OT:RR:CTF:EPDR H326779 JHS
Center Director
Agriculture and Prepared Products
Center of Excellence and Expertise
909 S.E. 1st Avenue, Suite 980
Miami, FL 33131
RE: Application for Further Review of Protest No. 2704-19-106346; United Foods; Tariff-
Rate Quota
Dear Center Director:
The purpose of this decision is to address the Application for Further Review (AFR) of
Protest Number 2704-19-106346, filed by Navigators Insurance Company (Navigators) on
November 27, 2019, regarding the assessment of duties at the over-quota rate for entries of
peanut butter from India. Our decision is set forth below.
FACTS:
In 2017, United Foods filed two entries for shipments of peanut butter from India: entry
numbers XXX-XXXX035-2 and XXX-XXXX036-0. At that time, peanut butter from India was
subject to a tariff-rate quota pursuant to Additional U.S. Note 6 of Chapter 20 of the Harmonized
Tariff Schedule of the United States (HTSUS) (2017). The entries were initially filed as type 02,
which delineates entries that contain quota-class merchandise, but the entry summaries were not
accompanied by estimated payments of duties, taxes, and fees. United Foods classified the
peanut butter in both entries under subheading 2008.11.0500, HTSUSA, in order to receive the
in-quota duty rate of 0%. U.S. Customs and Border Protection (CBP) determined that quota for
peanut butter from India oversubscribed on the weekend preceding May 1, 2017, and that quota
had filled on May 1, 2017.
Pursuant to CBP’s Automated Commercial Environment (ACE), for entry number XXX-
XXXX035-2, United Foods filed an entry (CBP Form 3461) and entry summary (CBP Form
7501) on April 28, 2017. The cargo arrived on April 30, 2017, and was released on the same day.
Due to the quota filling, the entry was subject to proration — meaning the total entered quantity
of peanut butter was not granted the in-quota duty rate. As a result of this proration, CBP rejected
the entry summary on May 1, 2017, and returned it to the importer to account for the quantity
entered in excess of the annual quota limit that was subject to a higher duty rate. CBP requested
that the entry summary be resubmitted by May 15, 2017. The entry summary was not
resubmitted by May 15, 2017, leading CBP to reject the in-quota entry summary on May 16,
2017. For entry number XXX-XXXX036-0, United Foods filed an entry and entry summary on
May 1, 2017. The cargo arrived on May 3, 2017, and was released on the same day. Due to quota
filling on May 1, 2017, the in-quota entry summary was rejected by CBP on May 3, 2017.
On February 20, 2019, CBP corrected the classification for both entries to subheading
2008.11.1500, HTSUSA, which corresponded to an over-quota duty rate of 131.8%. CBP
liquidated entry number XXX-XXXX035-2 on March 29, 2019, and entry number XXX-
XXXX036-0 was liquidated on June 7, 2019. CBP issued a bill to United Foods for the duties,
taxes, and fees owed, which was not paid. CBP then mailed a formal demand for payment to
Navigators, as the surety guaranteeing payment on the entries, for the delinquent amounts. For
entry number XXX-XXXX035-2, CBP mailed Navigators a demand on June 1, 2019. For entry
number XXX-XXXX036-0, CBP mailed Navigators a demand on September 1, 2019.
Navigators filed protest number 2704-19-106346 on November 27, 2019, protesting
CBP’s liquidation of the entries at the over-quota duty rate. Navigators makes two arguments:
first, Navigators argues that the subject entries deemed liquidated; second, Navigators asserts
that if we deny the deemed liquidation argument, CBP still erroneously assessed an over-quota
duty rate for entry number XXX-XXXX035-2 because the date of entry occurred prior to the
quota filling on May 1, 2017.
ISSUE:
Whether CBP properly liquidated the subject entries.
LAW AND ANALYSIS:
As an initial matter, we find that, pursuant to 19 U.S.C. § 1514(c)(3), this protest was
timely filed on November 27, 2019, “within 180 days from the date of mailing of notice of
demand for payment” for both entries. We also find that, pursuant to 19 U.S.C. §§ 1514(a)(2) and
1514(a)(5), a protestable issue was raised by challenging CBP’s decision regarding “the
classification and rate and amount of duties chargeable” for the peanut butter and the timeliness
of CBP’s liquidation. Finally, pursuant to 19 C.F.R. § 174.24(b), we find that further review of
this protest is warranted because it involves a question of fact which has not previously been
ruled upon – specifically, whether both entries were properly liquidated at the higher over-quota
duty rate.
