LIQ-4-02-CO:R:C:E 223111 GG/JRS
District Director of Customs
423 Canal Street
New Orleans, LA 70130
ATTN: Protest Office, Room 200
RE: Application for further review of Protest No. 2002-91-
000225; protest untimely; 19 U.S.C. 1514; 19 U.S.C. 1504;
protest of bill for supplemental countervailing duties
issued more than 90 days after liquidation
Dear Sir:
This is in response to the protest referenced above, which
was forwarded to us by your office for further review. Our
decision follows.
FACTS:
On April 14, 1984, the protestant imported 218 packages of
cold rolled steel sheet from Brazil, classified under item number
607.8360 of the Tariff Schedules of the United States. It filed
an entry summary on April 17, 1984, and deposited estimated
duties of $20,677.80. The entry summary contains five "Special
Summary Steel Invoices" (Customs Form 5520) which lists
"Rheem Metalurgica, S.A." as the seller (exporter) and "Rheem
Manufacturing Company" in either New Orleans, LA or Chicago, IL
as the buyer. We note that on two out of the five CF 5520s, one
producer is listed as "CIA. Siderurgica Paulista-COSIPA" (Invoice
No. Exp-054) and the other as "Usinas Siderurgicas de Minas
Gerais" (Invoice No. Exp-052); and the three other invoices list
"Rheem Metalurgica, S.A." as the producer.
The protestant indicated awareness of the fact that its
merchandise might be subject to countervailing duties ("CVDs") by
typing in CVD case number C351-021-000 on the last page of the
entry summary directly below the words "total duty". It also
took out a single entry bond to cover any CVDs which might
eventually be found to be due.
The protestant took these actions in response to a
Preliminary Affirmative Countervailing Duty Determination
published by the U.S. Department of Commerce ("Commerce") on
February 10, 1984 (49 Fed. Reg. 5,157 (1984)), which stated that
imports from Brazil of certain carbon steel products may have
received subsidies from the Brazilian government within the
meaning of the CVD laws. Commerce instructed Customs to suspend
liquidation of all affected entries, including that of the
protestant. 19 U.S.C. 1671b(d)(1). On April 26, 1984, Commerce
issued a notice of Final Affirmative Countervailing Duty
Determination (49 Fed. Reg. 17,988 (1984)), followed on June 22,
1984 by a notice of Countervailing Duty Order (49 Fed. Reg.
25,655 (1984)). The CVD order confirmed that Brazilian steel had
been subsidized.
Commerce conducted administrative reviews of the CVD order,
and on January 9, 1987, published a notice of Final Results of
Countervailing Duty Administrative Review (52 Fed. Reg. 829
(1987)). The review established that the following companies had
received the following subsidies: Companhia Siderurgica Paulista
("COSIPA") - 9.14 percent ad valorem; Companhia Siderurgica
Nacional ("CSN") - 39.38 percent ad valorem; Usinas Siderurgicas
de Minas Gerais, S.A. ("USIMINAS") - zero percent ad valorem;
Maxitrade - 38.45 percent; and all other firms - 21.13 percent ad
valorem. Commerce in its January 9, 1987 notice instructed
Customs to assess these listed CVDs on all shipments of affected
merchandise entered, or withdrawn from warehouse, for consumption
on or after February 10, 1984 and on or before September 30,
1984.
In response to Commerce's instruction, Customs initially
directed its field offices to withhold liquidation of the entries
because of pending litigation. See CIE N-132/84, Supp. 2 of
March 3, 1987 (a reproduction of Customs Telex 001999 dated 02-
18-87). However, on July 23, 1987, Customs issued CIE N-132/84,
Supp. 3 (a reproduction of Customs Telex 08432 of 06-23-87
(UNCLAS 8432)), which corrected the March instructions by stating
that the suspension applied only to entries of certain carbon
steel products exported by COSIPA or CSN. The field was to
proceed with the liquidation of all entries of affected
merchandise exported by USIMINAS, Maxitrade, and "all other
manufacturers/producers/exporters" (but not by COSIPA and CSN).
