VAL-2 OT:RR:CTF:VS H009250 CMR
Port Director
U.S. Customs and Border Protection
903 South America Way
Miami, FL 33132
RE: Application for Further Review and Protest 5201-05-100391; Reconciliation; Sufficiency of Documentation
Dear Ms. Hogan:
This is in response to protest 5201-05-100391, with application for further review, filed by Meeks & Sheppard, on behalf of their client, Corning Cable Systems, against your port’s decision to liquidate a Reconciliation Entry without refund of any duties or fees as sought by the importer by the submission of the Reconciliation Entry.
FACTS:
The protest at issue is against the liquidation of a Reconciliation Entry without change. The protestant asserts that between May 17, 1999 through December 22, 1999, protestant’s broker flagged entry summaries for reconciliation for purposes of providing Customs and Border Protection (CBP) adjusted value information that was not available at the time the underlying entry summaries were filed. The protest form shows the Reconciliation Entry was filed on February 16, 2001. However, the Automated Commercial System (ACS) shows the Reconciliation Entry date as April 9, 2001. It also indicates that the earliest entry summary was filed on May 28, 1999. 19 U.S.C. 1484(b) provided at the time that “[t]he reconciliation shall be filed by the importer of record at such time and in such manner as the Secretary prescribes but no
later than 15 months after the date the importer declares his intent to file the reconciliation.” Protestant acknowledges that the Reconciliation Entry was not timely filed. This is true even if one were to accept February 16, 2001 as the filing date. Fifteen months from the date of the earliest entry summary flagged for and grouped on the Reconciliation Entry at issue is August 28, 2000. Assuming the Reconciliation Entry was filed on February 16, 2001, it was nearly six months late.
In a letter dated February 13, 2001 to CBP’s Fines, Penalties and Forfeitures Office at the Port, the Protestant submitted the Reconciliation Entry along with copies of data in hard copy form and two diskettes. From the record in the file, it is apparent that the port allowed the protestant an extension of time in which to file the Reconciliation Entry. Again, by letter dated September 11, 2003, Protestant responded to CBP’s Fines, Penalties and Forfeitures Office at the Port providing a copy of its February 13, 2001 letter and “Entry by Entry Reconciliation Association File.” In addition, Protestant included “an electronic copy of the details supporting the subject reconciliation entry.”
The Reconciliation Entry was liquidated on July 25, 2005, as “no change.” Protest was timely filed on October 21, 2005 against the liquidation of the Reconciliation Entry as “no change” and seeking refunds of duties paid based on downward valuation adjustments. Protestant argues that a complete Reconciliation Entry was filed. The port states that the original Reconciliation Entry was submitted as “no change” and the reconstructed entry was incomplete including only a Header and Association file and lacking a summarized line item data spreadsheet. As the line item data spreadsheet necessary to process the Reconciliation Entry was not received by the port, the port recommends denial of the protest. The application for further review was approved by the port and the matter forwarded to this office for consideration.
The reconciliation as filed consists of two documents, one of which, labeled “Entry by Entry Reconciliation Association File”, was derived from the diskette filed as part of the reconciliation. That document consists of columns listing the following headings: port of entry, entry number, date of entry, original MPF, original HMF, original duty, total original duty+MPF+HMF, amended duties due, amended MPF due, amended HMF due, total amended duties and fees, difference in duties and fees paid at entry and amended, reconciliation date, days, interest rate, interest due/refunded total due or refund. While the document is more than simply the entry association file prescribed under the ACS Reconciliation Prototype and could be considered as the line item data spreadsheet that also is required under the prototype, it is evident that certain critical information that is required on the spreadsheet is missing. That is, there is no column for the following information: line, reason, and HTS number.
Among the numerous entries at issue, entry XXX-XXXXXXX-X was flagged under the protested reconciliation entry. Based on the Entry by Entry Reconciliation Association File document, the importer claimed a refund of $XX.XX, consisting of $XX.XX in an overpayment of duty, with an increase of $X.XX in MPF due and interest owed of $ X.XX. There are discrepancies in the amount of duty and MPF paid as listed in the above noted Entry Association File for entry XXX-XXXXXXX-X and the corresponding ACS record for that entry. The ACS record shows duty paid to be $XXX.XX vice $XXX.XX and MPF paid to be $XX.XX vice $XX.XX. The ACS record shows that the entry covered four lines and the merchandise covered by line four was assessed $XXX.XX in duty.
ISSUE:
Whether Customs and Border Protection (CBP) has received the requisite information to favorably process the Reconciliation Entry at issue.
LAW AND ANALYSIS:
Title VI of the North American Free Trade Agreement Implementation Act (the Act), Pub. L. 103-182, 107 Stat. 2057 (December 8, 1993), contains the provisions pertaining to the Customs Modernization (107 Stat. 2170). Subtitle B of Title VI established the National Customs Automation Program (NCAP) - an automated and electronic system for the processing of commercial importations. Title 19 U.S.C. §§ 1411 through 1414 describe the implementation of the components of the National Customs Automation Program (NCAP). Section 637 of the North American Free Trade Agreement Implementation Act amended Section 484 of the Tariff Act of 1930 to establish a new subsection (b), entitled "Reconciliation", a planned component of the NCAP. Section 101.9(b) of the CBP Regulations (19 CFR 101.9(b)) provides for the testing of NCAP components. The test procedures serve as the regulations to implement the statutes by virtue of 19 U.S.C. §§ 1411-1414 and 19 C.F.R. 101.9. The ACS Reconciliation Prototype was established pursuant to these regulations. The two-year prototype testing period commenced on October 1, 1998, and was extended indefinitely on October 1, 2000 (“Extension of the ACS Reconciliation Prototype,” 65 FR 55326 (September 13, 2000). See Headquarters Ruling Letter (HQ) 229670, dated February 10, 2003, for a discussion of the Reconciliation Program.
