LIQ-9-01-RR:CR:DR 227311 BJB
Port Director of Customs
U.S. Customs Service
6 World Trade Center, Room 761
New York, NY 10048-0945
ATTN: Head Protest and Control Section
Dear Sir or Madam:
RE: Application for Further Review of Protest Number 1001-96-106108; Ben Rickert, Inc.; mistake of fact; reliquidation; Taban Co. v. United States; Zaki Corp. v. United States; DD 806907; HQ 957873; reasonable care; clerical error, mistake of fact, or other inadvertence;
19 U.S.C. 1520(c)(1); retroactive application.
Dear Sir:
This is in reference to the Protest and Application for Further Review numbered 1001-96-106108, and Customs refusal to reliquidate an entry pursuant to 19 U.S.C. § 1520(c)(1). This protest was forwarded to our office for further review and we have considered the evidence provided, including the facts and issues raised by the protestant and records supplied by Customs. Our decision follows.
FACTS:
The present Protest and Application for Further Review were filed against your refusal to reliquidate the subject merchandise under entry number 506-XXXX932-4 by Ben Rickert, Inc., (“BRI”), pursuant to 19 U.S.C. §1520(c)(1). Notice of Customs refusal to reliquidate this entry (“the entry”) pursuant to §1520(c)(1) was issued to BRI’s counsel, Soller, Shayne & Horn on June 5, 1996. The Protest and Application for Further Review of this Customs decision was filed by counsel for BRI, Soller, Shayne & Horn, on August 8, 1996. In its Protest and Application for Further Review, BRI claims that Customs committed a “clerical error or mistake,” when it “liquidated half moon-shaped jars under Tariff Item 7013.39.2000, instead of pursuant to Tariff Item 7010.90.2000.”(Application by Soller, Shayne & Horn for reliquidation, dated March 22, 1996, p.1).
On February 13, 1995, Natural, Nydegger Transportation Corporation on behalf of BRI requested a tariff classification ruling from the District Director of Customs in Ogdensburg, New York.
On March 1, 1995, Customs District Director issued a tariff classification ruling, DD806907, for “a glass jar, a product of Spain.” A sample of the glass jar was provided to Customs (see para. 2, p.1). Customs classified the item under subheading 7013.39.2000 HTSUS with a duty rate of 29.2%.
On March 29, 1995, Ben Rickert, Inc. filed a request for reconsideration of the classification of the subject merchandise in DD806907.
On July 20, 1995, Natural, Nydegger Transportation Corporation, entered merchandise listed as “Glsware, Other, 7013.39.2000.” Natural, Nydegger Transportation Corporation, BRI’s broker, filed Customs Form 7501 for entry number 506-XXXX932-4, on behalf of Ben Rickert, Inc. BRI was listed as the importer of record.
On October 5, 1995, Customs issued an interim reply letter to BRI, stating that Customs “intends to revoke” DD806907.
On October 18, 1995, Customs published a notice in the Customs Bulletin, Volume 29, Number 42, proposing a revocation of District Decision 806907, and requesting comments from the public, to be received on or before November 17, 1995. The Proposed Revocation Notice appeared in the Customs Bulletin on October 18, 1995. No comments were received in response to the notice.
On November 3, 1995, Customs liquidated entry 506-XXXX932-4 (“the entry”).
On November 21, 1995, Customs issued a Headquarters ruling, HQ 957873, revoking DD806907 and reclassifying the recycled glass half moon-shaped jars under subheading 7010.90.20 HTSUS with a general 1 column duty rate of 3.5% ad valorem. The Headquarters ruling held that “[i]n accordance with 19 U.S.C. 1625 (c)(1), this ruling will become effective 60 days after its publication in the Customs Bulletin.” (HQ 957873, p. 5).
On December 6, 1995, Customs published HQ 957873 in the Customs Bulletin (Cust. Bull., Vol. 29, Number 49, December 6, 1995, pages 13-17).
On February 6, 1996, HQ 957873 became effective.
On February 16, 1996, BRI requested reliquidation of the entry pursuant to 19 U.S.C. §1514 (Control No. 1001-96-101450).
On February 20, 1996, the protest, numbered 1001-96-101450, was denied as untimely. From the date of liquidation, November 3, 1995, over 90 days had passed.
On March 22, 1996, BRI requested that the entry be reliquidated pursuant to 19 U.S.C. §1520(c)(1), (Control No. 1001-96-200448).
On June 5, 1996, Customs denied BRI’s reliquidation request, 1001-96-200448.
On August 8, 1996, BRI filed a protest and application for further review of Customs denial of BRI’s request for reliquidation (Control No. 1001-96-106108).
This protest and application for further review concerns the entry filed on behalf of the protestant, BRI. The subject merchandise is comprised of glass jars from Spain. In District Director’s decision 806907, the glassware was originally classified under HTSUS 7013.39.20, “Glassware of a kind used for table, kitchen, toilet, office, indoor decoration or similar purposed (other than that of heading 7010 or 7018) . . . glassware of a kind used for table (other than drinking glasses) or kitchen purposes other than that of glass-ceramics) . . .Other....Other...Valued over not over $3 each............29.2% DD806907:
BRI’s broker, requested a classification ruling from the District Director of Customs. The broker described the subject merchandise in detail and included a sample of the subject merchandise in its submission. As DD806807 noted:
“The subject articles are green tinted jars described on the invoice as ‘half moon jars.’ They are made of an exceptionally thick glass and measure 3" wide by 7" long and 5" tall. The jars’ bases are rectangular. They have an inward slope rising from the base. A short wide neck meets the sides at the top of the jars. At the top of the neck is a lip measuring approximately 1". The lip is wider than the neck which creates and “overhang” of the lip. The diameter of the mouth of the jars measures 2 3/16" and is closed with a round piece of cork. The name of your cosmetic bath products company, together with knurling, are molded into the bottom of the jar. Additionally, mold seams can be seen on the sides of the jars. The jars are produced by a semi-automatic machine and are valued at $.83 a piece.”
