LIQ-9-01-RR:IT:EC 226007 CC
Port Director
U.S. Customs Service
111 W. Huron Street
Buffalo, NY 14202
RE: Application for further review of Protest No. 0901-94- 100806; 19 U.S.C. 1520(c)(1); mistake of fact; mistake of law claim when request for reliquidation made within 90 days
of liquidation; 19 U.S.C. 1514
Dear Sir or Madam:
The above-referenced protest was forwarded to this office
for further review. We have considered the facts and issues
raised, and our decision follows.
FACTS:
This protestant seeks to protest 77 entries, which are
claimed to consist of yeast donuts. Customs computer records for
the subject entries list the dates of entry ranging from January
29, 1993 to June 4, 1993. The dates these entries were
liquidated range from May 21, 1993 to September 17, 1993. The
entries were liquidated under subheading 1901.20.00 of the
Harmonized Tariff Schedule of the United States (HTSUS), which
includes mixes and doughs.
On November 5, 1993 the protestant requested, in accordance
with 19 U.S.C. 1520(c)(1), that you reliquidate the entries under
subheading 1905.90.10, HTSUS, which includes bread, pastry,
cakes, and biscuits.
Therefore, the protestant's claim is that there was a
mistake of fact in classifying the merchandise. The protestant
claims that the broker who filed the entries believed that the
subject merchandise was frozen dough when it was yeast donuts,
classifiable under subheading 1905.90.10, HTSUS.
On March 3, 1994 the section 1520(c)(1) claim was denied.
Protest, with application for further review (AFR), on the denial
of the section 1520(c)(1) claim was filed on May 27, 1994.
The protest and AFR were denied on September 14, 1994. The
protestant requested in a letter dated September 27, 1994 that
denial of AFR be set aside in accordance with 19 U.S.C. 1515(c).
In HQ 225719 of November 23, 1994, we set aside denial of the
AFR, and this protest was forwarded to Headquarters.
ISSUE:
Whether a mistake of fact claim made pursuant to 19 U.S.C.
1520(c)(1) may be treated as a mistake of law claim pursuant to
19 U.S.C. 1514 when the request for reliquidation is made within
90 days of liquidation of the subject entries?
Whether Customs properly denied the protestant's request to
reliquidate the subject entries under 19 U.S.C. 1520(c)(1)?
LAW AND ANALYSIS:
Timeliness and Procedural Issues
Initially, we note that 77 entries were requested to be
reliquidated pursuant to 19 U.S.C. 1520(c)(1). The protest of
the denial of this request consisted of 77 entries. One of the
entries listed in the section 1520(c) claim (3X0-024XXXX8,
entered on May 11, 1993 and liquidated on August 27, 1993) is not
listed in the protest. One of the entries listed in the protest
(3X0-0242XXX4, entered on February 19, 1993 and liquidated on
June 4, 1993) is not contained in the list of entries in the
section 1520 claim. The same 76 entries are listed in both the
section 1520 claim and the protest. Therefore, we will consider
that this protest consists of those 76 entries.
Under 19 U.S.C. 1514, a protest must be made within 90 days
after the notice of liquidation or reliquidation of an entry.
Under 19 U.S.C. 1520(c)(1), a request for reliquidation due to a
mistake of fact must be made within one year of the date of
liquidation.
The request for reliquidation of the subject entries, made
pursuant to 19 U.S.C. 1520(c)(1), was filed with Customs on
November 5, 1993. In that request, the broker, on behalf of the
protestant, stated the following:
Petitioner respectfully admonishes the Customs Service
that no authority exist granting the the (sic) right or
option to treat this claim under the purview of Section
514 of the T.H. of 1930 as amended. This is not a
protest and is not to be treated as such.
