LIQ-9-01-RR:IT:EC 225026 SLR/SAJ
Port Director of Customs
P.O. Box 3130
Laredo, TX 78044-3130
RE: AFR Protest No. 2304-93-100355; Mistake of Fact;
Substitution of TIB Entry for Consumption Entry; American Goods
Returned; 19 C.F.R. 10.31(g); 19 U.S.C. 1520(c)(1)
Dear Sir:
The above-referenced protest was forwarded to this office
for further review. We note that the recent case of Aviall of
Texas, Inc. v. United States, 70 F.3d 1248 (1995), aff'g in part,
861 F. Supp. 100 (CIT 1994), regarding the applicability of 19
U.S.C. 1520(c)(1) to the plaintiff's "inadvertent" late filing of
the blanket certification for preferential tariff treatment under
the Agreement on Trade in Civil Aircraft (CAA) has no application
on the facts of this case. We have examined the arguments and
our decision follows.
FACTS:
The subject protest involves the importation of a Pratt &
Whitney gas turbine aircraft engine entered by Border Brokerage
Inc. (protestant) for the account of Sorta, S.A. de C.V. The pro
forma invoice indicates that the aircraft was imported from
Mexico for repair by Ryder Aviall, Inc. in Dallas, Texas. The
Customs Form (CF) 7501 lists protestant as the importer of record
for the merchandise.
The subject aircraft engine was entered on May 23, 1991,
under subheading 9801.00.10, Harmonized Tariff Schedule of the
United States (HTSUS). That provision provides for the
conditionally free entry of "American Goods Returned" after
having been exported, without requiring advancement in value or
improvement in condition, other than articles returned
temporarily for repair, alteration, processing or the like, for
subsequent re-exportation.
After entry, it was discovered on June 26, 1991, that the
engine was Canadian and not eligible for duty-free treatment. On
July 31, 1991, protestant wrote Customs Laredo, informing that
office that the subject article was incorrectly entered as U.S.
goods returned. Protestant indicated that it was in the process
of obtaining a certificate of origin from Pratt & Whitney Canada
and that it would enter the turbine under the CAA and provide a
corrected CF 7501 once the certificate was received. In the
alternative, it would seek entry under the Canadian Free Trade
Agreement.
On September 10, 1991, protestant wrote Customs Laredo
again, requesting that pursuant to 19 C.F.R. 10.31(g), it be
allowed to substitute a temporary importation bond (TIB) entry
(subheading 9813.00.05, HTSUS) for the original consumption
entry. Subheading 9813.00.05, HTSUS, provides for the temporary
importation, under bond, of merchandise to be repaired, altered,
or processed and re-exported within one year. On April 28, 1993,
Customs Laredo determined that the circumstances which led to the
substitution request did not constitute a "mistake of fact"
within the meaning of 19 U.S.C. 1520(c)(1), and denied relief.
The subject entry was liquidated under subheading 8411.21.4000,
HTSUS, at 5 percent ad valorem on May 21, 1993. Protestant has
filed this protest on August 19, 1993 against the liquidation.
Protestant alleges that prior to release, the turbine was
examined by its personnel to determine which type of entry would
be filed, TIB or consumption. Attached to the turbine was a
metal Pratt & Whitney dataplate which read, in pertinent part, as
follows:
PRATT & WHITNEY
CANADA
LONGUEUIL, QUEBEC, CANADA
* * *
MANUFACTURED EXPRESSLY FOR
MADE IN CANADA
Beechcraft
PARTS & SERVICE SUPPLIED THROUGH
BEECH AIRCRAFT CORPORATION, WICHITA, KANSAS, USA
Protestant claims that based on this observation, the
decision to file a consumption entry was made. Protestant
maintains that: (1) this decision was based on the mistaken
belief that the turbine was of U.S. origin; and (2) had it been
known that Canada was the true origin, a TIB entry would have
been filed. According to protestant, it was not until more than
a month after the entry was filed, when a manufacturer's
affidavit had been requested on a CF 28, that it learned that the
turbine was of Canadian origin.
