LIQ-9-01 CO:R:C:E 223625 C
John H. Heinrich
District Director of Customs
United States Customs Service
Los Angeles, CA
RE: Protest and application for further review no. 2704-91-
101785; reliquidation to correct a mistake of fact, clerical
error, or inadvertence; mistake must be manifest from the record
or established by documentary evidence at the time the
reliquidation request is made; burden of proof; 19 U.S.C.
1520(c)(1)
Dear Mr. Heinrich:
This responds to the referenced protest. The protest record
has been reviewed and our decision follows.
FACTS:
The facts as we understand them are as follows: The
importer in this case, the PROTESTANT (hereinafter referred to as
the importer), is a company that imported bicycle chain. The
importer, through its broker, classified the imported merchandise
on the entry documents under subheading 7315.12.00207, HTSUS
(Harmonized Tariff Schedule of the United States): "Chain and
parts thereof, of iron or steel: Articulated link chain and parts
thereof: Other chain . . . Of not over 50 mm pitch and containing
more than 3 parts per pitch . . ." The entries were liquidated
without a change in that classification, and duty was paid.
Subsequently, upon review of its records, the broker decided that
the merchandise had been misclassified. This discovery occurred
after expiration of the period within which a protest could have
been filed. Consequently, the importer, through its broker,
filed a request for reliquidation under 19 U.S.C. 1520(c)(1),
requesting a refund of overpaid duties. The request for
reliquidation stated the following:
During post-entry review; (sic) we realize that the
goods were not classified correctly.
The correct classification for bicycle chains should
be 7315.11.00100, Thus (sic) making sub-heading
9902.73.15 applicable. Therefore, we have overpaid
duty in the amount of $1,389.15.
We therefore, respectfully request re-liquidation
pursuant to Sec. 520 (c)(1) of the tariff act of 1930
as amended and Sec. 173.4 of the customs regulations.
Customs denied this request for reliquidation on the grounds
that a misclassification is an error in the construction of a law
not correctable under the statute. The importer filed a timely
protest of this denial under 19 U.S.C. 1514(a)(7) and made
application for further review in accordance with section 174.23
of the Customs Regulations (CR)(19 C.F.R. 174.23). In accordance
with that regulation, and section 174.26(b), CR, you submitted
the protest to this office for our determination (19 C.F.R.
174.26(b)).
ISSUE:
Was Customs denial of the importer's request for
reliquidation under 19 U.S.C. 1520(c)(1) erroneous, such that
this protest under 19 U.S.C. 1514(a)(7) should be approved?
LAW AND ANALYSIS:
The entry process includes a procedure for the correction of
errors made in the entry of merchandise. Under the protest
procedure of 19 U.S.C. 1514, errors in the classification,
valuation, etc., of merchandise can be corrected, and
reliquidation obtained with refund of overpaid duties, if the
error is brought to the attention of the appropriate Customs
officer within 90 days of the liquidation. Failure to file a
protest within the prescribed period renders the liquidation
final and binding on the importer and the government.
After expiration of the 90 day period, an importer can
obtain a reliquidation of the entry, and a refund of overpaid
duties, in only limited circumstances. Under 19 U.S.C.
1520(c)(1), an entry can be reliquidated to correct a clerical
error, mistake of fact, or other inadvertence not amounting to an
error in the construction of a law. The error must be adverse to
the importer and brought to the attention of the appropriate
Customs officer within one year from the date of liquidation.
The error must be manifest from the record or established by
documentary evidence. This means that the nature of the error
must be observable upon review of the record or upon submission
of documentary evidence. In either event, the burden is on the
petitioner to establish the nature of the error claimed and to
demonstrate that it falls within the ambit of the statute.
In determining a protest filed under 19 U.S.C. 1514(a)(7),
the issue to be decided is as set forth above: Did Customs err
in denying the section 1520(c)(1) request for reliquidation? If
Customs erred by failing to recognize the error as one
correctable under the statute, the protest can be approved where
the evidence reviewed on the protest record indicates that such
an error was, at the time the reliquidation request was
considered, either manifest from the record reviewed at that time
or established by documentary evidence submitted at that time.
If, however, the claimed error, even if later concluded by the
protest reviewer to be of the kind that is correctable under the
statute, was not manifest from the record, or made apparent by
documentary evidence submitted by the petitioner, at the time the
section 1520(c)(1) determination was made, the denial of the
1520(c)(1) request cannot be said to be erroneous. The alleged
mistake must be set forth with sufficient particularity to allow
remedial action. PPG Industries, Inc. v. United States, 4 CIT
143 (1982); Hambro Automotive Corp. v. United States, 81 Cust.
