OT:RR:CTF:EPDR H305747 ND
Center Director
Base Metals
Center of Excellence and Expertise
U.S. Customs and Border Protection
610 S. Canal St.
Chicago, IL 60607
Attn: Thomas C. Devose, Import Specialist
Re: Application for Further Review of Protest Number 460119102875; Failure to Give Notice of Extension of Liquidation to Surety; 19 U.S.C. § 1504; 19 C.F.R. § 159.12
Dear Center Director:
The purpose of this decision is to address the application for further review (“AFR”) of protest number 460119102875, filed by Pennsylvania National Mutual Casualty Insurance Company (“Penn National”) on March 28, 2019, regarding the demand on surety for payment of delinquent amount due. This protest is designated the lead protest and addresses the identical facts, issues, and arguments presented in protest numbers 170419100533 and 270419102847.
FACTS:
Between September 5, 2017, and September 28, 2017, Dynamic Metals imported three entries of steel wire hangers from Sri Lanka. At the time of entry, Dynamic Metals did not deposit antidumping duties (“ADD”). The entry summaries (U.S. Customs and Border Protection (“CBP”) Form 7501) reflect that each of the three entries was filed as type 01, meaning a formal consumption entry not subject to ADD. The entry summaries also list the manufacturer of the wire hangers as I-Lanka Cf K Metal PVT LTD, a Sri Lankan manufacturer, and the country of origin as Sri Lanka. The entries were secured by a continuous bond issued by surety Penn National. According to the Automated Commercial Environment (“ACE”), which is CBP’s system of record and where the entries were filed, CBP converted each of the entries to a type 03, meaning a formal consumption entry subject to ADD, as a consequence of effectuating a change in the country of origin for the steel wire hangers. CBP concluded the hangers were from the People’s Republic of China (“PRC”) instead of Sri Lanka, and therefore subject to the Steel Wire Garment Hangers from the PRC ADD Order, case number A-570-918. See Notice of Antidumping Duty Order: Steel Wire Garment Hangers from the People’s Republic of China, 73 Fed. Reg. 58,111 (Oct. 6, 2008).
According to ACE, liquidation of the entries was extended on December 20, 2017. ACE further indicates that notices of extensions of liquidation were issued to the importer and the surety for all relevant entries on December 20, 2017, through electronic publication on CBP.gov. Penn National included copies of the ACE record reflecting the issuance of notices of extension of liquidation with the supporting documentation for its protest. These notices indicate that they were posted online on December 20, 2017.
CBP liquidated the entries on July 6, 2018, pursuant to Commerce Message Number 7356315 (Dec. 22, 2017). Dynamic Metals did not tender timely payment. On October 3, 2018, CBP mailed a formal demand to Penn National, as surety, for payment of delinquent amounts pursuant to 19 C.F.R. § 172.4. On March 28, 2019, Penn National filed the pending protest.
Penn National alleges that it should not be obligated to pay the delinquent amount because CBP suspended liquidation of the entries on December 20, 2017, without proper notice to Penn National. Penn National characterizes these notices as pertaining to suspension of liquidation, instead of extension of liquidation, as reflected in ACE. Penn National alleges that CBP’s failure to provide notice of suspension of liquidation violated 19 U.S.C. § 1504(c) and 19 C.F.R. § 159.12(c), resulting in actual prejudice to Penn National’s obligations on the bond. Penn National therefore seeks release from its contractual obligations and its duty to pay the delinquent amount due.
Your office denied the protest on the basis that CBP timely published notices extending the timeframe for liquidation online. You state that posting on CBP.gov was proper and sufficient notice to extend liquidation pursuant to Federal Register Notice 81 Fed. Reg. 89,375, published on December 12, 2016, which required CBP to electronically post all official notices of liquidation, suspension of liquidation, and extension of liquidation as of January 14, 2017.
We note that Penn National further alleges that CBP failed to conduct an adequate risk assessment of Dynamic Metals’ pattern of practice as an importer. As Penn National cites no laws or regulations underpinning its argument, we decline to address this issue.
ISSUE:
Whether CBP provided adequate notice to Penn National of the extended liquidation for the relevant entries?
