PRO-2-02-RR:CR:DR 227909 IOR
Port Director
U.S. Customs Service
Vessel Repair Unit
423 Canal Street, Room 303
New Orleans, LA 70130-2341
ATTN: Glenn N. Seale
RE: Protest 5301-97-100050; surety protest; collusion; 19 U.S.C. §1514(c)(3)
Dear Sir:
This decision is in response to a February 11, 1998 memorandum from the Chief, Vessel Repair Liquidation Unit, requesting internal advice with respect to the above-referenced Protest.
FACTS:
On March 27, 1995, the M/V State Flamingo voy.1/95, arrived at the port of Texas City, Texas, and filed a timely vessel repair entry. The vessel operator sought full relief from duty due to fire damage sustained during the foreign voyage. The application was denied as incomplete on June 11, 1996, in part due to the absence of any U.S. Coast Guard report documenting the casualty. The entry was liquidated on August 16, 1996.
On November 26, 1996, your office received a letter dated November 25, 1996, requesting the status of a protest of the August 16, 1996 liquidation, which protest had purportedly been filed on August 28, 1996. The letter included attachments which consisted of a copy of an unnumbered CF 19, a copy of the subject entry, and a copy of the previously unsubmitted Coast Guard report. The original protest had been purportedly mailed to New Orleans instead of Houston. However, Customs has no record of having received the protest anywhere, prior to November 26, 1996. By letter dated November 27, 1996, the vessel operator was notified by your office, that Customs has no record of receiving the protest and that no further action can be taken on the matter unless Customs is provided with proof that the protest was timely submitted and accepted by a Customs officer.
On January 28, 1997, Protest No. 5301-97-100050 was filed by the surety for the vessel operator, which “parallels and duplicates claims made on the importer’s protest.” The request for internal advice states that no copy of the operator’s evidence is included in the surety’s protest. The protest filed by the surety states that the first demand on surety was October 31, 1996, in which case, the protest would be timely filed pursuant to 19 U.S.C. §1514(c)(3). The file includes a copy of the Formal Demand on Surety, which has a demand date of October 31, 1996. In the protest, the surety certifies that the protest is filed on its own behalf and surety is not collusively filing the protest to extend any other authorized person’s time to protest. The attachment to the protest states:
III. Surety protests the decision to deny the petition for relief from duty on vessel repairs on a U.S. flag vessel the “State Flamingo” in Trinidad.
IV. A petition for relief of duties on repairs necessitated on board the “State Flamingo” due to casualty sustained by an electronical fire on board. The vessel had to have repairs prior to its continuing on to the United States. Therefore, relief of payment of duties should be allowed.
The attachment goes on to state that the protest is also a protective protest against any other potential grounds for protest.
The request for internal advice recommends denial of the protest on the grounds that it is incomplete and does not provide the evidence necessary to support a claim for relief. In addition, the internal advice request makes the statement that the fact that the surety’s protest references a parallel protest, which in fact does not exist due to a flawed filing, is a contradiction making it difficult to conclude that the protest is not actually the result of collusion.
ISSUE:
Whether the surety’s protest is a valid protest.
LAW AND ANALYSIS:
The protest statute, 19 U.S.C. §1514, requires that "[a] protest must set forth distinctly and specifically ... each decision described in [19 U.S.C. §1514(a)] as to which protest is made ... [and] the nature of each objection and the reasons therefor ....". The Customs Regulations, 174.13(a)(6) (19 CFR 174.13(a)(6)), require that the protest contain “[t]he nature of, and justification for the objection set forth distinctly and specifically with respect to each...decision, or refusal”. In this regard, the surety’s protest is sufficient, in part. The protest was timely filed (within 90 days of the demand on the surety), and in addition to identifying the entry protested, the date of the entry, the date of liquidation, and the demand date and making the non collusion statement, the protest specifically requests relief of duties for repairs necessitated due to casualty sustained by fire on board the vessel. See, Mattel, Inc. v. United States, 72 Cust. Ct. 257, 262, C.D. 4547, 377 F. Supp. 955 (1974), in which the Court summarized prior Court decisions on this issue as follows: "In short, the court, taking a liberal posture, has held that however cryptic, inartistic, or poorly drawn a communication may be, it is sufficient as a protest for purposes of section 514 if it conveys enough information to apprise knowledgeable officials of the importer's intent and the relief sought".
In this case, with respect to the protest for relief of the vessel repair duties, the protest clearly articulates the matter protested (although, as discussed below, the protest is not substantiated by any evidence). However, with respect to the items referred to as a “protective protest”, the protest does not convey enough information to apprise Customs of the surety’s intent and the relief sought, thereby the “protective” portion of the protest is insufficient under 19 U.S.C. §1514.
However, with respect to the claim for relief of vessel repair duties, the surety did not submit any evidence. Documentary evidence was submitted by the vessel operator in an untimely protest, and the surety’s protest was stated to parallel and duplicate the vessel operator’s protest. As discussed below, Customs cannot be expected to search another protestant’s files and make a decision as to which evidence may support the other protest.
