Customs Ruling HQ 224397 - Application for Further Review of Protest No. 3001-89-000059; Antidumping Duties; Notice of Suspension or Extension of Liquidation; 19 CFR 159.12; 19 U.S.C. 1504; 19 U.S.C. 1514 Dear Sir:

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HQ 224397
Mar 08, 1994

Type : Liquidation • HTSUS :

LIQ-4-01/LIQ-11-CO:R:C:E 224397 PH

District Director of Customs
1000 Second Avenue
Suite 2200
Seattle, Washington 98104-1049

RE: Application for Further Review of Protest No. 3001-89-000059; Antidumping Duties; Notice of Suspension or Extension of Liquidation; 19 CFR 159.12; 19 U.S.C. 1504; 19 U.S.C. 1514 Dear Sir:

The above-referenced protest was forwarded to this office for further review. For your information, the protestant was granted two meetings on this matter, on April 9, 1993, and on February 4, 1994. The protestant also submitted a number of supplemental submissions to the original protest. Seven affidavits were submitted with the supplemental submissions. Copies of the supplemental submissions and affidavits submitted by the protestant are enclosed for inclusion in the protest file.

We have considered the points raised by your office and the protestant. Our decision follows.

FACTS:

According to the file, on November 29, 1980, the importer entered certain merchandise (transformers and accessories, etc.) from Italy. The protestant issued, as surety, an Immediate Delivery and Consumption Entry Bond (single entry) on November 25, 1980, for the merchandise in the amount of $358,000.

The merchandise under consideration was the subject of an antidumping finding (Treasury Decision (T.D.) 72-161). No cash deposit of antidumping duties was required or collected. The protestant surety states that it received no notice of suspension of liquidation with regard to the entry under consideration.

Customs sent a "Request for Information" to the importer on February 4, 1981, and the importer responded by letter of February 9, 1981. A second "Request for Information" was sent to the importer on April 27, 1981, to which the importer finally responded on May 28, 1981, with an explanation of "escalation" clauses in the contract for the merchandise under consideration. By a "Request for Information" form dated July 9, 1981, Customs asked that the importer declare the remaining escalation on the assembly when it was effected. The importer did so on August 17, 1981, and by Notice of Action dated August 25, 1981, Customs advised the importer of the net value at which the merchandise would be appraised and that liquidation was delayed pending an antidumping determination by the Department of Commerce and Customs Headquarters.

By Notice of Action dated March 31, 1988, the importer was advised that the entry was in the liquidation process and that dumping duties in the amount of $292,638.12 were being assessed. This was pursuant to C.I.E. N-169/70 (Supplement 13), dated February 2, 1988, and the notice of Final Results of Antidumping Administration Review published in the Federal Register on December 10, 1987 (52 FR 46806). The entry was liquidated on June 10, 1988, with antidumping duties in the amount of $292,638.12 and interest on the antidumping duties from December 12, 1980 (stated to be the "date of payment"), to the date of liquidation. On September 8, 1988, a protest of the liquidation was filed by the broker on behalf of the importer (this protest, not under consideration in the instant protest, was denied on July 23, 1992). On November 4, 1988, demand was made on the protestant surety.

The protestant states that the party (stated to have held title in the merchandise at the time of entry) for whom the importer acted as agent in importing the merchandise under consideration was placed under "Extraordinary Administration" in Italy in June of 1981. According to the protestant, this is an insolvency proceeding under Italian law in which the assets of the party holding title in the merchandise are transferred to a successor company and the predecessor is left with only the liabilities. Therefore, according to the protestant, "after the transfer of assets pursuant to the Italian Extraordinary Administration, there was neither an entity nor assets with which the surety could pursue its rights to subrogation in the event it was held liable for antidumping duties under its bond."

On January 23, 1989, the protestant filed the protest under consideration. The grounds for the protest were: (1) two different bills for different amounts, dated June 10, 1988, and July 22, 1988, were issued to the protestant; (2) the surety claimed that it did not issue a bond for the payment of antidumping duties covering this entry; (3) dumping duties were assessed in excess of the amount reflected in the assessment instructions of the International Trade Administration (ITA), Department of Commerce, and interest was calculated from an incorrect principal; (4) the entry should have been deemed liquidated as entered because no notice of suspension of liquidation was provided to the surety; (5) because no notice of suspension of liquidation was provided to the surety, the bond was breached to the prejudice of the surety, which discharged the surety's liability under the bond; (6) failure to liquidate the entry within 90 days after the suspension of liquidation was terminated should have resulted in a deemed liquidation of the entry; and (7) no deduction was made for the value of United States fabricated components under item 807.00 or 800.00, Tariff Schedules of the United States (TSUS). Further review for the protest was requested and granted.

With regard to the second ground for protest above, we consulted with the ITA. That Agency recommended denial of the part of the protest contending that dumping duties were assessed in excess of the amount reflected in the assessment instructions, stating that "... the correct amount of dumping duties [was] assessed on [the entry]." With regard to the issue of interest charged on the antidumping duties, that Agency stated that interest on overpayments and underpayments of antidumping duty assessed under 19 U.S.C. 1677g is not applicable to entries subject to the instructions of the applicable CIE notice and recommended that Customs grant this part of the protest.

The protestant filed a memorandum, dated June 30, 1992, in support of its protest in which it expanded on the "deemed liquidation" issues in the protest.

After meeting on April 9, 1993, with Customs Headquarters personnel, the protestant submitted additional arguments and materials with an April 12, 1993, letter. Subsequently, the protestant requested the opportunity to submit additional information regarding this matter. With its letter of August 27, 1993, the protestant did provide such additional information, consisting of two affidavits, along with supporting arguments.

