OT:RR:CTF:VS H300353 JMV
Port Director
U.S. Customs and Border Protection
Port of Laredo
P.O. Box 3130
Laredo, TX 78044-3130
RE: Application for Further Review of Protest number 2304-18-100059; NAFTA Preference Claim under 19 U.S.C. § 1520(d)
Dear Director:
This is in response to the Application for Further Review (“AFR”) of Protest number 2304-18-100059 received on May 10, 2018 and filed against U.S. Customs and Border Protection’s (“CBP”) decision to deny BASF Corporation’s (“Protestant”) claim for preferential treatment under the North American Free Trade Agreement (“NAFTA”) as untimely filed. The Protestant claims that it timely filed its claim for NAFTA preference and that the imported merchandise is entitled to preferential treatment under NAFTA.
FACTS:
The Protestant entered merchandise on January 5, 2017. From August to November of 2017, the Protestant filed post-importation NAFTA claims under 19 U.S.C. § 1520(d) (“520(d) claim”) through the CBP Document Image System (“DIS”) and received electronic confirmation. On January 12, 2018, the Protestant followed up with your office on duty refunds it claims it is owed. Your office responded by stating that the 520(d) claim needed to be submitted via the Automated Commercial Environment (“ACE”). Subsequently, your office denied the Protestant’s claim stating that it was untimely filed.
In denying the 520(d) claim, your office cited CBP’s Cargo Systems Messaging Service (“CSMS”) message number 16-000744, which states:
As a reminder, on August 27, 2016, CBP will deploy protest filing in ACE, at which time all electronic protests must be filed via the ACE Secure Data Portal (ACE Portal).
As part of this change, the Document Image System (DIS) will no longer be available to support protest submissions.
The Protestant notes that the CBP web page entitled “Post-Importation NAFTA Claims – Information Notice” makes no mention regarding how 520(d) claims must be filed. The Protestant also notes that the April 2016 DIS Implementation Guide, published by CBP, explicitly provided for 520(d) claims to be submitted via email to DIS. While CBP published an updated guide in February 2018 that deleted mention of the 520d claim, it did not do so until weeks after CBP denied the Protestant’s claim for NAFTA preference. Additionally, the updated guide does not explicitly state that CBP will not accept any further 520(d) claims via the DIS.
ISSUE:
Whether the importer’s claim for NAFTA preference under 19 U.S.C. § 1520(d) was properly denied.
LAW AND ANALYSIS:
As the importer did not claim NAFTA preference at time of entry, their claim is governed by 19 U.S.C. § 1520(d), concerning post-importation claims of NAFTA preference. Section 520(d), Tariff Act of 1930, as amended (19 U.S.C. § 1520(d)), provides as follows:
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 [NAFTA] rules of origin . . . 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.
(Emphasis added).
The CBP regulations implementing 19 U.S.C. § 1520(d) are found in 19 C.F.R. § 181.31-181.33. Section 181.32 sets forth the filing procedures for filing a proper NAFTA preference claim under 19 U.S.C. § 1520(d). It states, in relevant part, “A post-importation claim for a refund under § 181.31 of this part shall be filed with CBP, either at the port of entry or electronically” (emphasis added).
Furthermore, 19 C.F.R. § 181.33 enumerates grounds for denial of a 520(d) claim:
(d) Denial of claim -
(1) General. The Center director may deny a claim for a refund filed under this subpart if the claim was not filed timely, if the importer has not complied with the requirements of this subpart, if the Certificate of Origin submitted under § 181.32(b)(3) of this part cannot be accepted as valid (see § 181.22(c) of this part), or if, following initiation of an origin verification under § 181.72(a) of this part, the Center director determines either that the imported good did not qualify as an originating good at the time of importation or that a basis exists upon which preferential tariff treatment may be denied under § 181.72(d), § 181.74(c) or § 181.76(c) of this part.
(Emphasis added).
Here, all the claims that the Protestant submitted were filed electronically within the one year time period, as required by 19 U.S.C. § 1520(d) and 19 C.F.R. § 181.32. However, your office denied the 520(d) claims as untimely filed, citing the above mentioned CSMS message. This message states that all protests must be filed through ACE; however, as explicitly stated on “Post-Importation NAFTA Claims – Information Notice,” a claim under 1520(d) is not a protest. In fact, it states:
Customs field personnel are to reject any post-importation NAFTA claim filed pursuant to a protest under 19 U.S.C 1514 as raising a non-protestable matter. Field personnel are to issue this rejection by . . . stating that the protest is being rejected because it does not raise a protestable matter or by checking the “Rejected as non- protestable” box . . . .
As discussed in Headquarters Ruling Letter (“HQ”) 964923, dated March 30, 2001, both CBP and the trade community share a mutual responsibility of informed compliance. Under this concept, CBP communicates its requirements to the trade community. In return, the people and businesses subject to those requirements conduct their regulated activities in accordance with U.S. laws and regulations. A key component of informed compliance is the expectation that the importer will exercise reasonable care in his or her importing operations. However, an importer cannot exercise reasonable care and comply with CBP requirements if they are not effectively communicated.
Here, any change in the procedure to file a 520(d) claim was not effectively communicated to the Protestant. The CSMS message makes no mention of any claim, other than a protest, and as noted above, a 520(d) claim is not a protest. Additionally, nothing in the CBP regulations state that a 520(d) claim must be made through ACE. Therefore, the fact that the Protestant filed their claim through the DIS is not grounds for denial.
In this instance, the Protestant presented all of the data elements for making a 520(d) claim as outlined in 19 C.F.R. § 181.32(b). Therefore, absent the initiation of an origin verification, the claim should be granted. See 19 C.F.R. 181.33(d).
HOLDING:
The importer’s claim for NAFTA preference under 19 U.S.C. § 1520(d) was improperly denied. This protest should be granted.
In accordance with Sections IV and VI of the CBP 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, through its counsel, 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, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/, which can be found on the CBP website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division