CON-9-07 CO:R:C:E 223547 C
District Director of Customs
300 South Ferry St. Terminal Island
Room 2017
San Pedro, CA 90731
RE: Protest and application for further review no. 2704-7-
001755; temporary importation under bond; demand for liquidated
damages for failure to export or destroy merchandise entered
temporarily under bond; demand for liquidated damages not
protestable under 19 U.S.C. 1514; 19 U.S.C. 1514; 19 C.F.R.
10.31(e); 19 C.F.R. 10.31(h); 19 C.F.R. 10.39(d)(1)
Dear Sir/Madam:
This responds to the referenced protest and application for
further review. We have reviewed the record and our decision
follows.
FACTS:
In March 1986, PROTESTANT imported a milling machine under
item 864.20 of the Tariff Schedules of the United States,
subheading 9813.00.20 of the Harmonized Tariff Schedule of the
United States which became effective on January 1, 1989. Both
item 864.20, TSUS, and 9813.00.20, HTSUS, pertain to the
temporary importation under bond (TIB) of samples imported solely
for the purpose of taking orders. Under the temporary bond
conditions, the merchandise was to have been exported or
destroyed by expiration of the bond period. PROTESTANT, in
breach of the bond conditions, sold the merchandise to a buyer in
the United States, thereby failing to export or destroy the
merchandise as required. Consequently, in accordance with
section 10.39(d)(1) of the Customs Regulations, Customs issued a
"Notice and Demand for Liquidated Damages," demanding payment of
liquidated damages in the amount of 110% of the estimated duties
as determined at entry. (Note: the file does not contain a copy
of the "Notice"; however, section 10.39(d)(1) provides that the
district director will issue a written demand for payment of
liquidated damages; we assume that a "Notice" or some other
written demand was issued.) PROTESTANT submitted payment for the
liquidated damages by check dated February 27, 1987, in the
amount of $47,487.10. PROTESTANT also filed this protest,
contesting the assessment of liquidated damages in the above
amount. The protest, filed on May 29, 1987, asserts the
following: the value of the merchandise established at the time
of TIB entry was erroneous; since the bond amount is based on the
value of the merchandise as determined at the time of entry, the
amount of the bond, and thus the amount of the demand for
liquidated damages, was also erroneous. PROTESTANT argues that
the value of the merchandise at entry should have been less than
was established at that time.
ISSUES:
(1) Was the instant protest timely filed?
(2) Is the issuance of a demand for liquidated damages under
19 C.F.R. 10.39(d)(1) a protestable decision under 19 U.S.C.
1514?
LAW AND ANALYSIS:
(1) The protest was filed on May 29, 1987, objecting to the
assessment of liquidated damages on the ground that the valuation
of the merchandise, set at the time of entry, March 4, 1986, was
erroneous. The date of the demand for liquidated damages is
unknown (since a copy of the demand is not in the file; nor is
the date of same mentioned), but it clearly pre-dates
PROTESTANT's payment of liquidated damages which was accomplished
by check dated February 27, 1987. More than 90 days had elapsed
between the date of the check and the date the protest was filed.
Necessarily, then, more than 90 days had elapsed between the
demand for liquidated damages and the filing of the protest. The
protest therefore was not timely filed within 90 days of the
demand for liquidated damages, or any other Customs decision, and
it must be denied for untimeliness.
(2) Further, it has been acknowledged by the United States
Court of International Trade (Halperin Shipping Co., Inc. v.
United States, No. 87-02-00371, slip op. 90-63 at 9 (CIT July 2,
1990); Pope Products, Division of Purex v. United States, No. 89-
05-00254, slip op. 91-50 at 8, 11 (CIT June 18, 1991)) and the
United States Court of Appeals for the Federal Circuit (United
States v. Toshoku America, Inc, 879 F. 2d 815, 818 (Fed. Cir.
1989)) that a demand for liquidated damages is not a Customs
decision that is protestable under 19 U.S.C. 1514. (A party can
seek relief generally from a demand for liquidated damages by
resort to the mitigation procedure of 19 C.F.R. 172.1.)
Therefore, even had this protest been filed within 90 days of the
demand for liquidated damages, it would be denied.
Because a TIB entry does not involve an appraisement or a
liquidation (19 C.F.R. 10.31(e) and 10.31(h)), such an entry is
not protestable under 19 U.S.C. 1514(a)(1) or 1514(a)(5). In the
past, Customs has held that assertions of error in classification
or valuation in a TIB entry be considered in mitigation of
liquidated damages, a process provided for under part 172 of the
Customs Regulations. This was the holding of C.S.D. 79-377,
wherein an error in the valuation of merchandise entered under
TIB was alleged and remedy was sought under the reliquidation
provision of 19 U.S.C. 1520(c). (See 13 Cust. Bull. 1566
(1979).)(See also Customs ruling letters 217538 and 726002, dated
November 29, 1984, and August 13, 1984, respectively (copies
attached).) Section 172.21 of the Customs Regulations provides
that the district director may cancel any claim for liquidated
damages incurred, on such terms and conditions as, under the law
and in view of the circumstances, he shall deem appropriate. If
an importer can establish to the district director's satisfaction
that a classification and/or valuation in the TIB entry is
incorrect, the district director can take that into consideration
when determining the propriety and extent of mitigation. Section
172.2(a) provides that a petition for mitigation must be filed
within 30 days of the date of mailing of the notice of liquidated
damages. On the facts here, while the date of such mailing is
unknown, it is clear that the 30 day filing requirement was not
complied with.
HOLDING:
(1) The instant protest was not filed within 90 days of a
Customs decision having a bearing on this case and, therefore,
must be denied for untimeliness.
(2) A demand for liquidated damages is not a decision that
is protestable under 19 U.S.C. 1514. Errors in the valuation or
classification of TIB entries can be appropriately addressed in
the procedure for mitigation of liquidated damages upon
establishment, to the satisfaction of the district director, that
the valuation or classification was incorrect.
Based on the foregoing, you are instructed to deny the
protest in full. A copy of this decision should be attached to
the Form 19, Notice of Action, to be sent to the PROTESTANT.
Sincerely,
John Durant, Director
Commercial Rulings Division