In National Carloading Corporation v. United States, 44 Cust. Ct. 493, at 494, Abstract 64258 (1960), the court held that in support of a protest, a protest “may not incorporate, by reference to another document, the reasons embodied therein, unless the same is physically annexed to the writing which purports to be the protest.” In J.R. Press Corporation v. United States, 45 Cust. Ct. 382, at 383, Abstract 64924 (1960), the court followed the decision in National Carloading Corporation, and found that “information collaterally obtained by the collector does not validate an otherwise invalid protest.” In that case, the collateral information as to the position of the protestant had been given to the appraiser and not to the collector. The appraiser had apparently orally received the position of the plaintiff. The court in Atlantic Linen Importing Co. v. United States, 54 Cust. Ct. 290 (1964), sought to determine the sufficiency of a protest. The court applied the decision in National Carloading Corporation, and discussed whether information obtained collaterally by another letter must be physically attached to the protest. Id., at 293. The court concluded that a reference in one letter, to another letter, previously written by the same party, containing detailed facts, connects the two letters in fact. It was determined that the collector knew the intent of the importer, and the letters were “connected together in law.” The court, also noting that the first letter was “physically attached to the official papers which are presently before the court” decided:
While there may be some instances wherein information collaterally obtained may be deemed insufficient to state a cause of action, the instant case is not one. We believe the protest is sufficient.
Id.
In this case, the surety’s protest itself is sufficient, as to the vessel repair duties, without reference to the vessel operator’s protest. However, as the surety’s protest is not supported by any evidence upon which to base a decision, in this case we must determine whether the reference to the vessel operator’s untimely protest is sufficient for purposes of substantiating the protest with evidence. We find that unlike in Atlantic Linen Importing Co, the referenced documents are required to substantiate the protest, as opposed to making a sufficient protest in terms of stating the nature and reason for the protest, and therefore the decision in Atlantic Linen Importing Co, is not on point with the instant case. Providing notice to Customs of the nature and justification of the objections, is a different requirement than substantiating the objection which is the subject of the protest. Furthermore, in this case, because the vessel operator’s protest was not a valid protest due to untimeliness, it cannot be used for purposes of substantiating an otherwise unsupported protest. Untimely protests are invalid. United States v. Wyman, 156 F. 97, 84 C.C.A. 123 (Mo. 1907); see also Gallagher & Ascher v. United States, 21 CCPA 313 (1933); Spiegel Bros. v. United States, 21 CCPA 310 (1933).
To the extent that the surety did acquire the evidence it considers pertinent, it can supplement its protest, as long as a decision on the protest has not been made. There is no indication that the surety has supplemented its protest as of the date of this decision.
With respect to the question of collusion, it does not appear that there is any evidence to establish collusion. To the contrary, the surety’s stated reference to the importer’s protest which suggests the belief that a valid protest was filed, would militate against a finding of collusion. The surety did make a certification of non-collusion. The fact that the certification was made, alone, is not enough to support a finding of collusion. Collusion is a form of fraud or deception. “Collusion” is defined as “[a]n agreement between two or more persons to defraud another oh his rights by the forms of law or to secure an object forbidden by law.” Ballentine’s Law Dictionary, 218 (3rd ed. 1969). The term “fraud” is defined as “[d]eceit, deception, artifice, or trickery operating prejudicially on the rights of another, and so intended, by inducing him to part with property or surrender some legal right.” Id. at 496. In this case the collusion would be the method of trickery used to induce the government to surrender its right to enforce the 90 day time limit on the importer’s right to protest the liquidation of the entry.
In Sweet Briar, Inc. v. United States, 73 Cust. Ct. 93, C.D. 4558 (1974), the Court applied 19 U.S.C. §1521 (repealed by Pub. L. 103-182, Title VI, §618, Dec. 8, 1993, 107 Stat. 2180), which required a finding of “probable cause to believe there is fraud” in an entry, before it could be reliquidated up to two years after the last liquidation or reliquidation. In Sweet Briar, the court found that the requisite evidence of fraud to support a finding was lacking. In Sweet Briar, there were two issues: undervaluation, and false country of origin. The evidence as to the first issue was that the seller’s invoices did not include the buyer’s payments for certain embroidery work. The court found that the investigating agent determined that the failure of the seller to include those buyer-paid charges on the seller’s invoice to the buyer was due to the seller’s slip-up in adding the charges. As to the country of origin issue, fraud was alleged based on the investigating agent’s assumption that documents listing Philippine imports and exports showed a connection between the exports and Japanese materials. A review of the described goods in the two lists showed that the two lists described completely different goods.
In this case, the only apparent evidence of collusion brought to our attention is the surety’s reference to the vessel operator’s protest. Given the lack of evidence included with the surety’s protest, and the surety’s reference to the existence of a prior protest does not show that there was joint effort by the surety and the vessel operator to defeat the effect of the protest filing period for the vessel operator.
Based on the decision in Sweet Briar, Customs would have to support a rejection of a protest on the grounds of collusion, with more than a suspicion of collusion, and the burden would be on Customs to prove collusion. Even if the surety had known that the importer had failed to file a timely protest, the surety would not be precluded from filing a protest to protect its own interests, provided that it certified that the protest is not being filed collusively, under 19 U.S.C. §1514(c)(3).
HOLDING:
The protest filed by the surety is not supported by any evidence, and there is no basis upon which to make a decision. The protest is denied.
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, Freedom of Information Act and other public access channels.
Sincerely,
John Durant
Director
Commercial Rulings Division