LIQ-9-01-RR:IT:EC 226332 IOR
Port Director
P.O. Box 3130
Laredo, TX 78044
Attn: F.O. Duty Assessment Branch II, Harlingen, TX
RE: Application for further review of Protest No. 2304-95-100042; 19 U.S.C. 1520(c)(1); mistake of fact; classification of scrapped terminal strips; eo nomine; B.S. Livingston & Co., Inc. v. United States, 13 CIT 889 (1989); HQ 223524, dated February 13, 1992
Dear 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 protest has been filed against your denial of a request for reliquidation of the subject entries, pursuant to 19 U.S.C. 1520(c)(1).
The protest concerns an entry of 288,000 terminal strips from Mexico, entry 027xxx16338, dated January 13, 1994. The merchandise was initially entered by entry 027xxx11775 dated January 11, 1994 as “FE wste & scrp oth oth oth oth” under subheading 7204.49.0080 of the Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Ferrous waste and scrap; remelting scrap ingots of iron or steel:...other...other,” dutiable at a free rate of duty, along with eleven other items. The invoice identified the merchandise as “mixed steel scrap.” The crate of terminals was detained by Customs. The exporter’s clerk believed he had to change the declaration “because Customs wants it.” It is unclear from the facts how the detention was communicated to the exporter’s clerk. The exporter’s clerk then sent the protestant’s broker a new invoice for the merchandise, identifying the merchandise as “terminal strip” with a price in the amount of the original value of the terminal strips, and instructed the broker to enter them based on the original value. The merchandise was then entered under entry 027xxx16338, dated January 13, 1994, as “Terminals, Elec Splices & Coupli” under subheading 8536.90.0060 of the HTSUS, which provides for “Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits..., for a voltage not exceeding 1,000V: other apparatus...other,” dutiable at 4.8 percent. According to the protestant, the merchandise was sold as scrap to a scrap dealer on January 18, 1994 (although the documents submitted are not clear as to the identity of the goods sold to the scrap dealer). Entry 027xxx16338 was subsequently liquidated on April 29, 1994, as entered. Entry 027xxx11775 was liquidated on November 3, 1995 with the eleven other items, and did not include the subject merchandise.
On October 28, 1994 the protestant filed a petition for reliquidation of entry 027xxx16338 pursuant to 19 U.S.C. 1520(c)(1), claiming that the liquidation of the scrap as dutiable merchandise was the result of the exporter’s clerk’s “mistaken idea that he had to do so because Customs had questioned the original declaration.” According to the petition, the terminal strips had been rejected by CTS de Mexico (the exporter) because they did not meet specifications. The terminal strips had not been used when they were returned to the U.S., and appeared new. According to the documentation presented, the protestant and its vendor had agreed to scrap the merchandise prior to its importation into the U.S. and the protestant debited the vendor’s account in the amount of the original value of the terminals. The petition is incorporated in the protest. The protestant petitioned that the merchandise be reliquidated at the free duty rate for steel scrap. On February 17, 1995, the district denied the petition stating it does not meet the criteria of section 1520(c)(1) as constituting a “clerical error, inadvertence, or mistake of fact.”
The protestant filed the protest on the denial of the section 1520(c)(1) claim on March 13, 1995. The protestant asserts that the merchandise should have been liquidated based on the HTSUS classification under which it was initially entered, and asserts that the merchandise was incorrectly liquidated as a result of the following mistakes of fact:
1) The customs inspector believed he could tell whether the electronic parts were scrap or not by merely looking at them, and refused to clear the shipment as scrap;
2) the customs inspector believed he had the authority to order a change in classification, value and description;
3) the exporter’s clerk believed he had to obey orders from Customs without question, and changed the invoice to reflect the original purchase price of the merchandise and omitted the scrap designation;
4) the broker’s clerk believed the exporter’s clerk knew what the merchandise was and corrected an original mistake and the broker’s clerk entered the merchandise accordingly.
The protestant also asserts that clerical errors occurred when 1) the customs inspector failed to ask for confirmation or supporting documentary proof of the claim of scrap merchandise, 2) the exporter’s clerk failed to provide Customs with documentary proof of the claim of scrap merchandise either with the shipment or after the detention of the shipment, and 3) the broker’s clerk failed to ask the exporter’s clerk whether such documentary proof existed.
ISSUE:
Whether relief may be granted under 19 U.S.C. 1520(c)(1) to correct an alleged mistake of fact or clerical error in the classification of merchandise?
LAW AND ANALYSIS:
Initially we note that this protest was timely filed pursuant to 19 U.S.C. 1514(c)(2)(B). The date of decision protested was February 17, 1995, and the protest was filed on March 13, 1995. In addition, the refusal to reliquidate an entry under section 1520(c)(1) is a protestable matter pursuant to 19 U.S.C. 1514(a)(7).