The first of these affidavits, dated August 25, 1993, is by an attorney who states that he is currently employed by the protestant as "Bond Claim Manager" and has been so employed since 1991. This affiant states that he has conferred with the protestant's personnel responsible for Customs matters since 1980 and was advised that at all times relevant to this matter it was the regular business practice of the protestant to forward to the headquarters office of a Rouses Point, New York, company any documentation that the protestant received from Customs in connection with "the Government's extending and/or suspending the period for liquidating entries." The affiant states that he is familiar with and can identify Customs Form 4333-A, Notice of Suspension of Liquidation, and is aware that this form, as modified, is used to place sureties on notice that liquidation will be delayed. The affiant states that he has undertaken "an extensive and diligent search of any and all files, maintained by [his] office as well as other departments which are in the possession of [the protestant], and pertain to or correspond with [the protested entry]." The affiant states that this search revealed no trace of any Notice of Suspension of Liquidation for the protested entry and no record of the protestant's ever forwarding any Notice of Suspension to the Rouses Point company referred to above. The affiant states that he has no recollection of ever receiving or viewing any document from Customs which recorded or advised the protestant that the protested entry would not be liquidated within one year from the date of entry. The affiant "concludes" that the protestant never received Notices of Suspension of Liquidation from Customs for the protested entry.

The second affidavit, dated August 26, 1993, is by a person who states that she has been employed by the above-referenced Rouses Point company, stated to be a Customs Broker. The affiant states that she has worked continuously for the company at its headquarters location in Rouses Point since 1968. The affiant states that "[u]pon information and belief, at all times relevant to this matter, it had been the regular business practice of [the protestant] to forward to [the Rouses Point company] any documentation [the protestant] received from ... Customs ... in connection with the Government's extending and/or suspending the period for liquidating entries." The affiant states that she is familiar with and can identify Customs Form 4333-A, Notice of Suspension of Liquidation, and is aware that this form, as modified, is used to place sureties on notice that liquidation will be delayed. The affiant states that her department has maintained a file by Port of Entry and importer for each transaction that has been the subject of a Notice of Suspension of Liquidation forwarded to the Rouses Point company by the protestant. The affiant states that "[i]t has been the regular business practice of [her] department to file each and every document [they] receive pertaining to a particular importation in the appropriate file." The affiant states that she has undertaken "an extensive and diligent search of any and all files maintained by [her] department that pertain to or correspond with [the protested entry]." The affiant states that this search revealed no trace of any Notice of Suspension of Liquidation for the protested entry. The affiant states that she has no recollection of ever receiving or viewing any Notice of Suspension which recorded or advised the protestant that the protested entry would not be liquidated within one year from the dates of entry.

By letter of February 1, 1994, after Customs had, by letter of January 10, 1994, granted the protestant the opportunity to submit additional evidence in regard to the protest and offered the protestant the opportunity to meet again on this matter, the protestant submitted two additional affidavits, with supporting arguments.

The first of these two additional affidavits, dated January 31, 1994, is by a person who states that between 1975 and 1991 he was employed by the protestant and that he was employed by the protestant as National Underwriting Manager "at all times relevant to this matter." He states that his duties included review of all materials, including Notices of Suspension, that the protestant received from Customs. He states that after his review, the protestant's practice was to forward all notices to the Rouses Point company referred to above, to the attention of the person who provided the August 26, 1993, affidavit (described above), for further handling. The affiant states that he is familiar with and can identify Customs Form 4333-A, Notice of Suspension of Liquidation, and is aware that this form, as modified, is used to place sureties on notice that liquidation will be delayed. He states that he has no recollection of ever receiving a Notice of Suspension for the protested entry and, to the best of his knowledge and belief, the protestant never received such notice.

The second of these two additional affidavits, dated February 1, 1994, is by a person who states that she was an employee of the protestant between 1969 and 1985 and that she was employed by the protestant as "Clerical Supervisor" "at all times relevant to this matter." She states that her job responsibilities included the processing of all mail received by the protestant from Customs. She states that at the relevant times it was the protestant's practice to have the person who provided the January 31, 1994, affidavit (described above) review all materials from Customs and, after his review, it was her responsibility to forward all materials to the Rouses Point company referred to above, to the attention of the person who provided the August 26, 1993, affidavit (described above), for further handling. The affiant states that she is familiar with and can identify Customs Form 4333-A, Notice of Suspension of Liquidation, and is aware that this form, as modified, is used to place sureties on notice that liquidation will be delayed. She states that she has no recollection of ever receiving or viewing a Notice of Suspension for the protested entry and, to the best of her knowledge and belief, the protestant never received such notice.

On February 8, 1994, after the representatives of the protestant met on February 4, 1994, with Customs about this matter, the protestant submitted three additional affidavits (originals of the affidavits were submitted by letter of February 17, 1994, and one affidavit is dated February 16, 1994). The protestant made the additional argument at this time that, according to the codes on the Customs record of extension/suspension of liquidation for the entry under consideration, the notice which was allegedly provided was a notice of extension, not suspension, and since, according to the protestant, there was no basis to extend (rather than suspend) liquidation, the allegedly mailed notices were invalid. Further, the protestant argued in this letter, even if the alleged notices were valid, since, according to the protestant, they were notices of extension, the entry would have been deemed liquidated as entered four years after entry under 19 U.S.C. 1504(d). The three additional affidavits are described below.