Protestant claims that the liquidation of the subject
merchandise under subheading 8411.21.4000, HTSUS, was erroneous
in that 19 C.F.R. 10.31(g) allows for the substitution of a TIB
entry for consumption entry where there has been a mistake of
fact within the meaning of section 520(c)(1) of the Tariff Act of
1930, as amended (19 U.S.C. 1520(c)(1)).
ISSUE:
Whether Customs Laredo was correct in denying protestant's
19 C.F.R. 10.31(g) claim for relief.
LAW AND ANALYSIS:
Initially, we note that the protest was timely filed within
90 days of the liquidation under the statutory and regulatory
provisions for protests (see 19 U.S.C. 1514 and 19 C.F.R. Part
174) and that liquidation of an entry is a protestable issue
pursuant to 19 U.S.C. 1514(a)(5).
Section 10.31(g) of the Customs Regulations (19 C.F.R.
10.31(g)), provides that an entry may be amended to claim TIB
free-entry even though the articles have been released from
Customs custody, if it is established that the original entry was
made as a result of a clerical error, mistake of fact, or other
inadvertence within the meaning of 19 U.S.C. 1520(c)(1), and was
brought to the attention of Customs within the limits of that
section.
Section 10.31(g) was amended to provide for application of
19 U.S.C. 1520(c)(1) by T.D. 55850 (1963). The amendment
required the importer to establish that the failure to enter the
article under the temporary importation provision was due to an
error within the meaning of 19 U.S.C. 1520(c)(1) and to bring it
to the attention of Customs within the time limits of the
statute. There has been no change of substance to the regulation
provision since that amendment. The statute requires that the
error be brought to the attention of Customs within one year
after the date of liquidation or exaction. Compare with Article
435, Customs Regulations of 1943 and 19 C.F.R. 10.31 (1959 ed.).
In order to be entitled to the reliquidation of a
consumption entry under this section, the language of the statute
and regulation require the importer show that the importer made
the consumption entry as a result of a clerical error, mistake of
fact, or other inadvertence, and that the error was brought to
Customs' attention within one year after liquidation of the
erroneously made consumption entry.
Section 520(c)(1) of the Tariff Act of 1930, as amended (19
U.S.C. 1520(c)(1)), allows for the reliquidation of an entry to
correct a clerical error, mistake of fact, or other inadvertence
not amounting to an error in the construction of the law. The
error must be manifest from the record or established by
documentary evidence and brought to the attention of the
appropriate Customs officer within one year from the date of
liquidation. (Emphasis added.) A notice before liquidation does
not meet this statutory requirement (J.S. Sareussen Marine
Supplies, Inc. v. United States, 62 Cust. Ct. 449, C.D. 3799
(1969)), and therefore, does not meet the regulatory provision of
19 C.F.R. 10.31(g). In the case at hand, protestant's claim for
relief was made prior to liquidation of the subject entry.
Consequently, Customs Laredo was correct in denying protestant's
claim for 19 C.F.R. 10.31(g) relief. The issue of whether
protestant is entitled for relief under 19 C.F.R. 10.31(g) is
properly before us since the entry has been liquidated. We now
focus on the question of whether a mistake of fact occurred based
on the evidence in the record.
Under 19 U.S.C. 1520(c)(1), a "mistake of fact" is any
mistake except a mistake of law. See Jordan v. Brady Transfer &
Storage Co., 225 Iowa 137, 284 N.W. 73, 77 (1939). It has been
defined as a mistake which takes place when some fact which
indeed exists is unknown, or a fact which is thought to exist, in
reality, does not exist. See Savings Bank of Rockville v.
Wilcox, 117 Conn. 196, 197, 167 A. 713, 714 (1933). The seminal
case on mistake of fact is C.J. Tower & Sons of Buffalo, Inc. v.
