of discretionary authority may arise only when an
extension is granted even following elimination of all possible
grounds for such an extension. There is, in sum, a narrow limit
on Customs' discretion to extend the period of liquidation." Id.
(emph. added). This case further held: "[W]e must accept the fact
that Congress has directed the [court] to presume that Customs
decisions are correct and that it is St. Paul's [the plaintiff's]
burden to prove otherwise." Id., citing, 28 U.S.C. 2639(a)(1).
The St. Paul case also held that the quantum of proof required is
the "preponderance of the evidence." Id. Thus, not only does
Customs possess broad discretion to extend up to the full four year
period, but also anyone challenging a particular extension decision
will be required to prove, by a preponderance of the evidence, that
all possible grounds for such an extension were eliminated, but
Customs extended anyway. Protestant does not make such a showing.
In 1987, the protestant was investigated in connection with
shoes imported in violation of the trademark laws. The San Juan
Customs officials were aware of an investigation of the protestant
involving trademark violations of other similar shoes at another
district. The San Juan Customs officials were informed that
investigation resulted in a criminal conviction of the protestant.
The San Juan Customs officials were informed by the trademark owner
that it never authorized the protestant to import such shoes.
However, that latter information may have been received after the
entry was liquidated. In any event, by liquidating that
importation the question of admissibility, perhaps erroneously, was
decided in the protestant's favor.
While there appears to have been sufficient information
acquired by the import specialist with regard to the proper
classification with the laboratory report of November 15, 1989,
admissibility remained open. The report of the criminal conviction
by a guilty plea, of the protestant on a different shipment would
not decide the issue of admissibility on the shoes in the protested
entry. While the suspected violation was the same, the shoes here
involved a different trademark than the shoes in the criminal
proceedings. Moreover, the trademark here was the same as the
trademark violation for which the importer was investigated in
1987. It was proper for the import specialist to delay liquidation
to get all of the evidence to make a determination on
admissibility. Given those circumstances, there is no evidence to
show that the issuance of the second and third extension notices
was without any basis. Until liquidation, the question of
admissibility remained an open issue.
The protestant does not prove that all grounds for an
extension decision at issue were eliminated. The protestant
provides no evidence, but instead only states the following bare
argument: "Customs has had a sample of the merchandise under
protest since 1989 and may not issue a rate increase nearly four
years after the date of entry." The protestant's Application for
Further Review reiterates the substance of this argument, but again
produces no evidence.
This argument is unsubstantiated and, moreover, largely
irrelevant. The need for a merchandise sample was not the only
ground underlying the appropriate Customs officer's decisions to
extend. The appropriate Customs officer's decisions to extend are
also presumed regular and correct. St. Paul, 6 F.3d at 768-769.
The protestant has left these facts and presumptions totally
unrebutted and has not carried its civil burden of proof. On the
contrary, even Customs own review of its records indicates that the
subsequent one-year extensions were entirely appropriate given the
protestant's history of importing shoes that may have been
inadmissible.
HOLDING:
The subject entry did not deem liquidate. Therefore, you
should DENY this protest in full for the reasons stated above.
In accordance with Section 3A(11)(b) of Customs Directive 099
3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by your office to the
protestant no later than 60 days from the date of this letter.
Any reliquidation of the entry in accordance with the decision must
be accomplished prior to the mailing of the decision. Sixty days
from the date of the decision the Office of Regulations and Rulings
will take steps to make the decision available to Customs personnel
via the Customs Rulings Module in ACS and the public via the
Diskette Subscription Service, Lexis, Freedom of Information Act
and other public access channels.
Sincerely,
John Durant, Director