By affidavit dated February 8, 1994, the person who provided the January 31, 1994, affidavit (described above) states (in addition to what he stated in the earlier affidavit) that it was the protestant's regular business practice and procedure to receive monthly printouts from the Rouses Point company referred to above reflecting each of the bonds and amounts which had been issued by the protestant through the Rouses Point company for that month. The affiant states that from these monthly printouts he selected a sample of accounts for review in an annual audit which he conducted of the Rouses Point bond issuing activities for the protestant. The criteria for selection of the sample of accounts, according to the affiant, were nature of importation, size of bond, frequency of unliquidated entries, claims, or compliance with the Rouses Point bond authority limitations and established practices. The affiant states that he would request copies from the Rouses Point company of those bonds which were the subject of his audit. The affiant states that the bond for the protested entry "is one which [he] could have identified for audit based on its amount and the fact that it was issued by the Seattle branch of [the Rouses point company]." The affiant states that "[h]ad it [i.e., the bond for the protested entry] been selected for [his] annual audit, it would be one of the bonds for which [he] would have received a copy from [the Rouses Point company]."

The affiant states that the bonds which he received as a result of his audit would be maintained by the protestant in an audit file for at least a year and then usually discarded. In addition, the affiant states, open claims from Customs, notices of suspension or extension, records on principals in financial difficulty would be recorded on an accounting worksheet and placed into a master file, kept alphabetically, which would be monitored on a regular basis until favorably resolved. If the protestant did not receive a notice of extension or suspension, the affiant states, the entry would be treated as liquidated and any established files would be discarded. The affiant states that copies of any notices of suspension received by the protestant would be placed in the master file and the original of such notices would be mailed to the Rouses Point company, to the attention of the person who provided the August 26, 1993, affidavit (described above), for further handling.

The affiant states that when the protestant received a demand on the surety in 1988 for the protested entry, "to the best of [his] recollection" he searched the master file to determine whether the protestant had a copy of a notice of suspension for the protested entry and could not find one. In addition, the affiant states, in describing his search of the master file, "there would not have been a file at that point for this bond, since it would have been discarded approximately one year after completion of [his] audit on the understanding that the entry had been liquidated because it had not been extended or suspended."

By affidavit of February 8, 1994, the person who provided the August 25, 1993, affidavit (described above) states (in addition to what he stated in the earlier affidavit) that he undertook a search of all of the protestant's files relating to Customs bonds, "and specifically the audit and the master files maintained by [the person who provided the January 31 and February 8, 1994, affidavits described above] and referred to in his affidavit." The affiant states that "[he] was unable to locate an audit file or a master file for the bond for the [protested entry]."

By affidavit of February 16, 1994, the person who provided the August 26, 1993, affidavit (described above) states (in addition to what she stated in the earlier affidavit) that it was the regular business practice of her employee (the Rouses Point company referred to above), upon receipt of a notice of suspension or extension of liquidation, to request a copy of the entry file from the branch office of the Rouses Point company which issued the bond. The affiant states that upon receipt of the file, her department would set up a file and place the notice of suspension or extension in that file and that such files were maintained until the underlying issues of the suspension or extension of liquidation were resolved. The affiant states that if the Rouses Point company did not receive a notice of suspension or extension from the protestant, then a file for that matter would not be established. The affiant states that the Rouses Point company still maintains open files for entries made "around the same time" as the protested entry. The affiant states that she has undertaken a search of "all open and closed files involving [the protestant's] customs bonds [and] [has] been unable to locate a Notice of Suspension of liquidation for [the protested entry]."

ISSUE:

May the protest in this case be granted?

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed (i.e., within 90 days of the demand upon the protestant surety; see 19 U.S.C. 1514(c)(2)). With regard to the requirement in 19 U.S.C. 1514(c)(2) for a certification that the protest is not being filed collusively to extend another authorized person's time to protest, we note that a timely protest was filed on behalf of the importer. The decisions protested are protestable under 19 U.S.C. 1514 (the exception in 19 U.S.C. 1514(b) (see, Nichimen America, Inc. v. United States, 938 F.2d 1286 (1991 Fed. Cir.)) is not applicable because Customs implementation of the ITA instructions for assessing antidumping duties is protested, not the antidumping determination itself).

In regard to the contention that two different bills were issued to the protestant and one should be voided, you indicate that the second bill included interest which you state the Department of Commerce has advised should not be collected on this entry. Therefore, you state that the bill will be recalculated. The protest is GRANTED in this regard (see discussion of interest below).

In regard to the contention that the protestant surety did not issue a bond for the payment of antidumping duties covering the entry, the protestant did issue an Immediate Delivery and Consumption Entry Bond (Single Entry) for the entry under consideration. This bond binds the principal and surety, "in consideration of the release of [the covered shipment] before the full amount of duties and taxes imposed upon or by reason of importation has been finally determined ... to pay any and all such duties and taxes found to be due on the shipment". If the contention is that antidumping duties are not included in the meaning of "duties and taxes", as used in the bond, see C.J. Tower & Sons v. United States, 21 CCPA 417, 71 F.2d 438 (1934), and Imbert Imports, Inc. v. United States, 67 Cust. Ct. 569, 576, 331 F. Supp. 1400 (1971); aff'd 60 CCPA 123, 475 F.2d 1189 (1973). The protest is DENIED in this regard.

In regard to the contention that the dumping duties were assessed in excess of the amount reflected in the assessment instructions of the ITA, the antidumping duties in this entry are in accordance with the assessment instructions in C.I.E. N-169/70. As stated in the FACTS portion of this ruling, we consulted with the ITA in this regard and that Agency confirmed that "... the correct amount of dumping duties [was] assessed on [the entry]." The protest is DENIED in this regard.