On March 29, 1995, BRI filed a request for reconsideration of DD 806907, and the classification assigned to the glass jars, to Customs Headquarters. Protestant sought reclassification of its glassware under HTSUS classification heading 7010.90.20. This classification represents a substantially lower rate of duty.
BRI included its merchandise as glassware falling within the following description under HTSUS subheading 7010.90.20:
“Carboys, bottles, flasks, jars, pots, vials, ampoules and other containers, of glass, of a kind used for the conveyance or packing of goods; preserving jars of glass; stoppers, lids and other closures, of glass: Other: Closures imported separately; containers (with or without their closures) of a kind used for the conveyance or packing of perfume or other toilet preparations; other containers if fitted with or designed for use with ground glass stoppers: Produced by automatic machine...........3.5%”
BRI signed its Protest and Application for Further Review, Customs Form 19 (“CF19"), on August 7, 1996. The protest was filed with Customs on August 8, 1996. The protest is made against the denial of BRI’s 19 U.S.C. §1520(c)(1) request for reliquidation, Control No. 96-200488. The denial of the request for reliquidation was issued June 5, 1996. BRI seeks any refund with respect to the entry under protest pursuant to 19 C.F.R. 174.13(c). The protest alleges that the decision against which the protest is filed is inconsistent with “a ruling of the Commissioner of Customs . . . or with a decision made by any district with respect to the same or substantially similar merchandise.”
Along with its CF19, BRI submitted a memorandum/attachment to supplement its protest. BRI filed this protest for a refund of alleged excess duties paid, plus interest with respect to 66,482 pieces of glassware under its 19 U.S.C. §1520(c)(1) petition for entry number 506-XXXX932-4. The subject merchandise was entered into the United States on July 20, 1995, (corroborated by Customs ACS records) and liquidated on November 3, 1995, (also confirmed by Customs ACS records).
Along with its the memorandum/attachment, BRI also included:
Customs Form (CF) 7501 showing that entry number 506-XXXX932-4 was imported on July 18, 1995. No date has been inserted in the appropriate box for “Entry Date,” although there is a Customs, “Entry” date-stamp showing August 3, 1995. However, the Attorney-in-Fact signed the CF 7501 on “7/20/95.” Customs ACS system further confirms that the merchandise was entered on July 20, 1995 under “subheading 7013.39.2000/29.2%, Harmonized Tariff Schedule of the United States” (“HTSUS”). The CF 7501 describes the imported merchandise as “Glsware, Other.” The entry (number 506-XXXX932-4) again, was liquidated on November 3, 1995. The entry documents attached to entry 506-XXXX932-4 are the following:
Invoice number 4,012 from La Mediterranea, Cooperative Valenciana, Spain, describing the goods with reference numbers 5036, 5037, and 5038, as Recycled Glass: Jar w/ Cork, items numbers 6907, 6905, 6906.” The invoice is dated April 7, 1995 and date-stamped, as “RECEIVED NATURAL, NYDEGGER,” “JUL 19 1995" and signed.
The invoice also provides a “REFERENCIA DEL PERDIDO DEL CLIENTE/PURCHASE ORDER NUMBER:” “Purchase Order Nr. 19913 + MID NR. Eslamed468LQL. The invoice also states that the “PRODUCTION METHOD” is “AUTOMATIC.”
The glassware merchandise was shipped by La Mediterranea to BRI. The tariff classification of 7013.39.2000, handwritten, appears on the face of this invoice. The following merchandise is listed on the invoice:
Pieces/Reference Upc Code Description Item No. Price
1,305 5036 84-12795-30824-7 RECYCLED GLASS: JAR W/CORK 5907 XX
31,577 5037 84-12795-30826-1 RECYCLED GLASS: JAR W/CORK 6905 XX
33,600 5038 84-12795-30828-5 RECYCLED GLASS: JAR W/CORK 6906 XX
Total Pieces: 66,482
Total Cost: XXXXXXX - Pesetas ex-factory
Forwarder’s Cargo Receipt - from Cargo Flores, Sociedad Anonima, Barcelona, Spain;
This receipt confirms La Mediterranea Coop Valencia as the shipper, consigned to Ben Rickert, Inc., with second notification to Natural Nydegger Transport Corp., in New York, New York. The Receipt describes the goods as:
31,577 PCS HEX, Glass Jar Item No. 6905,
33,600 PCS TRAP Glass Jar Item No. 6906
1,305 PCS TRI Glass jar Item No. 6907, FOB Spain
and states that the “place and date of issue” is “Barcelona, JUL/09/95.”
On July 20, 1995, the merchandise was entered into the United States. The accompanying bill of lading, AWB number SENUBCN12479, shows that the merchandise entered via the Port of New York. The merchandise was described as 001 Glsware, other, 7013.39.2000.
Along with BRI’s memorandum/attachment, BRI included a copy of DD 806907, and HQ 957873.
On March 1, 1995, the District Director’s decision, DD 806907, was issued in Ogdensburg, New York. Natural, Nydegger Transport Corporation, Freight Forwarders and Customs Brokers, on behalf of BRI, submitted the request. The request sought a tariff classification ruling for “a glass jar, a product of Spain.” Based upon the broker’s submission and sample, the District Director’s ruling described the sample presented to Customs, in the following manner,
“A lightly tinted ‘antique’ green jar described on the accompanying suppliers invoice as a half moon jar. This jar is 3 3/8" wide x 7" long x 5 1/4" tall. The jar is made of exceptionally heavy glass and a cork stopper is present in the 2 3/16" mouth. Overall, the item is a rectangular based jar from which the base rises vertically at the long sides of the base and immediately curves to the wide-mouthed short neck, from the short sides. Embossed into the bottom is the name Ben Rickert in script. [The Broker] advise[s] that the jar will be filled with bath products. [The Broker] attached a copy of the catalogue
from the importer for [Customs] review; however the items pictured are not using the jar you provided as a sample.”
The District Director’s ruling further held that,
“[t]he applicable subheading for these items will be 7013.39.2000, Harmonized Tariff Schedules of the United States (HTS), which provides for “Glassware of a kind used for table, kitchen, toilet, office, indoor decoration or similar purposes, or similar purposed (other than that of heading 7010 or 7018): Glassware of a kind used for table (other than
drinking glasses) or kitchen purposes other than that of glass-ceramics: Other: Other: Valued not over $3. each . . . . The rate of duty will be 29.2%.”
