LIQ-9/CLA-2-RR:IT:EC 224447 SLR/PH
Port Director of Customs
San Diego, California 92188
RE: Protest No. 2501-93-100001; 9801.00.10, HTSUS; American
Goods Returned; Documentary Requirements; 19 U.S.C. 1514
Dear Sir or Madame:
The above-referenced protest was forwarded to this office for
further review. We have considered the evidence provided, and
the points raised, by your office and the protestant. As
described in the ruling, the protestant has met with officials of
this office and has submitted additional material. We are
enclosing copies of all additional material for your file. Our
decision follows.
[The decision in the HOLDING of this ruling grants the protest,
subject to the conditions that the protestant submit certain
documentation described in the ruling and satisfactorily resolve
discrepancies between the original entry documentation and the
"corrected" entry documentation, including correlating the total
of 22,380 units returned with the corresponding units incorrectly
entered on the original entry documentation. The protestant
should be given written notice of these requirements (by quoting
from the portion of the HOLDING describing the requirements). If
the protestant fails to meet these requirements within 45 days of
the date written notice is provided to the protestant of the
requirements, the protest should be DENIED.]
FACTS:
According to the file and Customs records, on June 24, 1992, the
protestant entered certain merchandise from a related company in
Mexico. The merchandise was entered as electric motors within
certain specifications, under subheading 8501.10.4040, HTSUS,
with an entered value of $641,202, dutiable at the rate of 6.6%,
with total duty for this merchandise of $42,319.33. The
merchandise was also entered under subheading 9802.00.80, HTSUS,
with an entered value for this portion of the merchandise of
$2,726,514, duty-free.
The invoice stated to have been filed with the entry under
consideration (the invoice number is referred to on the Entry
Summary form) describes the merchandise under consideration as
11,250 and 11,130 units of "Voice Coil Motor[s]", referring to
part number 90-13177.
According to Customs records, the entry was liquidated as
entered, on October 16, 1992.
On January 1, 1993, the importer protested the liquidation of the
entry, stating:
As a result of a review of the importer's cost accounting,
inventory control and invoicing procedures, the captioned
entry was found to contain discrepancies in the information
supplied to U.S. Customs originating in each of these areas.
A revised commercial invoice which reflects the correct
costs, quantities, part and HTSUS numbers is attached. For
the convenience of the district director, a corrected CF7501
is presented herewith.
Most significant among the corrections is the change in a
part number resulting in a decrease in the invoice value in
the amount of $3,257,568.27. The items in question appear
on page 4 of the commercial invoice, line items 1 & 2 of the
original commercial invoice, the subpart series "002" was
omitted causing these magnets to be invoiced as a finished
voice coil motor.
The importer respectfully requests reliquidation with refund
of excess duties deposited.
The "corrected CF7501" referred to in the protest listed the
merchandise under consideration as other U.S. goods returned
without being advanced or improved abroad, under subheading
9801.00.10992, HTSUS, free of duty. The "revised commercial
invoice" described the merchandise as 11,250 units of a "Magnet
Inner", part number 90-002-13177, and 11,130 units of a "Magnet",
part number 90-002-13176.
Further review was requested, and according to Customs records,
granted.
At the request of the protestant, personnel from this office met
with the representative of the importer about this protest on
February 7, 1995. After that meeting, by letter of April 7,
1995, the protestant submitted the following:
An affidavit dated April 3, 1995, by a person who stated
that he was employed by the importer as Vice President,
Finance in June 1992. The affiant stated that his
responsibilities included determining the costs of products,
preparation of bills of material, preparation of cost
submissions for Customs and dealing with the importer's
consultant hired by the importer to prepare documents for
Customs. The affiant stated that the commercial invoice
submitted with the entry under consideration referred to the
magnets at issue in the protest as voice coil motors and
listed them as part number 90-13177. The affiant stated
that both line item descriptions should have referred to
magnets, instead, and that the second description on the
invoice, for a quantity of 11,130 magnets, should have made
reference to part number 13176 instead of 13177. The
affiant stated that certain documents submitted to Customs
showing the return of the magnets in issue, numbered 13177
and 13176 in the invoice, to the manufacturer in the United
States refer to the part numbers as part numbers 13404-1 and
13405-1, respectively. The affiant stated that the importer
had changed from a "94 grade neodynimium iron boron magnet
to a 97 grade neodynimium iron boron magnet", and that this
resulted in a change in the part numbers from 13177 and
13176 to 13404 and 13405. The affiant stated that its
consultant did not update its database to reflect these new
part numbers, so that the invoice submitted with the
protested entry was not updated to reflect the change in
part numbers.