Customs continued to suspend the liquidation of the entry
that is the subject of this protest. On November 9, 1988, the
Court of International Trade lifted its preliminary injunction of
February 18, 1987, which suspended liquidation of the exports of
COSIPA and CSN. See Companhia Siderurgica Paulista, S.A. v.
United States, 12 CIT 1098, 700 F. Supp. 38 (November 9, 1988).
On July 14, 1989, the steel was appraised and it was
determined that the total amount of duties due was $62,746.28.
The difference between the appraised and deposited amounts,
$42,068.48, was for CVDs. This increase was stamped on the entry
summary. On August 25, 1989, the entry was liquidated "no
change" and a bulletin notice was posted. This liquidation was
recorded by Customs as a "deemed liquidation". Customs issued a
bill for "supplemental duties" in the amount of $42,068.48 on
December 14, 1990. The protestant protested that issuance on
March 14, 1991.
ISSUE:
Whether Customs may bill an importer for countervailing
duties accruing on an entry of merchandise which was liquidated
"no change" more than 90 days before Customs issued the bill for
supplemental duties?
LAW AND ANALYSIS:
Liquidation of an entry of merchandise means the final
computation or ascertainment by Customs of all duties accruing on
that entry. 19 CFR 159.1. In most instances, liquidation occurs
under the direction of a Customs officer shortly after
merchandise has been entered, pursuant to Section 500, Tariff Act
of 1930, as amended (19 U.S.C. 1500 (1991)). Sometimes, however,
an entry of merchandise will be deemed liquidated at the rate of
duty, value, quantity, and amount of duties asserted at the time
of entry by the importer of record. The two circumstances under
which an entry is deemed liquidated (or "liquidated by operation
of law") are outlined in 19 U.S.C. 1504: where Customs fails to
liquidate an entry within one year from the date of entry or
final withdrawal from warehouse (19 U.S.C. 1504(a)), and where an
entry which had been under suspension but whose suspension has
been lifted has not been liquidated at the expiration of four
years from the date of entry or warehouse withdrawal (19 U.S.C.
1504(d)). The liquidation date will be either the first or
fourth anniversary date of entry or withdrawal from warehouse.
When the entries were initially filed, Customs properly
withheld liquidating the entries of Brazilian steel because the
entries were subject to an outstanding countervailing duty
determination of February 10, 1984 in accordance with 19 U.S.C.
1671b(d)(1). On the entry's first year anniversary date,
liquidation continued to be properly suspended under 19 U.S.C.
1504(b)(2) as required by statute. See 19 U.S.C. 1671b(d)(1);
see Pagoda Trading Corp. v. United States, 804 F.2d 665 (Fed.
Cir. 1986). However, on the entry's fourth year anniversary
date, the statutory basis for suspending liquidation had expired
due to Commerce's issuance of its final results of its
administrative review on January 9, 1987. Additionally, the
court-ordered suspension of liquidation, while still outstanding
on April 17, 1988, did not enjoin the liquidation of steel
entries exported by Rheem Metalurgica. Rheem Metalurgica was the
exporter on the entry summary and was also listed as such on each
CF 5520. Thus, since these entries were not subject to any
statutory or court-ordered suspension of liquidation prior to the
fourth anniversary of its entry, 19 U.S.C. 1504(d) controls.
The Court of International Trade recently addressed the
"deemed liquidation" issue of 19 U.S.C. 1504(d). Paraphrasing
the court's holding slightly, the court stated in Nunn Bush Shoe
Co. v. United States, 16 CIT ___, Slip Op. 92-9, 26 Cust. B. &
Dec., No. 7 at p. 19 (February 12, 1992), that pursuant to
19 U.S.C. 1504, entries are deemed liquidated by operation of law
when they become four years old if the liquidation is not further
suspended by court order or statute as provided for in 19 U.S.C.
1504(b)(1)-(3), and that any subsequent liquidations by Customs
after four years is invalid. The court stated that Canadian Fur
Trappers Corp. v. United States, 12 CIT 612, 691 F. Supp. 364
(1988), aff'd, 884 F.2d 563 (Fed. Cir. 1989) applies only to
entries that remain suspended beyond the four year statutory
period (Canadian Fur Trappers involved a CVD order which was
lifted after four years had expired; court held that entries were
not deemed liquidated at rate asserted by importer at time of
entry when Customs failed to liquidate the entries within 90 days
after the suspension of liquidation was terminated).