On March 29, 1995, Mr. Ben Rickert of BRI, sent a letter to Customs requesting reconsideration of DD 806907 (Text of HQ 957873, p.1).
On October 5, 1995, BRI received an interim reply from Customs. At that time, Customs informed BRI that the letter was an “interim reply.” Customs informed Mr. Rickert, that [upon review [customs has] determined that this ruling is incorrect, and we intend to revoke it.” Customs further stated that, “ [w]e are including with this letter copies of the General Notice of Proposed Revocation as well as HQ 957873 by which we intend to revoke the above decision. These documents are scheduled to be published in the Customs Bulletin issued October 18, 1995. [Customs] invite[s] your comments on the correctness of this change.” (Ben Rickert, Inc. Letter dated March 29, 1995 (emphasis added)).
On November 21, 1995, Customs issued HQ 957873. The ruling was addressed to Mr. Ben Rickert of BRI. HQ 957873 gave notice that DD 806907 would be revoked 60 days after publication of the Headquarters decision in the Customs Bulletin. Notice of the upcoming ruling was sent to BRI. HQ 957873 also reviewed BRI’s full description of the jars, and BRI belief that they “could be considered containers of a kind used for the conveyance or packing of goods, classifiable under heading 7010, HTSUS.” Under the “FACTS” section of the headquarters decision, Customs reiterated the description submitted,
“The subject articles are green tinted jars described on the invoice as ‘half moon jars.’ They are made of an exceptionally thick glass and measure 3 3/8" wide by 7" long and
5 1/4" tall. The jars’ bases are rectangular. They have an inward slope rising from the base. A short wide neck meets the sides at the top of the jars. At the top of the neck is a lip measuring approximately 1". The lip is wider than the neck which creates and “overhang” of the lip. The diameter of the mouth of the jars measures 2 3/16" and is closed with a round piece of cork. The name of your cosmetic bath products company, together on the sides of the jars. The jars are produced by a semi-automatic machine and are valued at 83 [cents] a piece.”
On November 21, 1995, Customs held, that
“the glass half moon-shaped jars are classified under subheading 7010.90.20, HTSUS, with a general 1 column duty rate of 3.5% ad valorem,”
Customs found, inter alia, that “[a]ccording to the information provided, the jars are specifically made for the cosmetic bath products company and are sold from manufacturer to importer who then packs them with cosmetic bath products for retail sale, . . . the containers do not pass through any other channel of trade, nor are they sold in any other manner,” and the catalog statement demonstrates that the “glass jars are principally used to pack or convey bath products,” and “the articles are used in the same manner as was intended for the class or kind glass containers for the conveyance or packing of perfume or other toilet preparations.”
Thus, Customs held, that Explanatory Note (EN) 70.10 of the Harmonized Commodity Description and Coding System, which “covers all glass containers of the kinds commonly used commercially for the conveyance of packing of liquids or of solid products (powders, granules, etc.) . . .,” should be applied. Customs concluded, “[i]n accordance with 19 U.S.C. 625 (c)(1), this ruling will become effective 60 days after its publication in the Customs Bulletin.”
ISSUE:
Whether Customs refusal to allow retroactive application of a Headquarters ruling revoking a District Director’s classification decision, constitutes a clerical error, a mistake of fact, or an inadvertence pursuant to 19 U.S.C. § 1520(c)(1).
LAW AND ANALYSIS:
Reliquidation of an entry may be allowed in order to correct a mistake of fact, a clerical error or an inadvertence (19 U.S.C. § 1520(c)(1)), and, as a general matter, the refusal to reliquidate is a protestable decision pursuant to 19 U.S.C. §1514(a)(5). Customs decision to deny reliquidation of the entry was made June 5, 1996. 19 U.S.C. §1514(c)(3) requires that a protest of such a denial shall be filed with the Customs Service within ninety days after the date of the decision being protested. We note that this protest was timely filed on August 8, 1996, within 90 days from the June 5, 1996 date of Customs denial of BRI’s request to reliquidate the entry.
Section 19 U.S.C. §1514 sets forth the proper procedure for an importer to protest the classification and appraisal of merchandise when it believes Customs has misinterpreted the applicable law. 19 U.S.C. §1520(c)(1) is an exception to the finality of section 1514. Therefore, although the protest under consideration is untimely under 19 U.S.C. §1514, we note that the courts have treated untimely protest under 19 U.S.C. §1514, as seeking relief under 19 U.S.C. §1520(c), if such protest meets the requirements for claims under 19 U.S.C. §1520(c)(1).
The relief provided for in section 1520(c)(1) is not an alternative to the relief provided for in the form of protest under section 1514. Section 1520(c)(1) only allows, “limited relief in situations defined therein.” Phillips Petroleum Co., v. United States, 55 CCPA 7, 11, C.A.D. 893 (1966), quoted in Godchaux-Henderson Sugar Co., Inc., v. United States, 85 Cust. Ct. 68, 69, C.D. 4874, 496 F. Supp. 1326 (1980). Under section 1520(c)(1), Customs may reliquidate an entry to correct a clerical error, mistake of fact, or other inadvertence, not amounting to an error in the construction of a law, when certain conditions are met. The error or inadvertence must be
adverse to the importer and manifest from the record or established by documentary evidence and brought to the attention of Customs within one year after the date of liquidation.
The conditions to be met under 19 U.S.C. § 1520 (c)(1), require that the clerical error, mistake of fact, or other inadvertence must be adverse to the importer, manifest from the record or established by documentary evidence. See ITT Corp., v. United States, 24 F.3d 1384, 1387 (Fed. Cir. 1994).