As for the interest charged on this entry, although the protestant's contention that the interest was calculated from an incorrect principal must fail (on the basis of the determination in the immediately preceding paragraph), the ITA advised that no interest on the antidumping duties should have been charged in this case. There was no requirement for a cash deposit of antidumping duties for the entry under consideration, nor was any such deposit actually made. Therefore, pursuant to the applicable statute (19 U.S.C. 1677g) and Timken Co. v. United States, 15 CIT 526, 777 F. Supp. 20 (1991) (see also, Canadian Fur Trappers Corp. v. United States, 12 CIT 612, 691 F. Supp. 364 (1988); aff'd, 7 Fed. Cir. (T) 136, 884 F.2d 563 (1989)), the protest is GRANTED in regard to the interest charged on the antidumping duties on the entry under consideration (see discus- sion, above, of the issue of two different bills for the entry).

In regard to the contention that the entry should have been deemed liquidated as entered because, it is alleged, no notice of suspension of liquidation was provided to the surety, we note that the "deemed liquidated" provisions upon which the protestant relies in this regard (in 19 U.S.C. 1504) are applicable to the entry under consideration (i.e., see section 209(b), Pub. L. 95-410). Under section 1504, an entry not liquidated within 1 year from the date of entry of the merchandise shall be deemed liquidated as entered, except that liquidation may be extended by the giving of notice to the importer or consignee concerned and to any authorized agent and surety if, among other things, liquidation is suspended as required by statute or court order. The Courts have held that "[f]ailure to provide proper notice results in liquidation by operation of law" (International Cargo & Surety Insurance Co. (Data Memory Corp.) v. United States, 15 CIT 541, 543, 779 F. Supp. 174 (1991), and cases cited therein).

The protestant claims that it received no notice of suspension with regard to this entry. We have examined our computer records with regard to this entry and found that notices of suspension were sent to the importer and to the surety protestant suspending the liquidation for the entry. Notices were sent to the importer and the surety (i.e., according to Customs records, notices were sent to Hanover Insurance Company, 440 Lincoln Street, Worcester, Massachusetts 01605, the address given by the surety on the bonds under consideration) in the 44th week of 1981, the 43 week of 1982, and the 43 week of 1983. The code given for these notices was "Code 3" which, at that time, was the code for indefinite extension (i.e., suspension as required by statute or court order).

The protestant argues, in its February 8, 1994, supplemental submission, that the fact that three notices were allegedly provided and that the code for the reason for the notices was code 3 establishes that the alleged notices were notices of extension, not suspension, and that, therefore, either the alleged notices were invalid because there was no basis to extend or, if the notices were valid, the entry should have been deemed liquidated as entered under 19 U.S.C. 1504(d). We disagree. The fact that three notices of suspension were issued to the importer and the surety protestant, as would be the case for an extension of liquidation because information needed by Customs was unavailable or at the request of the importer (see 19 CFR 159.12(a), (d), and (e)), does not affect the validity of the notices (compare: Pagoda Trading Co. v. United States, 9 CIT 407, 617 F. Supp. 96 (1985), aff'd 5 Fed. Cir. (T) 10, 804 F.2d 665 (1986), in which computer- generated notices of suspension were issued after a countervailing duty order had been revoked and Customs had been directed to proceed with liquidation and in which Customs could not explain the reason for the issuance of the notices of suspension; in this case the notices of suspension were issued under a pending antidumping finding under which liquidation was suspended and Customs knew why the notices were issued). As to the meaning of "code 3", at the time of the notices that code meant "indefinite extension" or Court-ordered or statutory extension (i.e., the code refers to suspension, see 19 U.S.C. 1504(b)(2)) (the other codes in use at this time were "code 0", cancellation of an extension; "code 1", Customs extension; and "code 2", importer-requested extension; so "code 3", indefinite extension, could only have meant a Court- ordered or statutory extension, i.e., a suspension). The protest is DENIED in this regard.

In its supplemental submissions, the protestant made additional arguments as to why the protest should be granted in this regard and provided the affidavits described in the FACTS portion of this ruling. In its August 27, 1993, letter, the protestant states that it cannot glean from the above described computer records (provided to the protestant in response to a FOIA request for "all documents and records in the [G]overnment's possession evidencing the issuance and giving of a notice of suspension of liquidation to [the protestant] of [the protested entry]") how those records show that the notice was mailed to the protestant. The protestant argues that Customs cannot have any additional evidence that notice was provided to the protestant, because the copy of the above-described computer records was the only document provided to the protestant in response to its FOIA request and the FOIA request was not partially denied.

The protestant argues that if Customs is relying on the presumptions that Government officials perform their duties in the manner required by law and that proof of mailing raises a presumption of delivery, the protestant has rebutted the presumptions by the described affidavits (citing International Cargo & Surety Insurance Co. (Data Memory Corp.) v. United States, supra; Enron Oil Trading and Transportation Co. v. United States, 15 CIT 511 (1991), vacated 988 F.2d 130 (1993); Orlex Dyes & Chemicals Corp. v. United States, 41 Cust. Ct. 168, 170, C.D. 2036, 168 F. Supp. 220 (1958); and F.W. Myers & Co. v. United States, 6 CIT 215, 574 F. Supp. 1064 (1983)). On the basis of these cases, the protestant contends that it has rebutted the above presumption with the affidavits described in the FACTS portion of this ruling. On the basis of the Enron case, the protestant also states that the document relied upon by Customs (described above) was held insufficient in the CIT decision to prove mailing in that case.