Despite the broker's efforts to preclude relief pursuant to
19 U.S.C. 1514, the courts have found that a request for
reliquidation made pursuant to section 1520(c)(1) may be treated
as a protest, if it is received within 90 days of the date of
liquidation of the entry. Concerning this issue we stated in HQ
224431, dated February 16, 1996, the following:
[T]he Courts have held that a request for reliquidation
under 19 U.S.C. 1520(c)(1) is sufficient as a protest
under 19 U.S.C. 1514 if it is timely under the latter
(i.e., filed with Customs within 90 days of notice of
liquidation or reliquidation or of the date of the
decision protested) and if it conveys enough
information to apprise Customs of the importer's intent
and the relief sought and if it is timely (see Mattel,
Inc. v. United States, 72 Cust. Ct. 257 C.D. 4547, 377
F. Supp. 955 (1974), and Labay International, Inc., v.
United States, 83 Cust. Ct. 152, C.D. 4834 (1979)).
In both of the above cases (Mattel and Labay
International), the Court explicitly stated that the
request for reliquidation under 19 U.S.C. 1520(c)(1)
included the entry numbers, dates of entry and dates of
liquidation. The Customs Regulations have long
required that a protest contain this information (see
19 CFR 174.13(a)(3) and (4) in the current Customs
Regulations, see also, e.g., 19 CFR 17.1(b), 1961
Customs Regulations, Article 849(a), 1937 Customs
Regulations, and Article 1070, 1908 Customs
Regulations). Consistent with the requirement in the
Customs Regulations for this information, the Courts
have held that "[t]he entry number, dates of entry and
dates of liquidation are among other information
required to be set forth in a protest", Grover Piston
Ring Co. v. United States, 7 CIT 286 (1984), affirmed,
3 Fed. Cir. (T) 57, 752 F. 2d 626 (1985), citing Noury
Chemical Corp. v. United States, 4 CIT 68 (1982)
(emphasis added).
The request for reliquidation contained a list of entry
numbers, dates of entry, and dates of liquidation. Consequently,
any entries liquidated within 90 days of the receipt of the
reliquidation request may be treated as a protest pursuant to
section 1514. As stated above, the request for reliquidation was
received on November 5, 1993. Therefore, any entry liquidated on
or after August 7, 1993 may be treated as a protestable matter
under section 1514. Of the subject entries, 21 were liquidated
on or after August 7, 1993.
On March 3, 1994 the section 1520(c)(1) claim was denied.
If the request for reliquidation for the 21 entries is treated as
a section 1514 protest, then it becomes important to determine if
the denial of March 3, 1994 is a valid denial of the protest for
those entries. If so, then the only recourse open to the
protestant for those 21 entries would have been to file a civil
action in the Court of International Trade in accordance with 28
U.S.C. 2632 within 180 days. See 19 CFR 174.31.
The court in Labay International, supra, decided December
21, 1979, discussed the issue of what constitutes a valid denial
of a protest. In that case, the court treated the plaintiff's
request for reliquidation pursuant to section 1520(c) as a valid
protest when the request was made within 90 days of liquidation.
In addition, the court found that the denial of the 1520(c)
request served as a valid denial of the protest. The denial was
a notation made on the request for reliquidation, which was
returned to the proper party. The court stated that denial
unequivocally conveyed to the plaintiff that the request was
denied. Since the regulations at the time (19 CFR 174.30) did
not require anything more as far as form, the notation returned
to the plaintiff served as a valid denial of the protest.
In T.D. 80-271, dated October 7, 1980, the regulations to 19
CFR 174.30 were amended concerning denial of a protest. The
amended 19 CFR 174.30 required that notice of denial of the
protest include a statement of the reasons for denial and a
statement informing the protesting party of the right to file a
civil action contesting the denial.
The court in F.W. Myers & Co., Inc. v. United States, 6 CIT
299 (1983), discussed the issue of what constitutes a valid
denial of a protest under the amended law and regulations. In
that case, the court stated, in pertinent part, the following at
pages 300, 301:
The requirements for the denial of a protest are
specifically provided for in 19 U.S.C. 1515(a) and 19
CFR 174.30. Section 1515(a) provides "Notice of the
denial shall be mailed in the form and manner
prescribed by the Secretary. Such notice shall include
a statement of reasons for the denial, as well as a
statement informing the protesting party of his right
to file a civil action contesting the denial of a
protest under section 514 of the Tariff Act of 1930."