Congress, by amending 19 U.S.C. §1484 (Act of December 7, 1993, 107 Stat. 2057,
Pub. L. 103-182), required importers to exercise reasonable care in providing the initial classification and appraisement information to Customs. At page 136 of the House Report 103-361, Part 1 (November 15, 1993), the change is discussed:
The requirement that importers use reasonable care in making an entry establishes a “shared responsibility” between the Customs and the trade community, and allows Customs to rely on the accuracy of the information submitted by importers and, in turn, to streamline entry procedures. Under this new provision, the importer will have responsibility to use reasonable care when providing the initial classification and appraisement. In the view of the Committee, it is essential that this “shared responsibility” assure that, at a minimum, “reasonable care” is used in discharging those activities for which the importer has responsibility. These include, but are not limited to: furnishing of information sufficient to allow Customs to fix the final classification and appraisal of merchandise; taking measures that will lead to and assure the preparation of accurate documentation and providing sufficient pricing and financial information to permit proper valuation of merchandise. Section 621 above elaborates on the criteria used in evaluating whether a ‘reasonable care’ standard is achieved.”
H.Rpt. 103-361, Part 1 (November 15, 1993 at 136).
On November 3, 1995, Customs liquidated the entry on the basis of DD 806907. Although Customs issued HQ 957873 on November 21, 1995, this decision only became effective 60 days after publication in the Customs Bulletin. HQ 957873 was published in the Customs
Bulletin on December 6, 1996, and therefore, became effective on February 6, 1996. Thus, the ruling in effect upon the date of entry of the subject merchandise, was not HQ 957877.
BRI objected to the liquidation of the subject entry pursuant to DD 806807. BRI requested a reliquidation which was denied by Customs. Based upon its claim that Customs failed to apply the later Headquarters ruling, BRI claims that HQ 957873 supersedes the District Director’s decision (DD806907). Wherein HQ 957873 reclassified the subject merchandise, it also determined a significantly lower duty rate. It is that significantly lower rate of duty that BRI argues should be applied to the subject merchandise.
In this protest, the protestant has primarily argued that Customs failure to apply HQ 957873, was an inadvertence or mistake of fact, and has protested Customs unwillingness to reliquidate the entry on this narrow basis. The protestant has however, also shifted its argument in a letter to Customs dated April 29, 1997. In its April 29, 1997 letter, BRI raised for the first time, the argument that there was an error in applying the classification determined in DD 806907, caused in part, by a lack of knowledge of the merchandise by the broker. The alleged lack of knowledge of the subject merchandise has however, no apparent connection to the alleged misapplication of the District Director’s ruling in place of the Headquarters decision.
BRI first asserted that the “clerical error or mistake of fact was that Customs liquidated half moon-shaped jars under Tariff Item 7013.39.2000, instead of Tariff Item 7010.90.2000.” BRI alleged that the “clerical error is adverse to the importer and manifest from the record and by documentary evidence.” (March 22, 1996 Ben Rickert Letter from Counsel to Customs). Protestant BRI also stated that, “there is no question that the half moon-shaped jars were inadvertently liquidated under Tariff Item 7013.39.2000 citing binding ruling DD806907.” (Id.)
BRI argues that its protest should be granted because a mistake of fact or inadvertence occurred at the time of liquidation. BRI claims, that at the time of liquidation, Customs was aware of a Customs interim letter of reply, “dated October 5, 1995, directed to the importer, Ben Rickert, Inc., and which BRI claims determined that the classification of half moon-shaped jars pursuant to DD806907 was ‘incorrect and that [Customs] intend[ed] to revoke it.’”
BRI also claims that the “Customs Bulletin issued October 18, 1995, “was to have published the Notice of Proposed Revocation as well as HQ 957873" which “revoked DD806907.” Subsequent to the issuance of the October 5, 1995 interim letter of reply, BRI claims, “Customs knew or should have known that the liquidation of [its] entry on November 3, 1995 was incorrect.” (August 8, 1996, memorandum/attachment, p.1). BRI cites two court cases for the proposition that this Customs action constitutes inadvertence: C.J. Tower & Sons of Buffalo, Inc., v. U.S., ; see also, Hambro Automobile Corp., 66 CCPA 113, 603 F.2d 850 (1979). BRI states that ‘[i]nadvertence has been found in situations where Customs failed to be aware of a PENDING commerce decision granting duty free entry of scientific instruments. This caused, [according to BRI], the Customs officer to classify components of a scientific system as dutiable.” BRI notes that, “Headquarters found inadvertence and granted a 520(c)(1) request for reliquidation. HRL 305501 (July 7, 1980).
Citing HRL 305501 (July 7, 1980), BRI argued in its March 22, 1996 letter, that “[i]nadvertence has been found in situations where Customs failed to be aware of a PENDING commerce decision granting duty free entry of scientific instruments.” Protestant also asserted that this situation, “caused the Customs officer to classify components of the scientific system as dutiable,” and “Headquarters found inadvertence and granted a 520(c)(1) reliquidation.” In the present case BRI argues that, “Customs inadvertently disregarded the substituted Headquarters ruling and liquidated the entry in accordance with the older District Director ruling.” Therefore, protestant argues that its July 20, 1995 entry, entry number 506-XXXX932-4, should “be reliquidated with the half moon-shaped jars classified under Tariff item 7010.90.2000.”
However, the circumstances in HRL 305501, are readily distinguished from the facts in the present case. Although the entry papers, the petition for reliquidation, and the protest are missing from the 305501 file, the text of the decision illustrates the differences in the facts between the present situation and the situation in HQ305501. The decision states that when the merchandise was entered, the application had been filed with the Department of Commerce. The protestant asserted that a copy of that application was part of the entry papers. Here, however, there is nothing in the file to indicate that the accuracy of that assertion was in dispute. Unlike the situation here, the classification in 305501, depended upon a finding by the Department of Commerce that no instrument of equivalent scientific value to the foreign article was being manufactured in the U.S. Apparently the entry was liquidated before that fact was determined. Unlike the situation in HQ 305501, no fact about the glass jars was missing when the entry was liquidated. At all times, the description of the jars remained the same in the Rickert letter of March 29, 1995, the entry papers of July 20, 1995, and the notice of October 18, 1995. That evidence does not support a conclusion that the importer or Customs was unaware of the nature of the imported goods. Instead the evidence shows a dispute on whether those jars were classifiable under subheading 7013.39.20 or 7010.90.20, HTSUS.