Further, the protestant contends that there is nothing in the document (referred to in the preceding paragraph) to establish that "it" (we assume the protestant means notice) was printed or mailed. The protestant states that, based on the evidence in the Enron case, the "MAIL CYCLE" column contains a code identifying the year and weekly mail cycle in which the corresponding notice was printed and the "RUN DATE" column contains the actual date that the notice was printed. However, the protestant states, according to the evidence in the Enron case, Customs did not begin recording the actual dates that notices were printed until after the dates corresponding to the mail cycles shown for the notices of the first extensions in that case (i.e., in the Enron case; in 1985). The protestant contends that since the above-described document lists "00/00/00" under the "RUN DATE" column, although the "MAIL CYCLE" column shows a printing date for the notices of the 44th week in 1981, the 43rd week in 1982, and the 43rd week in 1983, there is no evidence that the notice was actually printed since there is no date in the "RUN DATE" column.

The two recent Court decisions addressing the issue of notice of extensions or suspensions of liquidation are the Enron case and the Data Memory Corp. case, cited by the protestant. As the protestant noted, the first of these cases, the Enron case, has been vacated on appeal. Nevertheless, an analysis of the evidence in that case is helpful in reaching a decision in the protest under consideration.

The evidence on behalf of the plaintiff in the Enron case consisted of affidavits by an employee of Enron and its predecessor and by Enron's attorney in the case. The employee stated that he had worked for Enron and its predecessor for the preceding nine years and that during the time relevant to the case, it was the regular business practice of Enron and its predecessor to forward any documents received from Customs to the employee (i.e., the employee of the plaintiff). The employee maintained a file for each product contract in the case, and it was his regular practice to lodge all of the documents he received pertaining to a particular importation in the appropriate contract file. The employee had searched these files and found no trace of any notice of liquidation (probably should be notice of extension) of the four entries at issue. The employee stated that he had no recollection of ever receiving or viewing any notice of extension, and that he believed that neither Enron nor its predecessor had ever received such notices.

The attorney for Enron in the case stated that he had personally ascertained that diligent searches of the relevant files in the offices of the surety for the entries had been undertaken and that no notices of extension or liquidation nor any records of receipt of such notices had been found.

The evidence on behalf of Customs in the Enron case consisted, in pertinent part, of affidavits of two Customs employees with expertise in the operation of Customs Automated Commercial System (ACS) and a computer printout similar to that described above in relation to this protest. According to the affidavits, at the time in question, Customs extended the time for liquidation by recording the extension information onto ACS which then automatically printed the notices. The notices were printed and processed on weekends, and separated and stacked in trays for pickup by the Postal Service. Customs did not maintain paper copies of extension notices, but stored information relating to notices in a computerized history file.

The computer printout in the Enron case listed the name and address for the addressee of each notice and had columns labeled "EXT/SUSP CODE" (note that in the Enron case, the code in this column was "1", consistent with the codes described above, in regard to the protestant's contention that the alleged notices were notices of extension, not suspension), "MAIL CYCLE", and "RUN DATE", in addition to columns listing the entry number and other information. According to the affidavits, the MAIL CYCLE column contained a code which identified the year and weekly mail cycle in which the corresponding notice was printed. The RUN DATE column contained the actual date that the notice was printed. In the first notices for the entries involved in the Enron case (these would have been issued in 1985), the RUN DATE was shown as "00/00/00" because at that time Customs did not record the actual dates that notices were printed, although the second notices did show dates less than two years after the date of entry in the RUN DATE column.

The Court in the Enron case concluded (15 CIT at 515) that "an issue of material fact remain[ed]: whether notice was mailed to [Enron's predecessor]." The Court then stated: "Plaintiff's affidavit from [the employee of Enron and its predecessor] is sufficient to rebut the presumption that notice was given" (i.e., the Court recognized the existence of this presumption). In view of the evidence of the employee of Enron and its predecessor (stated to be sufficient to rebut the presumption), the Court stated that "[t]he [G]overnment [then] had the burden of establishing that notice was given to plaintiffs [and] [t]he affidavits and admissions ... do not establish the fact." The Court noted that (in the absence of a date in the RUN DATE column) since the MAIL CYCLE code for the first extensions apparently was generated before printing, no date of actual printing is included in the records (i.e., "Thus it is not clear if the 'MAIL CYCLE' code verifies that the notices of the first extension were actually printed during that mail cycle, or were simply scheduled for printing" (15 CIT 516)).

In regard to the plaintiff's affidavits, the Court stated:

Plaintiff's evidence of non-receipt by [Enron's predecessor] is simple and clear, although circumstantial. The evidence of non-receipt by the surety is less firm, coming as it does from an affiant who gives no indication of his competence except that he "personally ascertained" that no record of notice existed in the surety's files. However, plaintiff need only establish that no notice was given the "importer, his consignee, or agent". 19 U.S.C. 1504. Evidence of non- receipt by the surety merely adds some support to that inference. [15 CIT at 516.]

As stated above, the Enron CIT decision was vacated and remanded in an unpublished decision "not [to] be cited by counsel, except in support of a claim of res judicata, collateral estoppel, or law of the case."

The second recent case considering this issue is the International Cargo & Surety Insurance Co. (Data Memory Corp.) case, supra. In this case, the evidence on behalf of Customs was similar to that in the Enron case (i.e., declarations by two Customs employees and a computer printout), except that in this case the ACS "extension/suspension history file" was stated to have been "lost" and as a substitute Customs produced the "entry summary header file." The latter printout contained encoded data which, according to the declarations, "establishe[d] that notices to [the importer and surety] were printed on [a particular date]" (15 CIT at 544). According to the declarations, as a routine matter notices were printed at the Customs Data Center on a Saturday or Sunday and mailed the following Tuesday.