United States, 68 Cust. Ct. 17, C.D. 4327, 336 F. Supp. 1395
(1972), aff'd, 61 CCPA 90, C.A.D. 1129, 499 F.2d 1277 (1974), in
which the following test was articulated:
[M]istakes of fact occur in instances where either (1) the
facts exist, but are unknown, or (2) the facts do not exist
as they are believed to. Mistakes of law, on the other
hand, occur where the facts are known, but their legal
consequences are not known or are believed to be different
than they really are. C.J. Tower 603 F.2d at 855.
In Headquarters (HQ) 723750, dated November 29, 1983,
Customs considered the substitution of a TIB for an "American
goods returned" consumption entry under 19 U.S.C. 1520(c)(1). In
that case, the broker entered the merchandise under item 800,
Tariff Schedules of the United States (TSUS), after being
informed by its client that the merchandise was of U.S. origin
and would be re-exported after a short period of time after
repair, testing, etc. The merchandise, however, was not of U.S.
origin. It was held that when a broker selects among alternative
types of entries which are available he is not precluded from
obtaining relief under 19 U.S.C. 1520(c)(1), provided the
original entry was filed as a result of a mistake of fact,
inadvertence, or clerical error, not amounting to an error in the
construction of the law.
Customs distinguished HQ 301863, dated November 14, 1974,
wherein entry substitution was not allowed. In that case, the
importer intended to and did file a consumption entry, but
because the imported truck did not meet the emission or safety
requirements, the importer attempted to subsequently substitute a
TIB entry. No mistake of fact was alleged.
There are two data plates involved. The first data plate, a
copy of which was provided with the protestant's letter of
October 12, 1993, was discussed in the Facts above. The second
data plate was provided as attachment D to the protest. That
second data plate states that the PT6 Turboprop engine was
manufactured expressly for Beechcraft. The manufacturer is shown
as Pratt & Whitney Aircraft of Canada, Ltd., having a Canadian
address. While the Pratt & Whitney Canada letter dated August
20, 1993 to the protestant speculates that the bottom lines of
the first data plate may have mislead the protestant's employees
as to the origin, it is merely a supposition.
The Court in PPG Industries, Inc. v. United States, 4 CIT
143 at 147-48 (1982), quoting, in part from the lower court in
Hambro Automotive Corp. v. United States, 81 Cust. Ct. 29, 31,
C.D. 4761, 458 F. Supp. 1220 (1978) stated that the burden and
the duty is on the plaintiff to inform the appropriate Customs
official of the alleged mistake of fact with "sufficient
particularity to allow remedial action." See also United States
v. Lineiro, 37 CCPA 5, 10, C.A.D. 410 (1949) (holding that
"[d]etermination of issues in customs litigation may not be based
on supposition." At most protestant's assertion merely
explains why there was an erroneous claim for the "American Goods
Returned" duty exemption; it does not show that the protestant
intended to enter the engine as a temporary importation under
bond or that it made a consumption entry as the result of that
error.
Protestant provided no evidence that the merchandise was
imported on a temporary basis and that the importer intended that
the merchandise be re-exported after repair. Rather, the facts
indicate that protestant intended to file a consumption entry.
The Entry Summary (CF 7501), indicates that the merchandise was
being imported for repairs, and the merchandise was entered under
the subheading 9801.00.1035, HTSUS, for "American Goods Returned"
after being exported without being improved in condition, other
than the articles being returned temporarily for repair,
alteration and the like, to be subsequently re-exported.
When protestant discovered that the turbine was of Canadian
origin and not U.S., protestant wrote Customs Laredo informing
that office that it intended to file an amended CF 7501, claiming
free-entry under either the CAA or the Canadian Free Trade
Agreement. This fact supports a conclusion that a consumption
entry was originally intended, and there is a complete lack of
evidence indicating that there was an intent to export the
articles after the repairs were made.