An invoice dated June 12, 1992, for the shipment of 11,130
units of "Hicorex ND permanent magnet[s]", customer parts
13405-1, from a U.S. company in Michigan (with the notation,
"Made in USA") to a company in Mexico (the latter company
was related to the protestant, according to documents in
another protest file).
An invoice dated June 15, 1992, for the shipment of 11,250
units of "Hicorex ND permanent magnet[s]", customer parts
13404-1, from the same U.S. company as is referred to above
to the same company in Mexico as is referred to above.
A numbered "discrepancy report" with the letterhead of the
protestant (and/or the related company in Mexico) stating
that an order of 11,130 units of part 13405-1 was rejected
because of "embedded particles in coating". The document is
checked to indicate "debit supplier", and is signed, with a
date of signature of June 23, 1992.
A numbered "discrepancy report" with the letterhead of the
protestant (and/or the related company in Mexico) stating
that an order of 11,250 units of part 13404-1 was rejected
because of "embedded particles in coating". The document is
checked to indicate "debit supplier", and is signed, with a
date of signature of June 23, 1992.
A document on the letterhead of the protestant listing
11,130 units of part 13405-1 and 11,250 units of part 13404-1, referring to the numbered "discrepancy report[s]"
described above and indicating that the parts were shipped
to the U.S. manufacturer referred to above. The document is
signed by the person stated to have prepared it, and is
dated June 23, 1992.
A document on the letterhead of the protestant (indicated to
be a debit memo) listing 11,130 units of part 13405-1 and
11,250 units of part 13404-1, referring to the numbered
"discrepancy report[s]" described above, referring to the
order numbers on the invoices for the shipments from the
U.S. company in Michigan to the protestant (referred to
above), indicating a "debit" was taken for this quantity of
parts, and stating the charge for the "freight in" and
"return freight".
A certification that certain parts, including part numbers
13176, 13177, 13404 and 13405, were manufactured by the
above-referenced U.S. company in Michigan. The
certification is dated March 12, 1992, and signed by a
person stated to be the duly authorized representative of
the above-referenced U.S. company in Michigan.
ISSUE:
May the referenced protest be granted?
LAW AND ANALYSIS:
Initially, we note that the protest was timely filed (i.e.,
within 90 days of the notice of liquidation (19 U.S.C.
1514(c)(3)) and that the matter protested is protestable (see 19
U.S.C. 1514(a) (2) and (5)).
Also in regard to procedure, we note that the grounds stated for
the protest on the face of the protest form appear to contest the
value of the imported merchandise and do not clearly raise the
issues which facts, as described in the FACTS portion of this
ruling, raise. However, we also note that the protest refers to
and submits as attachments to the protest a corrected CF 7501 and
revised commercial invoice, and that these documents do assert
the classification of the merchandise as "American products
returned" under subheading 9801.00.10, HTSUS. Thus, the protest
did, although perhaps "cryptic[ly], inartistic[ly], or poorly
drawn" (see Mattel, Inc. v. United States, 72 Cust. Ct. 257, C.D.
4547, 37 F. Supp. 955 (1974)), raise as a protested
administrative decision the failure to classify the merchandise
under subheading 9801.00.10. Therefore, the April 7, 1995,
letter may be treated as submitting additional grounds or
arguments in support of the protest (see 19 U.S.C. 1514(c)(1) and
19 CFR 174.28), which may be submitted at any time prior to
disposition of the protest, and not as an amendment of the
protest (see 19 U.S.C. 1514(c)(1) and 19 CFR 174.14)), which must
be filed within the 90-day time for protest. See, in this
regard, Audiovox Corp. v. United States, 8 CIT 233, 598 F. Supp.
387 (1984), affirmed 3 Fed. Cir. (T) 168, 764 F. 2d 848 (1985).
Insofar as applicability of subheading 9801.00.10, HTSUS, is
concerned, that subheading provides for the duty-free treatment
of products of the United States when returned after having been
exported, without having been advanced in value or improved in
condition by any process of manufacture or other means while
abroad. Section 10.1(a), Customs Regulations (19 CFR 10.1(a)),
outlines the necessary documentation required for duty-free
treatment under subheading 9801.00.10. The documentation
consists of a declaration by the foreign shipper in substantially
the form described in 19 CFR 10.1(a)(1) and a declaration by the
owner, importer, consignee, or agent having knowledge of the
facts regarding the claim for free entry in substantially the
form described in 19 CFR 10.1(a)(2). Under 19 CFR 10.1(b), if
the value of the returned articles exceeds $1,250 and the
articles are not clearly marked with the name and address of the
manufacturer, Customs may require other additional documentation,
such as a statement from the U.S. manufacturer verifying that
they were made in the U.S. or an export invoice, bill of lading,
or airway bill evidencing the U.S. origin of the articles and the
reason for exportation of them. Under 19 CFR 10.1(d), if Customs
is reasonably satisfied, because of the nature of the articles or
production of other evidence, that the articles are imported in
circumstances meeting the requirements of subheading 9801.00.10,
the requirements for producing the documents under 19 CFR 10.1(a)
may be waived.