As in the Enron case, the Court in the Data Memory case recognized the presumption that proper notice was given and noted that this presumption may be rebutted by evidence that notice was not received. In this regard, the Court in the Data Memory case cited the Enron case (note that the Data Memory case was decided before the Enron case was remanded) and stated that in that case "this court found that an affidavit from the importer's recordkeeper, stating that an extension notice had not been received, was sufficient to rebut the presumption and defeat summary judgement." (15 CIT at 544) Since no such evidence was submitted in the Data Memory case, after concluding that the extension was permissible under the statute, the Court held for Customs.

Other pertinent cases (most cited by the protestant in one or more of its supplemental submissions) are briefly described below. In United States v. International Importers, Inc., 55 CCPA 43, C.A.D. 932 (1968), the Court held that the evidence presented at the trial court level was sufficient to rebut the presumption of delivery. This evidence consisted of testimony by the vice president of the company involved that all mail, including mail containing Customs documents was opened by his secretary, or in her absence, himself. The witness stated that all records pertaining to Customs matters relating to importations were kept under his direct supervision, that a separate file containing all details of the importation and copies of all Customs forms relating thereto was maintained for each shipment, and that shipments were logged chronologically. The witness testified that the notices under consideration in the case were not received, to the best of his knowledge, nor was their receipt indicated by the office records. In addition, the witness gave evidence showing errors in mailing of other Customs notices, two of which directly affected the company involved on two separate occasions.

In Orlex Dyes & Chemicals Corp. v. United States, supra, the Court held that the evidence presented was sufficient to raise a presumption that the notice considered in that case was not mailed. The evidence consisted of testimony by the vice president and secretary of the customhouse broker (which was required to be given the notice) which entered the merchandise. These witnesses testified that there was an "established and invariable" practice which would have "required" the witnesses in the course of their regular duties to have handled the notice "to the exclusion of all other persons in the office." The witnesses testified that, to the best of their knowledge and believe, the notice had not been received and that an examination of the file did not disclose either the original or a photostatic copy, "which would have been made, if the notice had come into the office."

In F.W. Myers & Co. v. United States, supra, the Court recognized the presumption created by mailing but, upon evidence consisting of an affidavit by an F.W. Myers employee that "[w]e searched our files and were unable to locate any notice of Customs Service action on this protest ... and we believe that no notification was sent to us" (6 CIT at 217), the Court held the presumption to have been rebutted. Note that in this case the notice would have been in the company's files if it had been received (otherwise, the Court would not have accepted as meaningful the statement that the company had searched its files).

In Arnold, Schwinn & Co. v. United States, 45 Cust. Ct. 156, C.D. 2217 (1960) (cited in United States v. International Importers, Inc., supra), there was testimony by an employee of the brokerage firm to which the notices under consideration were required to be sent that his firm received through the mail from Customs notices of appraisement for the importer. The witness testified that, in the usual course of business, he opened all mail sent to his office by Customs. He testified that each notice of appraisement received by his firm, is forwarded to the importer, but a copy of the transmittal letter is retained in the broker's files. The witness testified that several searches had not yielded any record of receipt of the notices of appraisement in controversy. An employee of the importer also testified to that firm's procedures for handling mail relating to Customs matters (which would have been received from the broker, under the procedure described above). This witness stated that he made several searches of the pertinent files and failed to find any evidence of receipt of the notices. In spite of this evidence, the Court recognized the presumption of delivery and added that "the instant cases involve 17 such notices mailed on 4 different days over a 9-day period, and an inference that they were lost in the mail and not delivered would be opposed to the probabilities and could not support a finding of non-receipt" (45 Cust. Ct. at 160, emphasis in original). As the Court in the International Importers case, supra, noted, the trial court in that case distinguished the Arnold, Schwinn case, supra, on the basis that the latter case "involved the improbability of 17 notices going astray and did not involve evidence of misdirection of notices by the collector" (International Importers, Inc., v. United States, 57 Cust. Ct. 134, 138-139, C.D. 2742 (1966)).

In our opinion, the affidavits submitted by the protestant in this case do not meet the above standards, including those in the vacated and remanded Enron case. The "gist" (this term is used in connection with the testimony in the Orlex case, supra, 41 Cust. Ct. at 170) of the affidavits by the current or former employees of the protestant (i.e., all of the affidavits except the August 26, 1993, and February 16, 1994, affidavits by the employee of the Rouses Point company) is that at the time under consideration it was the regular business practice of the protestant to forward to the Rouses Point company any documentation received from Customs in connection with the extension or suspension of liquidation of entries. The person who states that it was her responsibility to process all mail received by the protestant from Customs and the person who states that his duties included the review of all materials, including Notices of Suspension from Customs, state that they have no recollection of ever receiving a Notice of Suspension for the protested entry.

The latter person also states that the bond for the protested entry "could" have been selected for audit, and if it had been so selected, he would have kept a record of it, along with any notices of suspension or extension (such notices would have been recorded on an accounting worksheet and copies would have been placed in the master file, if the bond for the protested entry had been selected for audit). This latter person also states that when the protestant received a demand on the surety in 1988 for the protested entry, to the best of his recollection, he searched the master file to determine whether the protestant had a copy of a notice of suspension for the protested entry and could not find one.