These two cases may be further distinguished. Several material facts exist in this case that were not present in HQ 305501. Thus, for example, the District Director’s decision 806907 was a binding Customs ruling at the time the subject merchandise was liquidated, the classification ruling was requested by BRI or by BRI’s broker, contrary to BRI’s assertions, it had no basis to rely upon an interim reply letter from Customs as if it were a ruling. There is no indication that these circumstances existed in the facts leading up to Customs decision in HQ 305501.
In BRI’s attachment to its CF19, dated August 8, 1996, BRI stated, “[w]e enclose herewith a ruling letter from Customs dated October 5, 1995, directed to the importer, Ben Rickert, Inc. which held that the classification of half moon-shaped jars pursuant to DD806907 is “incorrect and that we intend to revoke it.’” (CF19, August 8, 1996, at Supplement, page 1). BRI’s characterization of the October 5, 1995 letter from Customs as a ruling, is incorrect. However, BRI goes further in its supplement, to again characterize Customs interim reply letter as a ruling letter. These statements are at best inaccurate.
Customs October 5, 1995 interim reply letter is not a ruling. It is a courtesy letter issued by Customs discussing the process of a proposed revocation of a district director’s ruling. Although BRI mischaracterizes Customs interim reply letter as a Headquarters ruling, the October 5, 1995 letter does not constitute a Headquarters ruling or any other type of ruling. There is no basis in statute or Customs regulation for BRI’s assertion that the interim reply letter was a ruling, or in fact anything more than the courtesy letter Customs intended it to be. It is significant that BRI has failed to cite any statute or Customs Regulation upon which to base its mischaracterization.
In its April 29, 1997 letter to Customs, BRI offers yet another mischaracterization. BRI stated, “a request for a ruling was made on March 29, 1995 . . . Customs issued a reply on October 5, 1995 . . . which stated Customs current position on the law. This position was favorable to our client.” While BRI refrained here from characterizing Customs interim reply as a Customs Headquarters ruling, BRI’s suggestion that Customs had stated its “current position on the law” and that that position “was favorable to [its] client,” absent further explanation is a selective narrative. BRI fails to point out that Customs October 5, 1995 letter specifically stated that it was an interim reply to BRI’s March 29, 1995 request for reconsideration. BRI also fails to note Customs specific statement that “a Notice of Proposed Revocation is scheduled for publication.”
Customs Notice of Proposed Revocation, (Published October 18, 1995, Vol.29, No. 42, Cust. Bull. 26), includes a specific reference to 19 U.S.C. § 1625(c)(1), as amended by section 623 of Title VI (Customs Modernization) of the North American Fee Trade Agreement Implementation Act ( Pub. L. 103-182, 107 Stat. 2057). Therefore, BRI was clearly on notice that any modification or revocation of DD806907, would not be final until an additional 60 days after the end of the comment period was completed, ending on November 17, 1995.
At no time does BRI take note that Customs is bound by 19 U.S.C. §1625(c). Under §1625(c),
“A proposed interpretive ruling or decision which would -- (1) modify (other than to correct a clerical error) or revoke a prior interpretive ruling or decision which has been in effect for at least 60 days; . . . shall be published in the Customs Bulletin. The Secretary shall give interested parties an opportunity to submit, during not less than the 30-day period after the date of such publication, comments on the correctness of the proposed ruling or decision. After consideration of any comments received, the Secretary shall publish a final ruling or decision in the Customs Bulletin within 30 days after the closing of the comment period. The final ruling or decision shall become effective 60 days after the date of its publication.”
In light of 19 U.S.C. § 1625(c) there is little doubt that this “interim reply” provided by Customs, was nothing more than a courtesy letter outlining the next step in the process of a
proposed revocation. Customs never stated that it would circumvent or in some other manner fail to observe the requirements of revocation or modification of a ruling under the law.
Customs does however, state what its “current” position on the law was. Customs “current position on the law,” at the time of the October 5, 1995 letter, was that the District Director’s decision was in force. Customs was however reviewing a request for reconsideration of the classification. Customs may well have expressed an intention to revoke the District Director’s ruling, but not absent a proper comment and review period, a process that provides Customs ample opportunity to change its opinion at any time during that time. Thus, in this context, Customs states that there is a letter from BRI requesting the reconsideration of DD806907. Customs states that the General Notice of Proposed Revocation as well as HQ 957873, were scheduled to be published in the Customs Bulletin at a future date in time - but not before the proper notice and comment periods provided by law were followed and completed.
BRI has also asserted that Customs’ “failure to publish the Notice of Proposed Revocation in the Customs Bulletin on October 18, 1995, prior to liquidation on November 3, 1995, resulted in yet another ‘clerical error, mistake of fact, or other inadvertence not amounting to error in the construction of law.” BRI is mistaken. Customs did in fact publish the “Proposed Revocation of Ruling Letter Relating to Tariff Classification of Half Moon-Shaped Jars,” in the Customs Bulletin, Volume 29, No. 42, p.26, on October 18, 1995.
BRI claims that “since the liquidation of [its] entry was not yet final on November 21, 1995, the date upon which the revocation was finally issued, Customs knew or should have known, at least as of that date, that the liquidation was incorrect.” BRI argued that this was a type of inadvertence, the same type that occurred within the kind of error caused by oversight, inattention, or carelessness. BRI cited C.J. Tower & Sons of Buffalo, Inc. v. U.S., 336 F.Supp. 1399, for this principle, as it was cited in Hambro Automobile Corp., 66 CCPA 113, 603 F.2d 850 (1979), (contention raised in its March 22, 1996 letter). Again, BRI is incorrect. Thus too, BRI is incorrect when it argues that Customs was in error for failing to voluntarily reliquidate [BRI’s] entry pursuant to 19 C.F.R. §173.3(a).” The language of this regulatory provision is discretionary. Thus, Customs was under no such obligation to voluntarily reliquidate the subject merchandise. BRI’s arguments are fundamentally flawed.