19 U.S.C. 1514 sets forth the proper procedure for an importer to protest the classification and appraisal of merchandise when it believes the Customs Service has misinterpreted the applicable law. A protest must be filed within ninety days after notice of liquidation or reliquidation. Otherwise, the tariff treatment of merchandise is final and conclusive.
19 U.S.C. 1520(c)(1) provides that Customs may reliquidate an entry to correct a clerical error, mistake of fact, or other inadvertence, not amounting to an error in the construction of a law. The error must be adverse to the importer and manifest from the record or established by documentary evidence and brought to the attention of the Customs Service within one year after the date of liquidation. 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; section 1520(c)(1) only affords “limited relief in the situations defined therein” (Phillips Petroleum Company v. United States, 54 CCPA 7, 11, C.A.D. 893 (1966), quoted in Godchaux Henderson Sugar Co., Inc., v. United States, 85 Cust. Ct. 68, 69, C.D. 4874, 496 F. Supp. 1326 (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)).
The protestant’s first claim under 19 U.S.C. 1520(c)(1) is that the Customs officer made a mistake of fact or clerical error by believing he could determine whether the terminal strips were scrap by looking at them, failing to request documentary proof, and believing he could order a change in classification, value and description of the merchandise before releasing the shipment. The subject protest pertains only to the denial of reliquidation of the entry dated January 13, 1994, and any review of Customs actions taken with respect to the entry dated January 11, 1994 is beyond the scope of this protest. The mistakes of fact and clerical errors asserted on the part of the Customs officer all pertain to the January 11 entry, which is not a subject of this protest. With respect to the January 13 entry, no mistake of fact or clerical error by the Customs officer is alleged.
The protestant’s second claim is based upon the exporter’s clerk’s belief that he had to obey Customs order to change an invoice to reflect an original purchase price for scrapped merchandise and omit a scrap designation, and the clerk’s failure to provide documentary proof of the scrap nature of the merchandise. With respect to the clerk’s belief that he had to obey Customs order to change entry documentation and his failure to provide documentary proof of the nature of the merchandise, we find that this relates to the January 11 entry and is not within the scope of the subject protest. We will address the remaining portion of the claim, which is within the scope of the subject protest, and amounts to the clerk’s preparation of an invoice with an inaccurate value and description of merchandise.
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. “A mistake of law,” on the other hand, 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 PPG Industries, Inc. v. United States, 7 CIT 118, 123 (1984), and cases cited therein. In this case, there is evidence that the exporter’s clerk completed two invoices for the same merchandise. One invoice indicated the merchandise to be scrap, with no commercial value, and the other omitted a scrap designation and indicated a price equivalent of the original amount paid for the merchandise. Based on the evidence submitted, it appears that the exporter’s clerk knew that the merchandise was scrap, however did not know how to prepare an accurate invoice for the merchandise. This amounts to a mistake of law, the clerk knew the nature of the merchandise, however, had a mistaken belief as to the legal consequences of such nature in preparation of the second invoice. The preparation of the second invoice does not amount to a clerical error, since such an error is made by one in a clerical capacity, who has no duty to exercise judgment, in writing or copying figures or in exercising his intention. PPG Industries Inc. v. United States, supra at 124. A clerical error also includes the failure to associate all the papers in a record under consideration. T.D. 54848 (1959). There is no evidence that the clerk acted solely in a clerical capacity, that he was directed by another employee in the preparation of the second invoice, or that his mistake was in the nature of a transcription error. To the contrary, from the facts presented, it appears that the clerk did exercise his judgment in the preparation of the second invoice, and that the second invoice was completed as the clerk intended to complete it. There is also no evidence that the exporter’s clerk failed to associate any of the papers in the record in preparing the second invoice.
The protestant’s third claim is based upon the broker’s clerk’s belief that the exporter’s clerk knew what the merchandise was and had corrected an original mistake, and that she entered the merchandise accordingly without asking for documentary proof of the nature of the merchandise. We have already determined above, that the exporter’s clerk did know what the merchandise was, therefore this was not a mistaken belief on the part of the broker’s clerk. The record does not establish that a clerical error was made by the broker’s clerk. There is no evidence that the broker’s clerk acted solely in a clerical capacity, that she was directed by another employee in the preparation of the entry, or that her mistake was in the nature of a transcription error. The claim that the broker’s clerk believed that the second set of documents from the exporter’s clerk had been submitted to correct a mistake in the original documents, indicates that the broker’s clerk had access to the original entry documentation, including the original invoice which identified the merchandise as scrap. No evidence is provided to refute the fact that the broker’s clerk possessed the relevant information as to the true nature of the imported merchandise, including the original invoice, and incorrectly determined the classification, which would be a mistake of law. No evidence is provided that the broker’s clerk had documents which she failed to associate with the transaction. To the contrary, at the same time the protestant claims that the clerk did not have the documentation regarding the scrapped nature of the merchandise, it is claimed that the broker’s clerk believed that the second entry was a correction of the first, indicating that the clerk had documentation from the first entry, which presumably included the original invoice. The failure to request additional documentation here is not a clerical error.