Mexican import documents indicate that the turbine engine
was returned to Sortra, S.A. de C.V., six months after
importation. One of these documents contains the words "EXP.
TEMPORALMENTE." Furthermore, in the file, there is an import
activity sheet prepared by Consultores Aduanales Del Norte, S.C.,
on behalf of Sortra, S.A. de C.V. The summary sheet lists the
subject entry and reads "EXPORTACION TEMPORAL" "T.I.B.
IMPORTATION 5/23/91" and "IMPORTACION DEFINITIVA" "RETURN OF
T.I.B. TO MEXICO PERMANENTLY." These documents are dated after
the subject consumption entry was made and are not evidence of
protestant's intent to file a temporary bond at the time of
entry.
Protestant submitted documents to our office to supplement
the "pedimento de exportacion" in order to substantiate its claim
that there was an intent to enter the turbine for repairs and
return it to Mexico at the time of entry. One of these documents
is the Mexican export document "PEDIMENTO DE EXPORTACION" which
appears to cover the exportation of the subject turbine engine
from Mexico. The statement "Exportacion temporal para su
reparacion . . .", which means, "Temporary export for repair."
According to protestant, this was to advise Mexican Customs the
reason for filing the temporary exportation. Protestant claims
that the very nature of the "temporary exportation" means that
the merchandise will be returned within a specified time.
Protestant has also forwarded a copy of the pro forma
invoice for the merchandise. That document is dated May 21,
1991, and states, in part: "The motor is being exported from
Mexico in order to undergo repairs at Aviall." The handwritten
phrase, "No Commercial Sale -- For Customs Purposes Only" was
added by protestant. Protestant explained that this was written
at the time of entry because "it was our understanding that the
turbine was being imported for repairs and would be returned to
Mexico."
We remain unconvinced that protestant intended to file a TIB
at the time of entry. In a court case similar to the subject
protest, plaintiff filed a consumption entry for its merchandise
and subsequently requested the substitution of a TIB. The pro
forma invoice stated: "Experimental," "No charge" and "Value for
Customs purposes only." The court denied plaintiff's motion for
summary judgment, indicating, among other things, that these
notations were insufficient to establish that at the time of
entry plaintiff intended to and was capable of meeting the
requirements of TIB duty-free entry. PPG Industries, Inc. v.
United States, 7 CIT 118, 126 (1984); see also PPG Industries,
Inc. v. United States, 4 CIT 143 (1982). As for the "pedimento
de exportacion," protestant admits that it did not review this
document before making entry.
Protestant has forwarded a copy of a letter, dated April 22,
1991, from the Mexican shipper's U.S. office to Aviall notifying
them of the shipment of the turbine to Dallas for repairs. The
letter reads, in pertinent part: "As per our telephone
conversation please inspect and repair as necessary as to
reinstall on engine in Mexico so we can ferry aircraft back for
necessary overhaul at your shop." The letter is dated one month
prior to the entry of the subject merchandise. Protestant admits
that this letter was not in its possession at the time of entry.
Therefore, it has no evidentiary value on whether protestant
intended a TIB when the entry was filed.
It is possible that the exporter in this case intended to
file a TIB at entry. Customs has allowed for entry substitution
in cases where the broker either misunderstood or failed to
follow the importer's instructions. See Legal Determination 79-0392 (November 6, 1979); Headquarters Ruling Letter 723375
(August 27, 1984). In the case at hand, however, the CF 7501
lists protestant as the importer of record and these cases do not
apply.
HOLDING:
The protest should be denied in full. The request of
September 10, 1991 was not made in accordance with section
10.31(g) since it was made before liquidation of the consumption
entry. While the assertion that either data plate was misread as
to the origin might explain that the erroneous claim for duty-free entry as "American Goods Returned", it fails to show that
there was any intent to file a temporary importation under bond
instead of a consumption entry.
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 the
mailing of this 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,
Director,
International Trade Compliance
Division