In this case we are satisfied that the totality of the evidence
presented is sufficient to show that the merchandise, invoiced in
the corrected invoice as magnet inner, part 90-002-13177, and
magnet, part 90-002-13176, is a product of the United States and
was not advanced in value or improved in condition while abroad.
That is, there is a statement by the U.S. manufacturer verifying
that the merchandise (under any of the part numbers referred to)
was manufactured by a company in Michigan. There are copies of
shipping and other documents tracing the merchandise from the
company in Michigan to the Mexican company and back. There are
documents evidencing the reason for return of the merchandise to
the United States. Thus, evidence meeting both of the
alternative kinds of evidence described in 19 CFR 10.1(b) is
provided. On the authority of 19 CFR 10.1(d), the requirement
for the documents described in 19 CFR 10.1(a) may therefore be
waived, subject to the following conditions:
(1) Under 19 CFR 10.1(a)(1) and (2), the declarations
required therein require statements, among other things,
that the merchandise for which duty-free treatment is sought
is returned to the United States without having been
advanced in value or improved in condition by any process or
manufacture or other means abroad and that the merchandise
was not manufactured or produced in the United States under
subheading 9813.00.05, HTSUS, and that it was exported from
the United States without benefit of drawback. If a
knowledgeable, duly authorized official of the importer,
such as the affiant in the affidavit described in the FACTS
portion of this ruling, makes a declaration as to the above,
the protest may be granted.
(2) There are inconsistencies in the original entry
documentation and the "corrected" entry documentation. For
example, the original entry summary lists a quantity of
25,367 units of electric motors and the corrected entry
summary lists a quantity of 2,054 units of the electric
motors and an unstated quantity of units stated to be other
U.S. goods returned without being advanced in value or
improved in condition and apparently representing the 22,380
magnets under consideration. Thus, the quantities on the
"corrected" entry documentation are not accounted for,
correlated, or explained on the "corrected" entry
documentation. For another example, the "corrected" entry
summary lists for invoice line 003 207 units, with an
entered value of 204, of "US gds expd for temp use abroa",
classified under subheading 9801.00.10108, HTSUS. The
"corrected" invoice has only 1 "line" referring to
subheading 9801.00.1010.8 (page 4 of invoice, for 34
kilograms of voice coil motors, 550 units, also referring to
other subheadings). These inconsistencies must be
satisfactorily (to Customs) resolved and the importer must
correlate (or account for merchandise in) the original entry
documents with the "corrected" entry documents (e.g., the
25,367 units of electric motors in the original entry
documentation must be accounted for by explaining where
these units are represented in the "corrected" entry
documents (22,380 units are included in the magnets under
consideration and 2,054 are apparently included as electric
motors (line 002), leaving a balance of 933 units
unaccounted for)). If there is no correlation between the
entry documents, the protestant must satisfactorily (to
Customs) explain why this is so.
HOLDING:
The protest is GRANTED, subject to the conditions that:
(1) A knowledgeable, duly authorized official of the
importer, such as the affiant in the affidavit described in
the FACTS portion of this ruling, makes a written
declaration that the merchandise for which duty-free
treatment is sought is returned to the United States without
having been advanced in value or improved in condition by
any process or manufacture or other means abroad and that
the merchandise was not manufactured or produced in the
United States under subheading 9813.00.05, HTSUS, and that
it was exported from the United States without benefit of
drawback; and
(2) The discrepancies in the original entry documentation
and the "corrected" entry documentation, as described above,
are satisfactorily (to Customs) resolved, as described
above. (E.g., the original entry documentation lists 25,367
units of electric motors. These 25,367 units must be ac-
counted for by explaining where these units are represented
in the "corrected" entry documents (22,380 units are
included in the magnets under consideration and 2,054 are
apparently included as electric motors (line 002), leaving a
balance of 933 units unaccounted for). If there is no
correlation between the entry documents, the protestant must
satisfactorily (to Customs) explain why this is so.)
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, with
the Customs Form 19, 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, Tariff
Classification Appeals Division
Enclosure