Navigators asserts that entry numbers XXX-XXXX035-2 and XXX-XXXX036-0
deemed liquidated because CBP failed to liquidate within one year of their respective dates of
entry. Pursuant to 19 U.S.C. § 1504(a)(1):
Unless an entry of merchandise for consumption is extended under subsection (b)
of this section or suspended as required by statute or court order . . . an entry of
merchandise for consumption not liquidated within 1 year from–
(A) the date of entry of such merchandise . . .
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shall be deemed liquidated at the rate of duty, value, quantity, and amount of
duties asserted by the importer of record.
This statutory deemed liquidation provision was adopted to “increase certainty in the customs
process for importers, surety companies, and other third parties with a potential liability relating
to a customs transaction.” Headquarters Ruling Letter (HQ) 224162 (May 5, 1992) (quoting S.
Rep. No. 95-788, at 832 (1978)). Accordingly, any entry which is not liquidated by CBP within a
year from the date of the entry is deemed liquidated unless liquidation is suspended pursuant to
statute or court order, or CBP extends the timeframe for liquidation. We must thus determine the
legal dates of entry for both of the quota-class merchandise entries to determine whether their
liquidation was timely.
The time of entry for merchandise that is entered for consumption is established in
accordance with 19 C.F.R. § 141.68. Pursuant to 19 C.F.R. § 141.68(d), the time of entry for
quota-class merchandise “will be the time of presentation of the entry summary or withdrawal
for consumption in proper form, with estimated duties attached, or if the entry/entry summary
information and a valid scheduled statement date . . . have been successfully received by CBP
via the Automated Broker Interface.” The time of entry provision for quota-class merchandise
does not contemplate a situation where a presentation “in proper form” never occurs.
Presentation is a key step for quota-class merchandise because it establishes quota
priority and quota status if made in proper form. See 19 C.F.R. § 132.11(a). Quota priority is the
precedence granted to an entry of quota-class merchandise over other entries of merchandise
subject to the same quota. 19 C.F.R. § 132.1(f). Quota status is the standing which entitles quota-
class merchandise to admission under an absolute quota, or to a reduced rate of duty under a
tariff-rate quota, or to any other quota benefit. 19 C.F.R. § 132.1(g). In order to prevent
circumvention of quota, importers must comply with strict presentation requirements in order to
obtain quota priority and status. See HQ 229188 (Mar. 4, 2002) (“quota priority and status are
determined as of the time of presentation of the entry summary for consumption, or withdrawal
for consumption, in proper form, and in strict compliance with the applicable Customs
regulations”).
A quota entry will not be deemed presented “for purposes of quota priority and . . . quota
status” if not in proper form. 19 C.F.R. § 132.11(b); see also 19 C.F.R. §§ 132.1(d); 132.11a. The
requirements to establish “proper form” of presentation are for purposes of quota priority and
status are stringent. See generally DMV USA, Inc. v. United States, 25 C.I.T. 970, 979 (2003)
(“[w]hile plaintiff’s entry summary might have been sufficient solely for purposes of
classification, it was not in proper form for purposes of gaining the benefit of quota-class priority
and status”). A presentation may not be in proper form for purposes of quota priority and status if
the merchandise is misclassified, the wrong duty rate is claimed, or the entry summary does not
have the proper estimated duties attached. Id. at 978. Nor will quota priority or status attach to
merchandise when the entry summary is presented after the closing of the quota period. See HQ
230031 (Aug. 27, 2003); HQ 115507 (Mar. 26, 2002). In HQ 230031, CBP concluded that in
circumstances where an entry summary was not timely and correctly filed for purposes of
obtaining quota priority and quota status, the applicable rate of duty could not be established by
the initial attempted date of presentation. In HQ 115507, CBP further concluded that when an
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entry summary is filed after “the quota period in which the merchandise was released had
expired, the shipment was not entitled to any quota benefit, and it did not have any protected
quota status.”