Nunn Bush is dispositive in this case. We find that the
entry was initially liquidated by operation of law on April 17,
1988, which was the fourth anniversary date of its entry, by
virtue of the fact that prior to that time the suspension of its
liquidation had been lifted. See CIE N-132/84, Supp. 3, July 23,
1987 (UNCLAS 8432). It appears from the case file that Customs
withheld the liquidation on this entry because COSIPA was listed
as the manufacturer on one of the five CF 5520s attached to the
entry summary; however, the injunction applied only to entries
where COSIPA itself was the exporter, rather than the
manufacturer. Rheem was listed as the exporter on all five steel
invoices and on the entry summary covering the five entries.
Customs erroneously held these entries open on the fourth
anniversary date because the injuction did not cover exports by
Rheem. We note that on April 17, 1990, Customs clarified the
confusion regarding the instructions of CIE N-132/84, Supp. 3 of
July 23, 1987, that all entries exported by DUFERCO, DUFER or
RHEEM, regardless of manufacturer, should be liquidated at the
"all other" exporter rate of 21.13 percent ad valorem because the
subsidies on the merchandise purchased from the manufacturers
(COSIPA, CSN and USIMINAS) were calculated into the "all other"
rate by Commerce.
Customs has no record of a deemed liquidation occurring on
April 17, 1988, because it was under the mistaken impression that
the entry was still suspended. An inadvertent failure to record
a liquidation that occurred by operation of law will not serve to
invalidate that liquidation.
Customs can voluntarily reliquidate a 19 U.S.C. 1500
liquidation within 90 days of the notice of the original
liquidation, but cannot on its own accord reliquidate an entry
which has been deemed liquidated pursuant to 19 U.S.C. 1504. See
19 U.S.C. 1501. As a consequence, the August 25, 1989 "deemed
liquidation" was actually an unauthorized 19 U.S.C. 1501
reliquidation of the April 17, 1988 deemed liquidation of the
protestant's entry. The illegality of this later reliquidation
made it voidable. However, the protestant's failure to timely
protest the unlawful reliquidation of August 25, 1989 also made
it the final liquidation of the entry in question. See United
States v. A.N. Deringer, Inc., 593 F.2d 1015, 1021, 66 CCPA 50
(1979); Omni U.S.A., Inc. v. United States, 840 F.2d 912 (Fed.
Cir. 1988); United States v. Utex Int'l Inc., 659 F. Supp. 250
(CIT 1987), rev'd, 857 F.2d 1408 (Fed. Cir. 1988). An erroneous
liquidation can be corrected only by following the statutory
procedures. Deringer, supra.
The entry was reliquidated on August 25, 1989, albeit
unintentionally, as "no change". This in effect (and
notwithstanding the fact that the appraiser had earmarked the
entry for an increase) meant that Customs had determined that the
amount of duties deposited by the protestant at the time of entry
was correct, and that therefore no increase would be in order.
Since this was a liquidation under 19 U.S.C. 1500, not under 19
U.S.C. 1504, Customs could have corrected the August 25, 1989
reliquidation by billing the protestant for the CVDs within 90
days of that date. The December 14, 1990 billing, however, was
beyond the 90 day period and therefore was an untimely attempt by
Customs to reliquidate the entry. The protestant's protest,
filed within 90 days of the billing, was a timely protest of a
decision by Customs to reliquidate an entry. That decision was
without authority, and accordingly the position of the protestant
must be sustained.
HOLDING:
Customs cannot bill an importer for countervailing duties
accruing on an entry of merchandise which was liquidated "no
change" more than 90 days before Customs issued the bill for the
supplemental duties.
You are directed to ALLOW the protest in full. A copy of
this decision should be attached to the CF 19, Notice of Action,
and sent to the protestant to satisfy the notice requirement of
section 174.30(a) of the Customs Regulations.
Sincerely,
John Durant, Director