No statement was made by Customs to suggest that it would not follow the specific process required under Customs Regulations, a process which includes publication of the proposed revocation, a full comment period, publication of the final revocation, and passage of a 60 day period until the ruling becomes effective, dating from the date of actual publication in the Customs Bulletin.
Further, no statement was made by Customs to suggest that Customs would retroactively apply the proposed headquarter’s ruling. On the contrary, closer examination of Customs October 18, 1995 Notice of Proposed Revocation, establishes a comment period, to be held prior to any adoption of the proposed revocation. Thus, the Notice of Proposed Revocation declared, “Comments must be received on or before November 17, 1995.” (Proposed Revocation of Ruling Letter Relating to Tariff Classification of Half Moon-Shaped Jars, Customs Bulletin Vol. 29, No. 42, October 18, 1995, p. 26). Moreover, 19 C.F.R. § 177.9(a) specifically provides that, “[a] ruling letter issued by the Customs Service . . . represents the official position of the Customs Service with respect to the particular transaction or issue described therein and is binding on all Customs Service personnel in accordance with the provisions of this section until modified or revoked.” (Emphasis added.) Until the proper notice of proposed revocation was issued and published, the appropriate comment period finalized, and the final ruling was issued and effective no modification or revocation has taken place.
19 C.F.R. § 177.9(d)(2) also provides that a modification or revocation of a ruling letter will not be applied retroactively subject to an exemption. To qualify for the exemption five conditions must be met. The regulation requires that,
“[t]he modification or revocation of a ruling letter will not be applied retroactively with respect to the person to whom the ruling was issued, or to any person directly involved in the transaction to which the ruling related, Provided:
(i) The request for a ruling contained no misstatement or omission of material facts,
(ii) The facts subsequently developed are not materially different from the facts on which the ruling was based,
(iii) There has been no change in the applicable law,
(iv) The ruling was originally issued with respect to a prospective transaction, and
(v) All the parties involved in the transaction acted in good faith in reliance upon the ruling and retroactive modification or revocation would be to their detriment. . . .”
While BRI may argue that it has met the conditions one, two, and four, BRI has failed to qualify under the third and fifth conditions. The proposed revocation is for a change in the classification attributed to the subject merchandise. This represents a change in the applicable law and would not meet the requirement of the third condition. Additionally, all of BRI’s arguments specifically contradict any claim that “reliance upon the ruling and retroactive modification or revocation would be to [BRI’s] detriment . . ..”
Even in the event that all of BRI’s assertions could be somehow substantiated, the fact remains, DD806907 was in force at the time the subject merchandise was entered into the United States. Pursuant to 19 U.S.C. §1315(a), the classification of an article of merchandise, and thus, the rate of duty assessed, is determined at the date of entry into the United States.
19 U.S.C. §1315(a) states:
Ҥ1315 Effective date of rates of duty
(a) Articles entered or withdrawn from warehouse for consumption
Except as otherwise specially provided for, the rate or rates of duty imposed by or pursuant to this chapter or any other law on any article entered for consumption or withdrawn from warehouse for consumption shall be the rate or rates in effect when the documents comprising the entry for consumption or withdrawal from warehouse for consumption and any estimated or liquidated duties then required to be paid have been deposited with the Customs Service, by written, electronic or such other means as the Secretary by regulation shall prescribe . . .”
BRI entered its shipment of glass jars on July 20, 1995. BRI’s Customs Form (CF) 7501 was signed, and dated on July 20, 1995 by BRI’s broker. Customs Automated Computer System (“ACS”) corroborates this entry information. At the time the subject merchandise was entered into the United States, BRI’s broker Natural, Nydegger Transport Corp., International Freight Forwarders and Customs Brokers, had received a District Director’s Decision determining the rate of duty for the merchandise at 29.2%. The District Director’s Decision is dated March 1, 1995, a date well prior to BRI’s importation and entry of the glass jars.
In conformance with 19 U.S.C. § 1315, and absent any other binding ruling to the contrary issued subsequent to DD806907 (March 1, 1995), but prior to July 20, 1995, Customs has properly applied the 29.9% rate of duty to BRI’s entry. BRI’s entry was liquidated on November 3, 1995. Although Customs had published a “Proposed Revocation of Ruling Letter Relating to Tariff Classification of Half Moon-Shaped Jars,” on October 18, 1995 (Cust. Bull. Vol. 29, No. 42, October 18, 1995), the actual “Revocation of Ruling Letter Relating to Tariff Classification of Half Moon-Shaped Jars,” was not signed and issued until November 21, 1995. The final revocation was published in the Customs Bulletin on December 6, 1995. Thus, the final revocation was not signed and issued until eighteen days after the subject merchandise had already been liquidated. (Cust. Bull., Vol. 29, No. 49, December 6, 1995).
Pursuant to Customs notice of “Proposed Revocation of Ruling Letter Relating to Tariff Classification of Half Moon-Shaped Jars,” published in the Customs Bulletin on October 18, 1995, Customs specifically placed the public on notice as stated in the first paragraph, “this notice advises interested parties that Customs intends to revoke a ruling pertaining to the tariff classification of half moon-shaped jars used to package cosmetic bath products.” In the very next sentence, Customs added that, “[c]omments are invited on the correctness of the proposed ruling,” and instructed that, “[c]omments must be received on or before November 17, 1995.” It is clear therefore, that Customs did not intend this notice or Customs’ letter of October 5, 1995, (Customs Letter to Mr. Ben Rickert of Ben Rickert, Inc., from John Durant, Director of Commercial Rulings Division) to constitute a final revocation of DD806907. On the contrary, Customs was obligated by statute and by its regulations to reserve a final revocation, at least until the end of the comment period. The comment period ended only on November 17, 1995.
In the event that comments would have been received from the industry or from the public, Customs would have been obligated to respond to those comments. Whether Customs received comments or not, Customs was required to, and did comply with the requirements of
19 U.S.C. §1625(c)(1). Customs provided the required notice in the Customs Bulletin of the final revocation of DD806907, “Revocation of Ruling Letter Relating to Tariff Classification of Half Moon-Shaped Jars,” on December 6, 1995.
