LIQ-9-01-CO:R:C:E 224652 AJS
Mr. William Green
District Director of Customs
U.S. Customs Service
P.O. Box 17423
Washington, D.C. 20041
RE: Refund of duties prior to liquidation due to clerical error;
19 U.S.C. 1520(a)(4); 19 CFR 173.4a; 19 CFR 173.4; 19 U.S.C.
1520(c)(1); "clerical error"; "mistake of fact"; "inadvertence".
Dear Mr. Green:
This is in reply to your Internal Advice request of April
14, 1993, concerning refunds on formal entries prior to
liquidation.
FACTS:
Your request consists of three example transactions for
which you seek internal advice. Example 1 consists of an entry
in which the vendor made an error when preparing export invoices
by using the wrong unit value. A purchase order was in place
with the correct unit value. The shipment arrives at port with
entry documents accompanying the freight. Entry was made using
documents received and duty was paid. The entry is liquidated.
Within one month after liquidation, the importer discovers that
the invoice received is not correct as to the purchase price.
Example 2 consists of a shipment originating in Indonesia by
vessel. At Singapore, the shipment is placed on a plane for
destination. On arrival in New York, the freight forwarder makes
an immediate transportation (I.T.) entry to Washington, but
mistakenly uses Singapore as the exporting country. The bill of
lading clearly indicated that the goods were exported from
Indonesia for shipment to Washington. The merchandise is
eligible for duty-free treatment under the Generalized System of
Preferences (GSP). The broker made entry based on the
information provided, not detecting the
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error on the I.T. entry. The importer advised broker of the
error and broker requested, before liquidation of the entry, that
Customs refund duties upon liquidation.
Example 3 involves a situation in which a document needed to
claim duty-free entry is not included in the original entry
package. In this case, the importer submits entries as dutiable
even though the import specialists had previously accepted an
audit report which showed that the country of origin was a GSP
country. The importer was requested to enter the merchandise as
GSP if it qualifies, and the import specialist would review later
and request the documentation if necessary.
Our response is essentially limited to the applicability of
19 U.S.C. 1520(a)(4) inasmuch as your request is primarily
concerned with this issue.
ISSUE:
Whether the subject entries, prior to liquidation, are
entitled to a refund of excess duties, fees, charges or exactions
due to clerical error.
LAW AND ANALYSIS:
19 CFR 173.4a provides that pursuant to section 520(a)(4),
Tariff Act of 1930, as amended (19 U.S.C. 1520 (a)(4)), the
district director may prior to liquidation of an entry, take
appropriate action to correct a clerical error that resulted in
the deposit or payment of excess duties, fees, charges, or
exactions. Your request specifically asks whether the language
in this provision is narrower than the language in 19 CFR 173.4.
The answer is yes. Section 173.4a is expressly limited to the
correction of clerical errors prior to liquidation. It does not
also allow for the correction of a mistake of fact or other
inadvertence not amounting to an error in the construction of a
law within one year of liquidation as does section 173.4.
A "clerical error" has been stated by the Courts to be "a
mistake made by a clerk or other subordinate, upon whom devolves
no duty to exercise judgement, in writing or copying the figures
or in exercising his intention." See PPG Industries, Inc., v.
United States, 7 CIT 118, 124 (1984).,
and cases cited therein. In addition, T.D. 54848 provides,
"[c]lerical error occurs when a person intends to do one
thing but does something else . . . It includes mistakes in
arithmetic and the failure to associate all the papers in a
record under consideration." In Ruth F. Sturm's Customs Law &
Administration (3rd ed.), it is stated that "[c]lerical
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error has been found where mistakes were made in copying or
typing figures or where figures have been transposed", and a
number of Customs Court decisions are cited for this proposition
(section 9.4, at pages 5 and 6).
In Example 1, the vendor made an error in preparing an
export invoice by using the wrong unit values even though a
purchase order was present with the correct unit values. This
type of error is not a clerical error correctable pursuant to
section 1520(a)(4). The vendor did not intend to write down the
correct price and then mistakenly write down the incorrect price.
Rather, the vendor mistakenly used an incorrect value to obtain
the correct price.
In Example 2, an incorrect country of origin (i.e.,
Singapore) is used by the freight forwarder when the correct
country of origin (i.e., Indonesia) is available on the bill of
lading. This type of error is also not a clerical error
correctable pursuant to section 1520(a)(4). The freight
forwarder did not intend to write down Indonesia and instead
write down Singapore. Rather, the forwarder incorrectly used the
documentation present to ascertain the country of origin.
19 U.S.C. 1520(c)(1) allows for the correction of a mistake
of fact or other inadvertence not amounting to an error in the
construction of a law within one year after the date of
liquidation. A mistake of fact has been defined as "a mistake
which takes place when some fact which indeed exists is unknown,
or a fact which is thought to exists, in reality does not exist.
C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct.
17, 22, C.D. 4327, 336 F. Supp. 1395, 1399 (1972), aff'd 61 CCPA
90, C.A.D. 1129, 499 F.2d 1277 (1974). Inadvertence is a
somewhat broader term, and has been defined as "an oversight or
involuntary accident, or the result of inattention or
carelessness, and even as a type of mistake." Id. Each of the
above two examples would appear to be a type of inadvertence due
to inattention or carelessness which should be addressed under
section 1520(c)(1) instead of as clerical error under section
1520(a)(4).
In Example 3, a document needed to support a claim for
duty-free treatment was not included in an entry which was
submitted as dutiable. The importer did not want to enter the
merchandise as duty-free until they obtained proper
documentation. Once again, this is not a clerical error
correctable pursuant to section 1520(a)(4). The importer did not
intend to enter the merchandise as duty-free and then by error
enter it as dutiable. The importer made a conscious decision to
enter as dutiable until they received the proper documentation.
This would appear to be some type of mistake
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of fact in that the importer entered the merchandise as dutiable
because of the unproven fact of the merchandise's duty-free
status. This type of error could also be remedied under section
1520(c)(1).
In general, a clerical error, mistake of fact or other
inadvertence not amounting to an error in the construction of a
law should be handled in the following manner. In instances
where the district agrees that an excess deposit is made due to a
clerical error, then that excess may be refunded before
liquidation pursuant to section 1520(a)(4) and the entry
liquidated as entered taking into account the refund. In
instances where there are any other types of errors which are
agreed to by the district and importer, then the amount deposited
in error should be refunded upon liquidation. In cases where the
district does not agree with the alleged error, then the entry
should be liquidated as determined by the district and the
importer must act under 19 U.S.C. 1514 or 1520(c)(1), as
appropriate.
Your request specifically asks whether the instructions
outlined in Customs Directive (CD) 3710-01 (March 27, 1985) cover
all the transactions enumerated in 19 CFR 173.4(b). The answer
is no. These instructions are limited to unliquidated entries
and clerical errors. Inasmuch as section 173.4(b) covers
liquidated entries and other Customs transactions which also
involve a mistake of fact or other inadvertence, these
instructions cannot apply.
This request also specifically asks whether all authentic
clerical errors enumerated in section 173.4(b) are also included
in the provisions of section 173.4a and CD 3710-01. The answer
is yes. If an error is a clerical error under section 173.4(b)
it would also be a clerical error under 173.4a and CD 3710-01.
The major difference in these two provisions is the time at which
the correction of the clerical error may take place.
HOLDING:
The subject entries do not involve clerical errors which are
entitled to a refund of excess duties, fees, charges or exactions
prior to liquidation pursuant to 19 U.S.C. 1520(a)(4).
Sincerely,
John Durant, Director