... While the statutory provision controlling at the
time of Labay required notice to be in the style and
manner prescribed by the Secretary, it did not require
notice of the right to institute a civil action.
Similarly, the regulations, 19 CFR 174.30 (1974), did
not require notice of the right to institute a civil
action. The Labay case, therefore, is not controlling
under the present law.
In F.W. Myers the court also treated the plaintiff's request
for reliquidation pursuant to section 1520(c) as a valid protest
when the request was made within 90 days of liquidation. The
court found that denial of the section 1520(c) request was not a
valid denial of the protest when it did not contain a statement
to the plaintiff of the right to institute a civil action. The
only valid denial was in response to the plaintiff's protest of
the denial of the request for reliquidation.
In the present case, the first denial was contained on a
copy of protestant's letter of November 5, 1993, requesting
reliquidation pursuant to section 1520(c). The denial is stamped
with the statement "Returned to Broker, March 3, 1994." In
addition, the denial contains the notation, "We do not believe
520 c applicable because it amounts to an error in the
construction of law." This denial does not contain notice of
the protestant's right to file civil action. Consequently,
following F.W. Myers and in accordance with 19 U.S.C. 1515(a) and
19 CFR 174.30, this denial was not a valid denial of a protest.
The first valid denial of a protest occurred on September
14, 1994, the date on which the protest and the AFR on the denial
of the request for reliquidation occurred. Since denial of the
AFR was ultimately set aside and the protest voided, and the
protest is validly before us for review, any entry liquidated
within 90 days of the date of the reliquidation request will be
treated as a validly protested pursuant to 19 U.S.C. 1514.
As stated above, of the subject entries, 21 were liquidated
on or after August 7, 1993, and may be treated as validly
protested. Consequently, if a mistake of law concerning
classification exists pursuant to section 1514 for these entries,
the protest will be granted.
For the remaining 55 entries, liquidated prior to August 7,
1993, the mistake of fact claim will be considered. For those
entries the request for reliquidation was made within a year of
the dates of liquidation. The protest of the denial of this
request was made within 90 days of the date of denial of the
section 1520 request. Therefore, both the request for
reliquidation under 19 U.S.C. 1520(c)(1) and the protest of the
denial of that request under 19 U.S.C. 1514(a)(7) were timely
filed.
Section 1514 Claim
Section 514 of the Tariff Act of 1930, 19 U.S.C. 1514,
sets forth the proper procedure for an importer to protest the
classification when the importer believes that the Customs
Service has misinterpreted the applicable law, and has improperly
classified the imported merchandise. Cavazos v. United States, 9
CIT 628 (1985). Pursuant to 28 U.S.C. 2639(a)(1), tariff
classifications made by Customs are presumed to be correct and
the burden of proving that the assigned classification is
erroneous is upon the challenging party. See, e.g., Nippon
Kogaku (USA), Inc. v. United States, 69 C.C.P.A. 89, 92, 673 F.2d
380, 382 (1982). To determine whether the party challenging
Customs classification has overcome the statutory presumption of
correctness, the courts have considered whether the government's
classification is correct, both independently and in comparison
with the importer's alternative. Jarvis Clark Co. v. United
States, 733 F.2d 873, 878 (Fed. Cir. 1984).
The classification of the subject entries was under
subheading 1901.20.00, HTSUS, which provided for mixes and doughs
for the preparation of bakers' wares of Heading 1905. The
protestant claims that the merchandise the subject of this
protest is Long John Donuts, Cinnamon Bun Donuts and Premium Ring
Donuts, which are not classifiable as dough of subheading
1901.20.00, HTSUS. Instead, the protestant argues, these goods
are yeast donuts, classifiable under subheading 1905.90.10,
HTSUS, which provided for bread, pastry, cakes, biscuits and
similar baked products, and puddings, whether or not containing
chocolate, fruit, nuts or confectionery.