Ct. 29, C.D. 4761, 458 F. Supp. 1220 (1978).
The burden of proof requirement imposed under section
1520(c)(1) is one that must be met by the petitioner during the
section 1520(c)(1) petition and review process. It is not a
burden of proof that can be blithely ignored at the 1520(c)(1)
reliquidation stage and, instead, be addressed for the first time
at the protest stage. It is the affirmative burden of the
petitioner to establish, from the record or by documents
submitted, the nature of the error and to demonstrate, thereby,
that the error is in fact correctable under the statute.
On the record of this protest, it appears that the denial of
the reliquidation request was not erroneous for the reason that
the petitioner failed to bring the claimed error to the attention
of the Customs officer with sufficient particularity to allow
such officer to recognize a correctable error. In fact, the
petitioner, in its request for reliquidation, failed to specify
an error of any kind, stating rather that the "goods were not
classified correctly" and adding nothing more except the request
for reliquidation and refund of duties. Where the error is
manifest from the record, such that the petitioner does not have
to submit additional documentation to show the error, it is still
the petitioner's burden to bring the error to the attention of
the Customs officer with sufficient particularity to demonstrate
the nature of the error. Where the petitioner simply reports to
Customs that the classification was incorrectly made, without
explanation of the error that caused the misclassification, the
petitioner has failed to meet the burden imposed by the statute.
This appears to be what happened in this case, and Customs denial
of the request for reliquidation under this circumstance cannot
be said to be erroneous.
It is not enough for the importer to notify Customs that the
classification was wrong, that the correct classification for
bicycle chains is 7315.11.00100, HTSUS, and that, therefore,
subheading 9902.73.15, HTSUS, is the applicable provision for
duty-free entry. This does not identify and explain the
correctable error. It fails to demonstrate that the error was
other than a mistake in legal construction. Where a
misclassification can be explained by either a legal error or a
correctable mistake of fact or clerical error, the importer's
burden is to show, on the record or by documentary evidence, how
correctable error was responsible. Failure to rule out legal
error by proving correctable error will result in denial of the
petition for want of evidence. Bald assertion and supposition of
correctable error is not enough to gain reliquidation under the
statute. Bar Bea Truck Leasing Co. v. United States, 5 CIT 124
(1983); United States v. Lineiro, 37 CCPA 5, C.A.D. 410 (1949).
We conclude that the unspecified error was not manifest from
the record reviewed at the time of the 1520(c)(1) determination
and that the petitioner failed to establish the error - either by
specifying information in the record or by submitting additional
documentary evidence - with the requisite sufficient
particularity to meet the burden of proof imposed under the
statute. For this reason alone the protest should be denied,
inasmuch as it demonstrates that Customs did not err in denying
the reliquidation request.
Moreover, considering this matter on the record of this
protest, it is not clear that the error occurring in this case
was not a legal error. Your December 10, 1991, memorandum
requesting further review asserts that there was no way for the
broker classifying the merchandise to know that the chains were
bicycle chains. Yet, the information contained in the protest
record clearly indicates that the merchandise is bicycle chain.
For example, the CF 3461 (Entry/Immediate Delivery) relating to
one of the entries protested indicates "BICYCLE CHAIN" in block
20 for description of the merchandise. The invoice, dated
January 6, 1990, and bearing number TPC-1A-8016, also clearly
identifies the merchandise as bicycle chain. In addition,
"bicycle chain" is clearly indicated on the packing list, the
bill of lading, and the "Certificate of Origin" contained in the
file. Thus, the assertion that the classifier could not have
known that the merchandise was bicycle chain appears
questionable. This doubt is furthered by what you state on page
three of the memorandum: "1) The invoices clearly stated all of
the technical information necessary for the responsible import
specialist to make a correct classification." If this is true,
it is a mystery why the broker could not know that the
merchandise was bicycle chain.
The protest, executed by the importer's broker, indicates
the following: "It is our contention that said Entry-Summaries
(sic) were inadvertently handled by our staffmember. The invoice
is clear as to the product with applicable dimensions. We
content (sic) that instead of seeking information from the
client; (sic) the wrong classification was used."
This explanation seems to suggest that the invoice was
sufficiently clear and that the problem had to do with the
employee's mishandling of the assignment. The invoices reviewed
in this protest record are clear enough to indicate that the
merchandise was bicycle chain. Given the information available
to the broker's employee, he/she should have made a correct
classification. If there was some confusion and the employee
failed to responsibly seek information from the importer, such
failure is more in the nature of negligence. Moreover, since the
tariff subheading applicable to bicycle chain and the subheading
chosen by the employee carried the same duty rate, perhaps a
judgment was made that choosing one or the other did not matter.
