LIQ-4-01/02 CO:R:C:E 225343 TLS
District Director
U.S. Customs Service
300 S. Ferry Street
Terminal Island
San Pedro, California 90731
RE: Further review of protest #2704-91-102697 concerning the
assessment of anti-dumping duties (ADD) and countervailing duties
(CVD) on a certain entry; 19 U.S.C. 1504; Nunn Bush and Weyco
Group, Inc. v. United States, CIT slip op. 92-9 (February 5,
1992).
Dear Sir:
This office has received the above-referenced application
for further review of the protest as provided for under Customs
regulations. We have considered the request and have made the
following decision.
FACTS:
The entry in question was filed on July 10, 1984. Customs
was ordered to suspend liquidation on the subject entry, as well
as other entries, through a Federal Register notice published at
49 Fed. Reg. 19547 (May 8, 1984). The notice also ordered the
district director holding the entry to require a cash deposit or
bond to cover antidumping duties (ADD) on the entry at a 13.7%
rate. Customs received instructions on November 14, 1986 lifting
the suspension of liquidation and orders to liquidate. There was
no extension of liquidation on the entry after that date.
The entry was also subject to a countervailing duty order
which was issued on October 1, 1984, suspending liquidation.
Customs received instructions on December 23, 1986 lifting the
suspension and orders to liquidate the entry at a 24.04% rate.
As with the ADD, there was no extension of liquidation after the
suspension was lifted.
Your office claims that the ADD rate is 13.7% as the
protestant says and the CVD rate is 24.04%. No interest is to be
assessed on the ADD but interest is to be charged on unpaid
countervailing duties, according to your office. Your office
also explains that the delay in liquidating the entry is
attributed to the entry being the subject of a fraud
investigation. It is conceded that the entry was not extended
during this time.
Liquidation was done on December 14, 1990. Customs made a
Formal Demand on Surety on March 4, 1991 for payment of the
subject duties. This protest was timely filed within 90 days of
that action on May 29, 1991 in response to the demand.
ISSUE:
Whether the rate and interest to be charged on ADD and CVD
is proper in light of the entry not being extended or liquidated
after suspension was lifted.
LAW AND ANALYSIS:
The relevant parts of 19 U.S.C. 1504 read as follows:
(d) Limitation.--Any entry of merchandise not
liquidated at the expiration of four years from the
applicable date specified in subsection (a) of this
section, shall be deemed liquidated at the rate of
duty, value, quantity, and amount of duty asserted at
the time of entry by the importer, his consignee, or
agent, unless liquidation continues to be suspended as
required by statute or court order. When such a
suspension of liquidation is removed, the entry shall
be liquidated within 90 days therefrom.
The Act of December 8, 1993 (Pub. L. No. 103-182 sec. 641, 107
Stat. 2057) amended 19 U.S.C. 1504 to deem liquidate on its
fourth-year anniversary any entry whose liquidation is extended
that is not liquidated within four years; any entry whose
liquidation is suspended and such suspension is subsequently
removed but the entry is not liquidated within six months after
Customs receives notice of the removal is deemed liquidated at
that time. The present entry is not subject to this amendment
because the suspension of liquidation was lifted before the
effective date of the amendment.
With respect to the liquidation issue in this case, we
believe the recent court holding in Nunn Bush and Weyco Group,
Inc. v. United States, CIT slip op. 92-9 (February 5, 1992), is
controlling. The Nunn Bush decision held that 19 U.S.C. 1504(d)
should be read to deem as liquidated any entry which is not
subject to valid suspension on its fourth-year anniversary. Id.
As noted above, Commerce issued instructions lifting the
suspension on November 14, 1986 (ADD) and December 23, 1986
(CVD), requiring Customs to liquidate the entry. The entry
remained unliquidated on its fourth-year anniversary, July 10,
1988. Thus, pursuant to Nunn Bush, the entry was deemed
liquidated on that date at the rate asserted by the importer at
the time of entry.
Your office concedes that no extension was done after the
suspension was lifted, but explains the delay was due to a
pending fraud investigation involving the entry. Customs laws at
the time of entry allowed for reliquidation of an entry if the
appropriate customs officer found probable cause to believe fraud
is involved. 19 U.S.C. 1521. Thus, the possibility of fraud on
the entry did not preclude Customs from following instructions to
liquidate that entry. Furthermore, there is no apparent finding
of fraud in this case. Therefore, as noted above, absent an
extension of liquidation, the entry in question is deemed
liquidated on its fourth-year anniversary at the rates of duty
asserted when entered.
The entry was made with 0.73% asserted as the ADD and 29.94%
for CVD. The actual rates to be assessed should have been 13.7%
for ADD and 24.04% for CVD. Whatever the difference might be in
total duties owed between the asserted amounts and the amounts
that should have been assessed cannot be collected because of the
deemed liquidation. Customs also cannot collect any interest on
either the ADD or the CVD because the entry was deemed liquidated
at the duty rate asserted at time of entry. We note that the CVD
rate asserted by the protestant at time of entry, 29.94%, is
higher than the CVD rate at which the subject entry was
liquidated, 24.04%. The protestant contends that no CVD (or ADD)
should be assessed on the subject entry no later than July 10,
1988. The rate to be assessed for the valid period before
liquidation, however, is 29.94% because of the deemed
liquidation. Since liquidation is deemed to have been done on
July 10, 1988, the rate to be assessed is the rate asserted at
time of entry, pursuant to Nunn Bush, supra.
The protestant also contends that since the ADD/CVD bond in
this case covers only up to $276,572, Customs cannot collect the
$1, 067,279.20 the agency claims is owed on the entry. We find
this argument to be without merit. The clear and explicit
language of the CF 7595 General Term Bond posted with this entry
states in section (8), "...the above-bounden principal shall pay
to the district director of customs, when demanded, all duties,
taxes, and charges found legally due and unpaid..." A Federal
district court held that notwithstanding the fact that a
particular bond was not posted on an entry, a surety remains
liable under a general bond which calls for payment on demand of
all duties, however they arise. Gissel v. United States, 353 F.
Supp. 768, 777 (S.D. Tex. 1973), aff'd, 493 F.2d 332 (5th Cir.
1974), cert. denied, 419 U.S. 1012 (1975). We follow the holding
of Gissel in finding here that even if the ADD/CVD bond posted in
this case does not cover the amount to be assessed, the general
bond would cover any and all charges regardless. Such is true
with the general bond posted in this case. Therefore, the surety
remains liable for the ADD and CVD in this case under the general
term bond posted.
Concerning any interest that might have been assessed in
this case, we find that none is to be charged on the ADD or CVD
because the entry was deemed liquidated before the final orders
calling for interest were published.
HOLDING:
The subject entry is deemed liquidated pursuant to 19 U.S.C.
1504 and Nunn Bush, on the fourth-year anniversary of the entry
date, or July 10, 1988.
The duty rates applicable to this entry are those which were
asserted at the time of entry, 0.73% on ADD and 29.94% for CVD.
The ADD and CVD rates published subsequent to the entry date are
not applicable in this case. Interest cannot be charged on
either the ADD or CVD.
The protestant is liable for the amounts of ADD and CVD
asserted on the entry under its general term bond. The fact that
an ADD/CVD bond was not posted on the subject entry does not
reduce or eliminate its liability under the posted entry bond.
This protest should be ALLOWED with respect to the deemed
liquidation and DENIED with respect to the protestant's liability
under general bond.
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 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