A Reconciliation Entry is comprised of three components: the header, the association file and the summarized line item data spreadsheet (“Modification of National Customs Automation Program Test Regarding Reconciliation,” 64 FR 73121 (December 29, 1999)). In order for a Reconciliation Entry to be considered filed, all three components must be received by the CBP processing port assigned to the importer. Accordingly, the actual filing date for each Reconciliation Entry is the date when all of these components have been properly presented to
CBP (“Modification of National Customs Automation Program Test Regarding Reconciliation,” 64 FR 73121). In cases where a Reconciliation Entry is filed with no adjustments to value and other elements of the underlying transactions, the spreadsheet need not be provided (“Modification of National Custom Automation Program Test Regarding Reconciliation,” 63 FR 44303 (August 18, 1998)). When the reconciliation is filed with the intended corrections, CBP will review and liquidate accordingly. The liquidation of the reconciliation will be posted to the Bulletin Notice of Liquidation, and may be protested pursuant to section 1514 but the protest may only pertain to the issue(s) flagged for reconciliation (i.e., the protest may not re-visit issues previously liquidated on the underlying entry summary).
In this case, the information filed with the port appears to consist of only the header and association file. The Reconciliation Entry is missing the summarized line item data spreadsheet. However, the association file in this case consists of the information required in the association file, i.e., the entry numbers for the involved entries and the port code for each entry, and some of the information which is required in the summarized line item data spreadsheet, though not all of the required information. The information required in the summarized line item data spreadsheet is set forth in CBP’s Publication, “Automated Commercial System (ACS) Reconciliation Prototype, A Guide to Compliance, Version 4.0,” dated September 2004, and it was also published in the Federal Register in a CBP notice, “Revised National Customs Automation Program Test Regarding Reconciliation,” 63 FR 6257, February 6, 1998. As the protest at issue involves entries from 1999, we refer to the 1998 Federal Register notice wherein it is stated:
Each reconciliation line item will be consolidated for all of the underlying entries listed in the association file. Each combination of HTSUS, country of origin, Special Program Indicator (SPI) and calendar year of release will require a separate line. The line item data shall be presented in the format shown in the sample spreadsheet below:
See “Revised National Customs Automation Program Test Regarding Reconciliation,” 63 FR 6257, at 6262 (February 6, 1998). See also “Modification of National Customs Automation Program Test Regarding Reconciliation,” 63 FR 44303 at 44305 noting errors in the February 6, 1998 notice with regard to the title of the spreadsheet, i.e., it should read “Reconciliation Summarized Line Data Spreadsheet”, and typographical errors in the calculations in the spreadsheet.
According to the CBP Form 6225A, “Customs Protest and Summons Information Report,” the value issue subject of the Reconciliation Entry involved merchandise for which classification in subheading 9802.00.8040 of the Harmonized Tariff Schedule of the United States (HTSUS) was claimed. The Federal Register notice of February 6, 1998, previously referenced stated that with regard to heading 9802, a Reconciliation “must also provide the port(s) covered (port(s) at the first two digits), and a link between the original data submitted and the reconciled data.” The notice further stated, “Census needs to be able to capture the shift in value, in order to know how to adjust the statistics for both the HTSUS Chapter 1-97 provision and for the HTSUS heading 9802 provision. An example of a 9802 change is also provided in the spreadsheet above.”
The defects in the spreadsheet with respect to this protest are best illustrated by reference to entry XXX-XXXXXXX-X. First, the flagged entry consisted of four lines. Despite the discrepancies in duty and MPF amounts between the ACS record and Entry Association File, it appears that the importer intended to reconcile line four but, contrary to the Prototype requirements, failed to identify that line. Second, the importer failed to identify the reason for the asserted decrease in duty and increase in MPF. Consequently, the refusal to liquidate the reconciliation entry with a decrease in duty was appropriate for lack of evidence.
We acknowledge that information submitted in connection with this protest was unfortunately misplaced. However, the two diskettes submitted with the February 13, 2001 letter to CBP were located and contained the Header and Association File. They did not contain a summarized line item spreadsheet as described in the February 6, 1998 and required for an entry-by-entry reconciliation. The diskette submitted with the September 11, 2003 letter to CBP was not found and this office requested from counsel for the protestant copies of the information contained on that diskette and the two which were subsequently located by the port. We have not received any additional information from the protestant. Although the submitted Association file contains much of the information required in the summarized line item data spreadsheet, such as the reconciled values for the underlying entries, without all of the information required in the summarized line item spreadsheet, i.e., information regarding the associated Harmonized Tariff Schedule of the United States subheading numbers, reasons for reconciliation, and country of origin of the goods, the Reconciliation Entry is incomplete. The port is unable to either review or verify the reconciled values since the summarized line item spreadsheet was not submitted.
HOLDING:
As the Reconciliation Entry is incomplete, i.e. it is missing the summarized line item spreadsheet which is a requirement, and this office has not been provided with said spreadsheet, the protest is denied.
In accordance with the Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, 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 mailing of the decision. Sixty days from the date of the decision Regulations and Rulings of the Office of International Trade 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