Consequently, to overcome the presumption of correctness
attached to the classification of the subject merchandise, the
protestant must show two things: 1) Long John Donuts, Cinnamon
Bun Donuts, and Premium Ring Donuts are classifiable under
subheading 1905.90.10, HTSUS; and 2) the subject entries
consisted of Long John Donuts, Cinnamon Bun Donuts, and Premium
Ring Donuts.
In support of its claim, the protestant has submitted
pertinent pages from its Operator's Guide. This guide shows that
the protestant's yeast donuts, which include Long John Donuts,
Cinnamon Bun Donuts, and Premium Ring Donuts, are ready to finish
donuts, which have already been fried before they are shipped.
In addition, the protestant submitted a list of the different
types of donuts with the corresponding product numbers. Finally,
invoices from the company and its broker were included with the
file.
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification shall be
determined according to the terms of the headings and any
relative section or chapter notes.
To meet the terms of subheading 1901.20.00, HTSUS, the
subject merchandise would have to be considered a mix or dough.
The evidence produced by the protestant shows that Long John
Donuts, Cinnamon Bun Donuts, and Premium Ring Donuts, are frozen,
ready-to-finish, yeast donuts, which have already been fried
before they are shipped. All that is required to serve them is
thawing, warming, and applying icing. Clearly, this merchandise
is not dough, but instead is best described under the tariff
schedule as a cake or pastry of Heading 1905, HTSUS.
Consequently, the Long John Donuts, Cinnamon Bun Donuts, and
Premium Ring Donuts are classifiable under subheading 1905.90.10,
HTSUS.
All the protestant must now show to rebut the presumption of
correctness in the classification of the subject entries is that
these entries consisted of Long John Donuts, Cinnamon Bun Donuts,
and Premium Ring Donuts. The entry summaries (CF 7501) list the
entered merchandise as "mixes/dough, other, oth." All of the
invoices before us (both the protestant's and the broker's),
purported to be the invoices for the subject entries, list "Long
John Donuts," "Cinnamon Bun Donuts," "Premium Ring Donuts," or
some combination thereof, along with the corresponding product
numbers. Although, there is no invoice number, shipper's
reference number, etc. that appears on both the invoices and the
entry summaries (CF 7501), there is evidence that strongly
suggests that the invoices before us do match the subject
entries. For example, there are invoices in which the listed
value of the merchandise matches the value contained in the
purported corresponding entry summary. In addition, we have
before us broker records which list the entry numbers with
corresponding merchandise, shipper's reference codes, and value
of the entered merchandise. Assuming that these invoices do
indeed match the entry summaries, then the subject entries
consist of Long John Donuts, Cinnamon Bun Donuts, and Premium
Ring Donuts. Consequently, the presumption of correctness in the
classification of the subject merchandise would be rebutted, and
the protestant will have demonstrated that the subject
merchandise is classified under subheading 1905.90.10, HTSUS.
Thus, the protest could be granted for these 21 entries (those
liquidated on or after August 7, 1993).
Section 1520(c)(1) Claim
The remaining 55 entries (liquidated prior to August 7,
1993), can be considered for the mistake of fact claim. Under 19
U.S.C. 1520(c)(1), an entry may be reliquidated 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.
The protestant states the following concerning the alleged
mistake in classifying the subject goods:
The broker understood that the products being
imported were frozen dough, when in fact, some of them,
which are the articles which are the subject of this
protest, were baked goods. Those articles are: Long
John Donuts, Cinnamon Bun Donuts and Premium Ring
Donuts. Had the broker and had Customs known the true
facts, i.e., that these goods were baked goods and not
frozen dough, the goods would have been entered and
liquidated under the provision of HTSUS No.
1905.90.1050 rather than under HTSUS No. 1901.20.0095.
A mistake of fact occurs when a person understands the facts
to be other than what they really are and takes some action based
on that erroneous belief, whereas a mistake of law occurs when a
person knows the true facts of the case but has a mistaken belief
as to the legal consequences of those facts. See, e.g., C.J.
Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17,
21, C.D. 4327, 336 F. Supp. 1395 (1972), aff'd, 61 CCPA 90,
C.A.D. 1129, 499 F.2d 1277 (1974); Hambro Automotive Corp. v.