A person who was first employed by the protestant in 1991 states that he searched all of the protestant's files pertaining to the protested entry and that he found no trace or record of any Notice of Suspension of liquidation for the protested entry. He also states that he has no recollection of ever receiving or viewing any document advising the protestant that the protested entry would not be liquidated within one year from the date of entry. This person also states that he searched all of the protestant's files relating to Customs bonds, specifically including the audit and master files described by the above affiant, and that he was unable to locate an audit file or a master file for the bond for the protested entry.

The problem with the foregoing evidence is that, according to the affiants, the protestant would have no record of receipt of notices of suspension for the protested entry unless the bond for the protested entry had been selected for audit (compare to all of the Court cases described above, in which it is clear that the party to whom Customs was required to give notice kept records of the notices under consideration, had examined those records, and found no evidence of receipt of the notices in those records). The statement that the bond "could" have been selected for audit and, if it had been selected for audit the protestant would have maintained records of notices of suspension, is speculative and hypothetical (compare to the exactitude and certainty of the testimony or affidavits in the Enron, International Importers, Orlex, and Arnold, Schwinn cases, supra). The same defect (i.e., the lack of exactitude and certainty) exists in regard to the "master file", about which the affidavit is not at all clear, but which it appears would contain notices of suspension or extension (and other data) for bonds selected for audit (note that the affiant, in describing his search of the master file, states that there would not have been a file for the bond for the protested entry, "since it would have been discarded approximately one year after completion of [his] audit ...."). Additionally, the affidavits are inconsistent with each other (i.e., one affiant states that notices of suspension or extension were recorded on an accounting sheet and placed, along with copies of such notices, in the master file and another affiant states that he was unable to locate an audit file or a master file for the bond for the protested entry (in other words, this affiant indicates that audit and/or master files are kept for each bond and the other affiant states that all documents relating to audited bonds are placed in a master file)).

Therefore, the evidence of non-receipt by the party to whom Customs was required to given notice (i.e., the surety- protestant), other than the speculative and hypothetical evidence discussed above, consists of the statements by three affiants that, to the best of their recollection, they did not see the notices under consideration. The statement by the affiant who was not employed by the protestant until approximately 10 years after the first notice was sent to the protestant, according to Customs records, is of no value whatsoever (i.e., because he would not have had the opportunity to see any such notice since, according to the protestant's evidence, the protestant's practice was to forward such notices to the Rouses Point company). The evidence of this affiant is in the nature of the evidence of non-receipt by the surety in the Enron case "coming as it does from an affiant who gives no indication of his competence except that he 'personally ascertained' that no record of notice existed in the surety's files." The Court in the Enron case called this evidence "less firm", and that is even more true of the evidence in this protest, when the affiant's own statement explains why no such notices would be found in the protestant's records (i.e., because, according to the affidavit, they were routinely forwarded to the protestant's broker).

The other two affiants were, according to their statements, employed by the protestant at the time under consideration. How- ever, their affidavits, with the caveat that their statements are to the best of their recollection, are in reference to something which, according to Customs records, happened between 10 and 12 years before the dates of their affidavits. Furthermore, their affidavits relate to duties or responsibilities which were quickly and routinely discharged (i.e., according to the protestant's evidence, notices of suspension were routinely forwarded to the Rouses Point company), so they would have had no reason to remember this transaction among the thousands of similar transactions they must have handled in the intervening time. Also, these recollections about events years before the affidavits were given are unsupported by any documents or records (e.g., such as a record of the protestant's filing system, or its actions on other such notices (at the February 4, 1994, meeting with the protestant, the protestant's representatives were offered the opportunity to submit such records but have not done so)). In regard to this latter point, see Peerless Insurance Co. v. United States, 12 CIT 1231, 1234, 703 F. Supp. 104 (1988), in which the Court cited the Supreme Court case of Magee v. Manhattan Life Ins. Co., 92 U.S. 93, 98 (1875), for the proposition that "notice to a surety for payment is not rendered insufficient merely because the record-keeping practices of the surety are inadequate."

In regard to the foregoing paragraph, see Andy Mohan, Inc. v. United States, 74 Cust. Ct. 105, C.D. 4593, 396 F. Supp. 1280 (1975), aff'd 63 CCPA 104, C.A.D. 1173, 537 F.2d 516 (1976)), in the CCPA decision of which the Court noted that the affidavits in question "... [were] entitled to little weight, being incomplete and based on unproduced records, and having been executed years after the transactions to which they attest" (63 CCPA 107). See also, in this regard, United States v. Baar & Beards, Inc., 46 CCPA 92, C.A.D. 705 (1959), in which an affidavit more than 2 years after the event to which it related which was not supported by any records was found insufficient to overcome the valuation affixed by the appraiser.

The August 26, 1993, and February 16, 1994, affidavits by the employee of the Rouses Point company basically state that the broker to which the protestant allegedly forwarded notices of extension or suspension did not receive the records. This is of no value whatsoever. Customs was not required to give this company notice, it was required to give the surety notice (note that in each of the Court cases discussed above, the evidence accepted by the Court as rebutting the presumption of delivery referred to or included records showing that the party to whom Customs was required to receive notice did not receive such notice). Compare, to the evidence of non-receipt by the surety in the Enron case, which the Court stated "merely adds some support to [the] inference [that no notice was given in that case to the importer, his consignee, or agent]" (see also, comparison to the evidence on mail-handling procedures in the Arnold, Schwinn case, below). Testimony by this affiant, as an employee of the company to which the notices would allegedly have been sent, is of even less value than that relating to the non-receipt by the surety in the Enron case (i.e., because there is no requirement that the company be given notice, in this case). In regard to the non-receipt by the surety in the Enron case, we note that the Court stated that evidence of non-receipt by the surety did inferentially add "some support" to the plaintiff importer's position. We note that in this protest the protestant has provided no such evidence relating to non-receipt by the importer, consignee, or agent, which would correspond to such evidence.