Customs also met its obligation under 19 U.S.C. §1625, that a “proposed interpretive ruling or decision which would (1) modify (other than to correct a clerical error) or revoke a prior interpretive ruling or decision which [had] been in effect for at least 60 days; . . . shall be published in the Customs Bulletin.” Further, met the requirement that, “[t]he Secretary shall give interested parties an opportunity to submit, during not less than the 30-day period after the date of such publication, comments on the correctness of the proposed ruling or decision. After consideration of any comments received, the Secretary shall publish a final ruling or decision in the Customs Bulletin within 30 days after the closing of the comment period. The final ruling or decision shall become effective 60 days after the date of its publications.” Thus, the revocation of DD806907, and the lower rate of duty were not in effect until February 6, 1996, and Customs was correct in its liquidation of the subject merchandise. District Decision 806907 was binding at the time of entry and still in effect at the time of liquidation. If indeed a mistake or inadvertence occurred, it was a mistake of law committed by BRI and its broker.
Customs application of an established District Director’s ruling prior to the actual adoption of a reclassification of the subject merchandise in a later ruling is not a mistake of fact. BRI’s failure to read, or take notice of the Customs’ published notices, is a mistake of law, not a mistake of fact, clerical error or inadvertence.
In protestant’s November 19, 1997 response to questions submitted to BRI by Customs, BRI raised a new argument. BRI’s counsel wrote that,
“There was a mistake of fact as to the physical nature of the goods. The invoice description was too general and thus did not disclose sufficient facts to identify the merchandise as those which Customs classifies under HTSUS 7010,” and reiterated its previous claim to a mistake of fact alleging that, “Customs inadvertently disregarded the substituted Headquarters ruling and liquidated the entry in accordance with the older District Director ruling.” (Answer to Question 15, Letter Dated November 19, 1997, from Soller, Shayne & Horn to Customs).
As aforementioned, this appears to be a new basis for protestant’s argument of mistake of fact. Under 19 U.S.C. §1514(c)(1), “[a] protest may be amended, . . ., any time prior to the expiration of the time in which such protest could have been filed. New grounds in support of objections raised by a valid protest or amendment thereto may be presented for consideration in connection with the review of such protest pursuant to section 1515, of this title at any time prior to the disposition of the protest in accordance with that section.” Thus, BRI’s additional argument with respect to its broker’s alleged lack of knowledge as to the nature of the imported article was still timely raised.
Although BRI had ample time to formulate its argument of “mistaken belief” regarding the extent of its broker’s knowledge of nature of the goods, BRI failed, even at this late date, to provide any convincing evidence that its broker was in fact unaware of the nature of the subject merchandise. In one instance, where an invoice submitted by BRI for the subject merchandise, clearly refers to a “Purchase Order.” BRI never provided Customs with the purchase order although it could have shed light on the description of the goods. Absent the physical presence of the purchase order, there is no way to confirm its content. Does the invoice contain for example a description of the goods? There is no way to know what additional information was or was not available to BRI and its broker. Whether the purchase order provided sufficient information to confirm or negate BRI’s late assertion of mistaken belief must be left unresolved. Despite numerous other opportunities and inquiries, including an opportunity to fully answer a set of interrogatories sent by Customs to BRI, no evidence has been presented to demonstrate that BRI’s broker was unknowledgeable as to the nature of the subject merchandise.
What is clear, is that the invoice does clearly describe the subject merchandise as glass jars. Moreover, BRI’s reliance upon this argument of mistaken belief, suggests a transparent disregard for the contents of Customs decisions in DD 806907 and HQ 957873. In both decisions the glass jars are described in great detail, as noted above in the “FACTS” section of this decision. In both cases, Customs had a sample of the subject merchandise, provided by BRI or BRI’s broker.
The tardy insertion of this argument aside, BRI’s assertion of a “mistaken belief” runs counter to the fact that both BRI, and BRI’s broker, were directly responsible for and involved in the actual requests for the jars’ classification and reclassification. Moreover, even when given an opportunity, BRI failed to provide affidavits from those individuals in its operation, responsible for this transaction, or responsible for verifying the classification of these glass jars, and who could attest to the details of an alleged mistaken belief as to the nature of the goods. As previously noted, BRI’s broker in fact submitted a sample of the subject merchandise to Customs. A mistaken belief as to the classification of the merchandise is not a mistake of fact, it is a mistake of law. The courts have consistently taken the position that an erroneous classification of merchandise is not a clerical error, mistake of fact, or other inadvertence within the meaning of 19 U.S.C. 1520(c)(1), but is an error in the construction of law. See, Mattel Inc., v. United States, 336 F. Supp. 1395, 68 Cust. Ct. 17, C.D. 4327, aff’d. 499 F.2d 1277, 61 CCPA 90 (1972).
Under 19 U.S.C. §1520(c)(1), the clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law must be “manifest from the record or established by documentary evidence.” The alleged error in this case is not manifest from the record (see ITT Corp. v. United States, 812 F. Supp. 213 (CIT 1993), reversed, 24 F.3d 1384 (Fed. Cir. 1994) at 1387, (“. . . manifest from the record [means] apparent to Customs from a facial examination of the entry and the entry papers alone, and thus requiring] no further substantiation . . .”). In ITT, the Court stated that, “[m]istakes of fact that are not manifest from [the] record . . . must be established by documentary evidence.”(Id.)
The Customs Service has previously addressed the issue of an importer's failure to provide additional information. In C.S.D. 80 250, Customs determined that the failure of the importer to respond to Customs request for additional information amounted to negligent inaction and, therefore, did not fall within the meaning of 1520(c)(1). This conclusion has been upheld by the courts. In Occidental Oil & Gas Co. v. United States, 23 Cust. B. & Dec. No. 17, p. 40, Slip Op. 89 40 (CIT 1989), the court held that an importer's delay in forwarding additional information is not an inadvertence or mistake within the scope of 1520(c)(1). The court found that the record showed that the appropriate documents supporting the claim had not been supplied and, therefore, the Customs officer had made a legal determination as to the classification. We see no reason to reach a different conclusion in the instant case. The protestant was given an opportunity to supply additional information but failed to do so. The protestant had ninety days to protest the reliquidation under 19 U.S.C. 1514, but failed to do that in a timely fashion as well.
