VAL CO:R:C:V 545578 LPF
District Director
U.S. Customs Service
P.O. Box 025280
6601 NW 25th Street
Miami, FL 33102-5280
RE: Internal Advice Request 7/94; Reduction of current duty liability to account for prior overpayments
Dear Director:
This in response to Internal Advice Request No. 7/94, filed
on behalf of Farah USA on January 24, 1994, concerning the
appraisement of wearing apparel.
FACTS:
From 1988 to 1991 all wearing apparel entered by Farah USA
was appraised under transaction value pursuant to 19 U.S.C.
1401a(b). The appraising officer determined that the
relationship between Farah USA and its foreign subsidiary,
Corparacion Farah, did not preclude appraisement based on
transaction value. Although Farah USA's annual cost
reconciliations (from estimated to actual costs) submitted from
1988 to 1991 reflected a net overpayment of duties, the entries
filed during these years were liquidated as entered and were
neither petitioned nor protested by Farah USA.
In 1992, after a Farah representative contacted the Miami
district office, it was determined that the circumstances of the
sales between Farah USA and Corporacion Farah indicated that the
relationship between the companies influenced the price actually
paid or payable for the merchandise. Since the merchandise could
not be appraised under transaction value under 1401a(b) or
1401a(c) and the importer requested appraisement under computed
value, the merchandise was appraised based on computed value.
The liquidation of the 1992 entries filed by Farah were
withheld pending the receipt of computed value information. This
information resulted in an increase, as compared to prior years,
in the value of the merchandise.
Farah has requested that the 1992 duty liability be reduced
to account for prior overpayments of duties reflected through the
cost reconciliations submitted from 1988 to 1991.
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ISSUE:
Whether Customs has the legal authority to reduce an
importer's current duty liability to account for prior
overpayments of duties which were neither petitioned nor
protested by the importer.
LAW AND ANALYSIS:
19 U.S.C. 1514 explains, in pertinent part, that the legality
of all orders and findings regarding the appraised value of
merchandise and the liquidation or reliquidation of an entry, or
modification thereof, is final and conclusive unless a protest is
filed within ninety days after notice of liquidation or
reliquidation.
In addition, 19 U.S.C. 1520 states that, "the Secretary of
the Treasury is authorized to refund duties . . . whenever it is
ascertained on liquidation or reliquidation of an entry that more
money has been deposited or paid as duties than was required by
law to be so deposited or paid. . . ."
However, with regard to reliquidation of an entry, section
1520 adds that, ". . . the appropriate customs officer 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, adverse to the importer and manifest from
the record or established by documentary evidence . . . brought
to the attention of the appropriate customs officer within one
year after the date of liquidation or exaction. . . ."
In this case, the inquirer did not file a protest.
Accordingly, pursuant to section 1514, the liquidation of the
merchandise entered between 1988 to 1991 is deemed final and
conclusive.
Moreover, based on the facts provided, because it appears
that the alleged error or mistake made in appraising the
merchandise amounts to an error in the construction of a law,
that is 19 U.S.C. 1401a, Customs apparently would have been
unable to afford redress in accordance with section 1520. We
note that if Customs would have refused to reliquidate the
entries under section 1520(c), the importer's proper recourse
would have been to protest such a decision pursuant to section
1514.
HOLDING:
In accordance with 19 U.S.C. 1514 and 1520, Customs is
without legal authority to reduce the importer's 1992 duty
liability to account for overpayments of duties reflected through
the cost reconciliations submitted from 1988 to 1991.
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Sixty days from the date of this letter 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