United States, 81 Cust. Ct. 29, 458 F.Supp. 1220 (1978), aff'd,
66 CCPA 113, 603 F.2d. 850 (1979); and PPG Industries, Inc. v.
United States, 7 CIT 118 (1984). The courts have taken the
position that generally an error in the classification of
merchandise is not a clerical error, mistake of fact, or
inadvertence within the meaning of 19 U.S.C. 1520(c)(1), but is
an error in the construction of the law. See, e.g., Cavazos v.
United States, 9 CIT 628 (1985); Mattel, Inc. v. United States,
72 Cust. Ct. 257, C.D. 4547, 377 F.Supp. 955 (1974); and Fibrous
Glass Products v. United States, 63 Cust. Ct. 62, C.D. 3874
(1969), appeal dismissed, 57 CCPA 141 (1970).
As stated above, assuming the invoices represent the subject
entries, both the company's and the broker's invoices describe
some of the merchandise as being yeast donuts. For example, all
of the invoices before us list "Long John Donuts," "Cinnamon Bun
Donuts," "Premium Ring Donuts," or some combination thereof,
along with the corresponding product numbers. Therefore,
contrary to the protestant's claims, the entry invoices show the
true nature of the merchandise. As stated above, a mistake of
fact must be manifest from the record or established by
documentary evidence. See, ITT Corp. v. United States, 24 F. 3d
1384, 1387 (Fed. Cir. 1994), Mistakes of fact that are not
manifest from [the] record ... must be established by documentary
evidence." Since the invoices show that the merchandise
consisted of yeast donuts, there could be no mistake as to the
nature of the merchandise. Instead, the invoice descriptions in
the very entry documents indicate that the decision to enter the
merchandise as dough was a mistake in the application of the law,
only correctable under 19 U.S.C. 1514.
The courts have found that the relief provided for in 19
U.S.C. 1520(c)(1) is not an alternative to the relief provided
for in the form of protests under 19 U.S.C. 1514; 19 U.S.C.
1520(c)(1) only offers "limited relief in the situations defined
therein" (Phillips Petroleum Company v. United States, 54 CCPA 7,
1, C.A.D. 893 (1966), quoted in Godchaux-Henderson Sugar Co.,
Inc., v. United States, 85 Cust. Ct. 68, 69, C.D. 4874 (1980);
see also, Computime, Inc. v. United States, 9 CIT 553, 555, 622
F. Supp. 1083 (1985), and Concentric Pumps, Ltd. v. United
States, 10 CIT 505, 508, 643 F. Supp. 623 (1986)). Consequently,
relief under 19 U.S.C. 1520(c)(1) is not warranted for the 55
entries liquidated prior to August 7, 1993.
Finally, counsel for the protestant has sought to rely on
ITT Corp. v. United States, 24 F. 3d 1384 (Fed. Cir. 1994) in
support of its claim, stating that the court found in that case
that a mistake of fact occurred "in the initial creation of the
broker's records." As stated above, however, the invoices show
that there was no mistake as to the nature of the merchandise.
Consequently, ITT Corp. v. United States, does not support the
protestant's claim.
The more analogous case is B.S. Livingston & Co., Inc. v.
United States, 13 CIT 889 (1989). The court found in that case
that where a correct invoice description existed but the
merchandise was improperly classified, no mistake of fact
existed.
HOLDING:
The 21 entries liquidated on or after August 7, 1993 were
timely protested pursuant to 19 U.S.C. 1514 as a mistake of law
claim. Assuming that the invoices do indeed match the entry
summaries, the subject merchandise was misclassified, and should
be classified, instead, under subheading 1905.90.10, HTSUS.
Therefore, the protest could be GRANTED for those 21 entries.
For the remaining 55 entries (those liquidated prior to
August 7, 1993), no mistake of fact was present under 19 U.S.C.
1520(c)(1) in an error in the tariff classification of the
subject merchandise. Consequently, the protest should be DENIED
for those 55 entries.
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 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,
Director, International Trade
Compliance Division