“The [CIT] correctly notes that “a party who waits past the time of filing its 19 U.S.C. §1520(c)(1) request to file supporting documentation risks an adverse decision by Customs in the interim.” . . . While true, such an adverse decision does not preclude an importer from introducing additional evidence, documentary or otherwise, at trial de novo before the [CIT] . . . to substantiate further the alleged mistake of fact. [24 F.3d at 1388].” However, BRI does have the possibility of submitting new arguments and evidence up until the time of a Customs ruling.
Counsel for BRI argues in her April 29, 1997 letter that, the recent case, Taban Co. v. United States, 960 F. Supp. 326, is directly on point with the facts set forth in this case. Counsel raises two points. One, the right to have goods reclassified under section 1520 based upon a mistake of fact due to the broker’s failure to know the physical nature of the goods, and two, the right to have the application of a subsequent ruling applied upon reliquidation.
In support of her first claim, BRI’s counsel states, “[i]n the Ben Rickert, Inc. case, the broker also did not know the physical nature of the goods.” Counsel then asserts, “[t]he invoice only stated ‘closures, cosm. Auto mach made,’” thus, in an attempt to mold the facts to fall within the confines of Taban, Counsel argues that BRI’s broker, Nydegger, did not know the physical nature of the goods.
The invoice submitted by BRI, discussed above, is an invoice from the Spanish company, La Mediterranea, dated July 4, 1995. This invoice does not describe the subject merchandise in the manner counsel asserts. Instead, under “Description,” also in Spanish, “Descripcion,” one finds, in capital letters, RECYCLED GLASS: JAR W/ CORK. Moreover, the description is written three times. Remarkably, the invoice is date stamped, in capital letters, “RECEIVED, NATURAL, NYDEGGER, JUL 19 1995, OCEAN IMPORT DIVISION.” This is strong confirmation that Nydegger did know about the nature of the goods. Customs repeated requests for documentation and information, including a list of interrogatories issued for BRI’s response, appear to have been insufficient to induce BRI to provide the invoice it now relies upon in its new arguments. BRI has failed to provide this office with any such invoice or description as cited by BRI’s counsel. However, it is clear from the La Mediterranea invoice/document that Nydegger in fact received this invoice. In fact, BRI’s broker acknowledged receipt of the invoice, along with its description of the subject merchandise, as evidenced by the broker’s company date stamp appearing prominently on the invoice.
BRI’s claim that its broker did not know the physical nature of the goods is further belied by BRI’s own submission of a document entitled, “Forwarder’s Cargo Receipt.” This document is from a company named “Cargo Flores.” This Forwarder’s Cargo Receipt shows that the shipper of the subject merchandise is La Mediterranea Coop VAL, Spain, the consignee, Ben Rickert Inc., and that notification was to be provided to “Ben Rickert Inc,” and to BRI’s broker, “Natural Nydegger Transport Corp.” The notations appear under the heading, “DESCRIPTION OF THE GOODS,” and specifically describe 31,577 PCS Hex, Glass Jar Item No. 6905, 33,600 PCS Trap Glass Jar Item No. 6906, and 1,305 PCS TRI Glass Jar Item No. 6907. Neither BRI, nor its counsel have provided any evidence to counter this indication that BRI and its broker were notified as to the nature of the subject merchandise.
In Taban Co. v. United States, 960 F. Supp. 326 (CIT 1997) (reprinted in Customs Bulletin, March 19, 1997, p. 43) and Zaki Corp. v. United States, 960 F. Supp. 350 (CIT 1997) (reprinted in Customs Bulletin, April 2, 1997, p. 84) the Court of International Trade found that there was a mistake of fact, as opposed to a mistake of law, because “the ‘exact physical properties’ of the merchandise were not known to the broker or to the Customs in th[ese] case[s].” Taban, Customs Bulletin at p. 53; Zaki at 95-96. The facts found in Taban and in Zaki, are simply not reflected in BRI’s Protest and Application for Further Review.
In the present case, no where in the protest did BRI assert that the broker failed to review the entry documents. In Taban and Zaki, the court concluded that the “broker and Customs were unaware [of the exact physical properties of the merchandise] until more than ninety days after their liquidation and therefore plaintiff’s broker could not have relayed the information to Customs for its consideration in classifying and liquidating the merchandise at issue.” Id., Taban at 54; Zaki at 95-96. Substantial evidence presented in this case suggests that both the broker and Customs knew precisely what the nature of the subject merchandise was.
Clouded by Counsel’s exertions to bootstrap Taban to the facts of this case, all of the following appear to have been overlooked by BRI: the text of DD 806907; the fact that the submitter of the request for a tariff classification was BRI’s broker, Nydegger; and the fact that Nydegger submitted a sample of the glass jar. Moreover, the Customs District Director’s decision was issued to Nydegger. Thus, BRI’s broker knew exactly what the physical nature and properties of the goods were, unlike the brokers in Taban and Zaki. The second paragraph of DD 806907, clearly states, “[t]he sample presented, on behalf of your client Ben Rickert, Inc., is a lightly tinted “antique” green jar describe on the accompanying suppliers invoice as a half moon
jar.” Therefore, if there is a mistake it is not a mistake of fact on the part of BRI, on the part of Customs, or on the part of BRI’s broker, it is a mistake of classification, which is a mistake of law.
HOLDING:
The protest, numbered 1001-96-106108, is DENIED, and relief may not be granted for entry number 506-XXXX932-4, under 19 U.S.C. §1520(c)(1) for the reasons given in the LAW AND ANALYSIS portion of this ruling.
No inadvertence on the part of Customs, or in Customs application of the District Director’s ruling, (in force at the time the subject merchandise was entered into the United States) has been found. Although the protestant has also claimed that the broker was mistaken as to the nature of the goods, the protestant has failed to present sufficient evidence to substantiate such a claim.
Consistent with the decision set forth above, you are hereby directed to deny the subject protest. 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 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, Freedom of Information Act and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division