Here, as in both HQ 230031 and HQ 115507, the initial entry summary filings did not
qualify as valid presentations for purposes of quota priority and status. When entry number
XXX-XXXX035-2 was filed on April 28, 2017, the in-quota rate had been oversubscribed. In
circumstances where quota is oversubscribed, CBP prorates the remaining available in-quota
amount, such that “entry summaries for consumption . . . must be returned to the importer for
adjustment” and resubmitted with a portion of the merchandise subject to the higher over-quota
estimated duties, taxes, and fees. 19 C.F.R. § 132.13(a)(1)(iii). Although United Foods was given
an opportunity to adjust the entry summary and preserve quota priority and status for some of the
entered quantity of peanut butter, no entry summary was ever resubmitted and the original entry
summary was rejected. Therefore, no entry summary was properly presented with estimated
duties attached in order to obtain quota priority and status. Similarly, when entry number XXX-
XXXX036-0 was filed on May 1, 2017, quota for peanut butter from India had already filled and
closed. Therefore, no entry summary was properly presented with estimated duties attached in
order to obtain quota priority and status. Accordingly, neither entry for quota-class merchandise
was ever presented in proper form.
Even if an entry for quota-class merchandise fails to satisfy the strict presentation
requirements to obtain quota priority and status, CBP has previously determined that this initial
presentation is nevertheless sufficient to establish a time of entry. In HQ 229480, dated June 21,
2002, an importer of raw sugar cane from Colombia filed a type 02 entry claiming the in-quota
duty rate for the sugar. As part of the entry, filed on November 12, 1999, the importer submitted
a Certificate of Quota Eligibility for the 1998-1999 tariff rate quota period. CBP rate advanced
the entry as subject to the over-quota duty rate on the basis that the certificate was invalid for the
1999-2000 quota period for which the raw sugar cane was eligible. CBP held that “submission,
in proper form[,] of a valid Certificate of Quota Eligibility is necessary in order to determine
whether a certain merchandise is entitled to quota status. It entails a legal determination in terms
of the status that a certain merchandise will be accorded at the time of entry.” (emphasis in
original). CBP concluded that “submission of an incorrectly dated certificate [properly] resulted
in Custom’s denial of quota privileges on the subject entry.” Significantly, although CBP
determined presentation in proper form never occurred to establish quota priority and status, the
initial presentation on November 12, 1999, nevertheless served to establish the time of entry for
the raw sugar.
Here, as in HQ 229480, although United Foods never effected presentation in proper
form for either of the protested entries, the initial presentation date nevertheless serves to
establish the time of entry. Entry number XXX-XXXX035-2 was presented to CBP on April 28,
2017, while entry number XXX-XXXX036-0 was presented to CBP on May 1, 2017. The cargo
actually arrived at the port of entry on April 30, 2017, and May 3, 2017, respectively. Pursuant to
19 C.F.R. § 141.68(e), an entry or an entry summary which serves as both the entry and entry
summary cannot be considered filed or presented, until the merchandise has arrived within the
port limits with the intent to unlade. Accordingly, “an entry cannot legally be deemed ‘filed or
presented’ until the subject merchandise arrives at the port where it will be unladen and entered.”
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HQ H336408 (Jan. 25, 2024). Due to the merchandise not arriving until after the date of
presentation for both entries, the time of entry is established by the subsequent date of arrival at
the port of entry. The time of entry for entry numbers XXX-XXXX035-2 and XXX-XXXX036-0
is thus April 30, 2017, and May 3, 2017, respectively.
The liquidation of these entries was never suspended pursuant to statute or court order,
nor did CBP extend the timeframe for liquidation, in accordance with 19 U.S.C. § 1504(a)(1).
Consequently, CBP had one year to liquidate from each date of entry. Failure to comply with this
statutory deadline for liquidation results in the entries’ deemed liquidation “at the rate of duty,
value, quantity, and amount of duties asserted by the importer of record.” 19 U.S.C. §
1504(a)(1)(A); see also 19 C.F.R. § 159.11(a). CBP liquidated the entries at the over-quota duty
rate for peanut butter in 2019: entry number XXX-XXXX035-2 was liquidated on March 29,
2019, and entry number XXX-XXXX036-0 was liquidated on June 7, 2019. For each entry, we
find that CBP’s liquidation in 2019 was untimely because it occurred roughly two years from the
date of entry in 2017. Consequently, we find that both entries deemed liquidated at the 0% rate of
duty asserted by the importer at the time of entry.
We note that because both entries deemed liquidated, we do not address Navigators’
second argument.
HOLDING:
Entry numbers XXX-XXXX035-2 and XXX-XXXX036-0 deemed liquidated at the 0%
rate of duty asserted by the importer at the time of entry. The protest should be GRANTED in
full.
You are instructed to notify the Protestant of this decision no later than 60 days from the
date of this 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 the public on the Customs
Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/, or other methods of public
distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial & Trade Facilitation Division
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