This would imply ignorance of subheading 9902.73.15, HTSUS. This
kind of error is an error in the construction of a law.
Concentric Pumps, Ltd. v. United States, 10 CIT 505, 643 F. Supp.
623 (1986). We cannot conclude that the foregoing is what
happened, but it is suggested as a reasonable possibility on the
information contained in this protest record. Speculation aside,
the protest itself does not allege facts from which a correctable
error can be discerned.
In short, we are unconvinced that the record of this protest
establishes that a correctable error was responsible for the
misclassification. This conclusion is academic, however, in view
of our prior conclusion that this protest cannot be approved for
the reason that Customs did not err in denying the request for
reliquidation. Nonetheless, we note that had we undertaken a de
novo review of the reliquidation request, our conclusion would be
that correctable error has not been established.
You asked that we consider several additional issues. First,
the instant case is distinguishable on its facts from Customs
Service Decision (C.S.D.) 89-87, which was cited in support of
the proposition that the protest should be approved. There, an
employee of the importer failed to take notice of pertinent
documents relative to the imported merchandise. Consequently,
the employee gave erroneous instructions to the broker respecting
the classification of the merchandise. On the facts here, this
is not the case. It has not been alleged that an employee of the
importer or the broker failed to take notice of pertinent
documents or that the broker received erroneous instructions.
Here, the broker misclassified the merchandise, but it is not
entirely clear why. As above, the record fails to show that the
misclassification was due to correctable error.
On the issue of the broker's conduct, however, C.S.D. 89-87
is applicable to the instant case. In part, the ruling held the
following: "The broker had all documentation necessary to file a
correct entry. Notwithstanding the erroneous instructions it
received from the importer, the record does not establish that
the broker made a mistake of fact, inadvertence or clerical error
in filing the entry under the wrong classification, rather than a
mistake of law by improperly classifying the merchandise." This
holding is applicable to the instant case in that the protest
record (which contains more information than the record
considered at the time the reliquidation request was considered)
does not demonstrate that correctable error, rather than legal
error, was responsible for the misclassification. The rule is
that the misclassification of merchandise is an error in the
construction of a law unless it can be shown that a correctable
error was in fact responsible for the misclassification. Mattel
Inc. v. United States, 377 F. Supp. 955, 72 Cust. Ct. 257, C.D.
4547 (1974). On the record of this protest, we are constrained
to conclude that the misclassification was an error of law.
Second, you inquired as to the affect automated entry
processing would have on questions under section 1520(c)(1).
Customs decision to liquidate merchandise automatically is based
on its determination that the merchandise is of low risk with
respect to the merchandise itself, as well as with the
information it receives regarding that merchandise from the
importer or broker. This determination is based on pre-
importation knowledge about the merchandise, the importer, the
ultimate consignee, etc. The relevant part of the statute that
governs liquidation, 19 U.S.C. 1500, requires only that the
appropriate Customs officer classify the entered merchandise,
liquidate the entry, and give notice of that liquidation. No
particular procedure is required to accomplish these tasks.
Consequently, the method selected is irrelevant to the issue of
whether or not there was an error in the entry correctable under
19 U.S.C. 1520(c)(1).
In summary, reliquidation under section 1520(c)(1) is not a
remedy for broad application. It is not intended to provide a
simple alternative resolution to classification problems in those
instances where the importer fails to file a timely protest.
Rather, it is intended to apply in limited circumstances
(Phillips Petroleum Co. v. United States, 54 CCPA 7, C.A.D. 893
(1966); Godchaux-Henderson Sugar Co. Inc. v. United States, 85
Cust. Ct. 68, C.D. 4874 (1980)) and only when a correctable error
is established on the record or by submitted documentation. This
burden of proof has two purposes that, in a sense, are two sides
of the same coin; one to establish the correctable error and the
other to thereby demonstrate that an error of legal construction
did not occur. This burden must be met at the time the section
1520(c)(1) petition is considered.
HOLDING:
On the facts of this case, as above, it does not appear that
Customs erred in denying PROTESTANT's request for reliquidation
under 19 U.S.C. 1520(c)(1). The record of this protest fails to
demonstrate that a correctable error was established by the
importer - either by reference to the record or by documentary
evidence - upon the record of the reliquidation request.
Consequently, this protest must be denied.
You are instructed to deny the protest. A copy of this
decision should be attached to the Form 19, Notice of Action, to
be sent to the PROTESTANT.
Sincerely,
John Durant, Director
Commercial Rulings Division