We note in this case, according to Customs records, three notices were mailed to the protestant-surety and three notices were mailed to the importer. As noted above, in spite of the suggestion in the Enron case that evidence of non-receipt by the importer could at least be supportive, the protestant has provided no such evidence. As in the Arnold, Schwinn case, supra, the fact that this case involves three notices, mailed at three different dates (in three different years) (and that there is no evidence of non- receipt of the three such notices which were mailed to the importer, according to Customs records), casts doubt on the reliability of the protestant's evidence (basically, that the affiants cannot remember seeing the notices in controversy), as non-delivery of the notices "would be opposed to the probabilities" (45 Cust. Ct. at 160).

We note also that the mail-handling procedures alleged in this case are similar to those in the Arnold, Schwinn case. In that case, the broker, to whom Customs gave notice, forwarded Customs notices to the importer. Employees of both the broker and the importer testified to the procedures and testified that a search for the notices had revealed no evidence of receipt of the notices under consideration. In the Arnold, Schwinn case, as contrasted with the case under consideration, in the usual course of business the broker kept copies of transmittal letters to the importer (transmitting the notice). Notwithstanding the testimony as to the mail-handling procedures and the search of the files for evidence of receipt of the notices, as stated above, the importer in the Arnold, Schwinn case was found not to have overcome the rebuttable presumption of delivery and receipt.

In conclusion, based on the foregoing, the affidavits of the protestant's current or former employees are incomplete, speculative and hypothetical, lacking in exactitude and certainty, inconsistent with each other, based on unproduced records, based solely on memory of events which would have transpired years before the time of the affidavits, and opposed to the probabilities recognized by the Courts. The affidavits by the employee of the Rouses Point company are of no value, because they basically state that a company to which Customs was not required to give notice of suspension did not receive such notice.

Thus, according to both of the recent CIT decisions (one vacated) (cited by the protestant in regard to this issue and in which the Government relied on evidence similar to that in this case) addressing this issue, Customs is entitled to a rebuttable presumption that notice of the suspension of liquidation was properly given to the protestant. An analysis of those CIT decisions as well as other relevant decisions clearly shows that the protestant has failed to rebut this presumption. Accordingly, the protest is DENIED in this regard.

The protestant's contention that the bond was breached because, allegedly, no notice of suspension of liquidation was provided to the surety is resolved by the resolution of the preceding issue. That is, although 19 CFR 159.12(c) was effective with regard to the entry under consideration (see T.D. 79-221, effective September 10, 1979), according to Customs records, notice of suspension of the liquidation was given to the importer and surety protestant and, therefore, the liquidation was properly extended. The protest is DENIED in this regard.

In regard to the protestant's contention that the failure to liquidate the entry within 90 days after the suspension of liquidation was terminated should have resulted in a deemed liquidation of the entry, we are guided by the decisions of the CIT and the CAFC in the case of Canadian Fur Trappers Corp. v. United States, supra. In this case the CIT held that the provision in 19 U.S.C. 1514(d) allowing 90 days from the removal of the suspension of liquidation for liquidation of an entry is directory and not mandatory ("... it is the statutory language and structure which compels the conclusion that the provision is directory" (12 CIT at 618)). Quoting from the legislative history for the provision under consideration, which is stated to clearly support the decision of the CIT, the CAFC affirmed the decision of the CIT regarding the interpretation of 19 U.S.C. 1504 (7 Fed. Cir. (T) at 139). See also, Eagle Cement Corp. v. United States, 17 CIT ___, Slip Op. 93-117 (June 23, 1993), and Dal-Tile Corp. v. United States, 829 F. Supp. 394 (1993). We note that under the amendments effected to 19 U.S.C. 1504 by section 641, title VI, Public Law 103-182 (107 Stat. 2057, 2204), the liquidation in this case was timely and there would have been no deemed liquidation (i.e., the amendment requires Customs to liquidate entries for which liquidation was required to be suspended by statute or court order within 6 months after receiving notice of the removal from the Department of Commerce, other agency, or a court with jurisdiction over the entry and the liquidation in this case was within that 6- month period).

Accordingly, following the decision in the Canadian Fur Trappers Corp. decision, and consistent with the applicable statute as amended by Public Law 103-182 (see above), Customs failure to liquidate the entries within 90 days of the lifting of the suspension of liquidation (liquidation was 129 days after the February 2, 1988, issuance of liquidation instructions) does not result in a "deemed liquidation." The protest is DENIED in this regard.

In regard to the protestant's contention that there was no deduction for the value of United States fabricated components under item 807.00 or 800.00, TSUS, the file indicates and you state that deduction was made for American Goods Returned under item 800.00. In the absence of any other evidence on this issue, the protest is DENIED in this regard (see, e.g., United States v. Lineiro, 37 CCPA 5, 10, C.A.D. 410 (1949), regarding the burden of proof in Customs litigation, in which the Court stated "[d]etermination of issues in customs litigation may not be based on supposition").

HOLDING:

The protest is GRANTED IN PART (as to the interest on the antidumping duties and the second bill for the entry, which includes such interest) and DENIED IN PART (as to the remaining issues). In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office, with the Customs Form 19, to the protestant 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 Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act, and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division