LAW AND ANALYSIS:
We note initially that the instant Protest was timely filed pursuant to 19 U.S.C. § 1514(c)(3), i.e., within 180 days from the date of mailing to the surety of the notice of the demand for payment. Under 19 U.S.C. § 1514(a), “decisions of [CBP], including the legality of all orders and findings entering into the same, as to … the liquidation or reliquidation of an entry … are final unless a protest of that decision is filed.” Furthermore, pursuant to 19 U.S.C. § 1514(c)(3): “A protest by a surety which has an unsatisfied legal claim under its bond may be filed within 180 days from the date of mailing of notice of demand for payments against its bond.” In this case, CBP mailed the demand for payment to Penn National on October 3, 2018, and Penn National filed its protest on March 29, 2019. Additionally, 19 U.S.C. § 1514(c)(3) stipulates that “if another party has not filed a timely protest, the surety’s protest shall certify that it is not being filed collusively to extend another authorized person’s time to protest as specified in this subsection.” Penn National has satisfied this additional requirement and certified that its protest “is not being filed collusively to extend another authorized person’s time to protest.”
It is the opinion of your office that this protest meets the criteria for further review. We agree and are of the opinion that this protest raises issues of fact that have not been previously ruled upon by the CBP Commissioner, his designee, or the customs courts, namely whether notices of the extension of liquidation were timely posted on CBP.gov with regard to the protested entries. 19 C.F.R. § 174.24(b).
CBP is directed by statute to provide notice of extension of liquidation. 19 U.S.C. § 1504(b) provides:
The Secretary shall give notice of an extension under this subsection to the . . . . surety . . . . Notice shall be made in such form and manner (which may include electronic transmittal) as the Secretary shall by regulation prescribe. . . .
The corresponding implementing regulation, 19 C.F.R. § 159.12(b) further stipulates:
If the Center director extends the time for liquidation, as provided in paragraph (a)(1) of this section, the official notice of extension and reasons thereof will be posted on www.cbp.gov. The notice of extension will be maintained on www.cbp.gov for a minimum of 15 months from the date of posting. The Center director will also endeavor to transmit a courtesy notice of extension to the entry filer or its agent and the surety on an entry through a CBP-authorized electronic data interchange system.
19 C.F.R. § 159.12(b); See also Notice of Final Rulemaking Electronic Notice of Liquidation, 81 Fed. Reg. 89,375 (Dec. 12, 2016). Such notice must “be posted for the information of importers in a conspicuous place on www.cbp.gov in such a manner that it can readily be located and consulted by all interested persons.” 19 C.F.R. § 159.9(b). Effective January 14, 2017, “official notice of liquidation, suspension of liquidation, and extension of liquidation [must] be posted electronically on the CBP website rather than being physically posted at the customhouses or stations or mailed.” 81 Fed. Reg. 89,375.
CBP was required to provide Penn National with notice of extension of liquidation for each of the three protest entries per 19 U.S.C. § 1504(b) and 19 C.F.R. § 159.12(b). Notice must be effectuated by posting on CBP.gov. 19 C.F.R. 159.12(b); 81 Fed. Reg. 89,375 (Dec. 12, 2016). The entries were shipped and entered in September 2017, well beyond the effective date of the rule change enumerated in 81 Fed. Reg. 89,375, which required all official notices pertaining to all future entries to be posted on CBP.gov. Notices extending the liquidation of each of the three entries was posted on CBP.gov on December 20, 2017. Consequently, Penn National received public and inconspicuous notice extending the liquidation of the protested entries on December 20, 2017. Penn National’s own protest documents contain copies of the notices extending liquidation for each entry dated December 20, 2017.
There is no statutory or regulatory requirement that CBP provide any notice beyond the posting of the official notice on its website. While there is aspirational language in 19 C.F.R. § 159.12(c) that CBP will “endeavor” to provide an electronic courtesy notice to the surety, it need not do so as a matter of statutory or regulatory law. As explained in 19 C.F.R. § 159.9(d), such courtesy notice “serve[s] as an informal, courtesy notice and not as a direct, formal, and decisive notice of liquidation.” Failure to provide the courtesy notice is not grounds for alleging “substantial prejudice” in cases where CBP posted the official notice of extension online. Penn National is thus required to pay the outstanding duties owed for the protested entries.
HOLDING:
Based on the foregoing, CBP provided adequate notice of extension of liquidation to Penn National for the relevant entries. The protest, along with protests 170419100533 and 270419102847, should be DENIED in full.
You are instructed to notify the Protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
For Yuliya A. Gulis, Director
Commercial & Trade Facilitation Division