A Customs broker is licensed to transact Customs business on behalf of others. As defined in the Customs Regulations, section 111.1, Customs business includes transactions involving entry, classification, value and payment of duty. Furthermore,, under 19 U.S.C. 1641(b)(4), a broker is required to exercise responsible supervision and control over the Customs business it conducts. There is no evidence in the record that the broker or its clerk was unaware of all material facts, or that the broker’s clerk did not have both the original and the “corrected” entry and documentation upon which to base classification. We do not find any mistake of fact or clerical error on the part of the broker’s clerk.
In B.S. Livingston & Co., Inc. v. United States, 13 CIT 889 (1989), where the plaintiff/importer was fully aware of the nature of the imported merchandise, but claimed the broker had carelessly placed the incorrect tariff classification number on the entry documents, and the merchandise was liquidated under that number, the Court sustained denial of a request for reliquidation. The court found that the plaintiff could not state that it was unaware or mistaken as to any facts pertaining to the merchandise and that the plaintiff was fully aware of the nature of the merchandise. The Court held that if the plaintiff was of the opinion that the Customs classification was incorrect, the appropriate procedure or remedy was to file a timely protest pursuant to 19 U.S.C. 1514(a). Id. at 894. In Livingston, the importer’s broker had information necessary to classify the merchandise. Similarly, in this case, based on the documentation submitted by the protestant, there is no doubt that the protestant was aware of the claimed nature of the merchandise, and the facts indicate that the broker’s clerk did have some documentation regarding the scrap nature of the merchandise, in the form of the original entry and invoice. The protestant cannot claim that it was unaware or mistaken as to the nature of the merchandise. If the Customs classification was believed to be incorrect, the appropriate remedy was to file a timely protest.
As stated above, the mistake of fact, or other error correctable under the statute, must be manifest from the record or established by documentary evidence. As stated in PPG Industries, Inc. v. United States, 4 CIT 143 (1982), "it is incumbent on the plaintiff to show by sufficient evidence the nature of the mistake of fact. The burden and duty is upon the plaintiff to inform the appropriate Customs official of the alleged mistake with 'sufficient particularity to allow remedial action.'" Id. at 147 48 (quoting from the lower court in Hambro Automotive Corp. v. United States, 81 Cust. Ct. 29, 31, C.D. 4761, 458 F. Supp. 1220 (1978)).
The question presented therefore is whether the evidence on the record of this protest is sufficient to clearly demonstrate that a mistake of fact, as opposed to a mistake of law, was responsible for the erroneous classification. Ordinarily, mistakes in classification of merchandise are considered mistakes in the construction of a law and not correctable under section 1520(c)(1). Mattel, Inc. v. United States, 72 Cust. Ct. 257, 262 63, C.D. 4547 (1974) (and cases cited therein). Here, the only possible error established by the protestant is one involving the classification of the terminals, which could only have been corrected by the filing of a 19 U.S.C. 1514 protest within 90 days of the original liquidation. Only when an error correctable under 19 U.S.C. 1520(c)(1) is identified as responsible for the misclassification can there be a reliquidation of a classification error under section 1520(c)(1) and only then if it is manifest from the record or established by documentary evidence.
Essentially the protestant’s claim is that the subject merchandise was classified under the wrong provision. The question of whether merchandise is properly classifiable under an eo nomine provision (subheading 8536.90.0060 HTSUS) or as scrap (assuming that the merchandise is defective) is a legal question. With respect to the entry prepared by the broker’s clerk, the subject invoice identified the merchandise as ‘terminal strips.” There is no dispute that the merchandise did in fact consist of terminal strips. An eo nomine provision, one describing a commodity by a specific name, includes the article named, even if damaged. 2 R. Sturm, Customs Law and Administration §53.2 (3d ed. 1982 & Supp. 1993), citing United States v. Paul M. W. Bruckman, CCPA 90, C.A.D. 1211, 582 F.2d 622 (1978), H.A. Johnson Co. v. United States, 21 Cust. Ct. 56, C.D. 1127 (1948) (damaged Brazil nuts), Bush & Co. (Inc.) v. United States, 12 Ct. Cust. Appls. 22, T.D. 39894 (1923) (cleaned rice which had been damaged), C.J. Tower & Sons v. United States, 24 Cust. Ct. 39, C.D. 1204 (1950) (fire-burned and water-soaked wheat, oats, and barley) and cases cited. As subheading 8536.90.0060 HTSUS contains no qualifying language, the terminal strips, although not meeting specifications, are nevertheless terminal strips. The protestant was clearly aware of the claimed scrap nature of the merchandise, and if the protestant was of the opinion that the classification of the terminal strips was incorrect, the appropriate remedy was the filing of a 19 U.S.C. 1514 protest within 90 days of the original liquidation.
HOLDING:
An error in the classification of merchandise is correctable by the filing of a 19 U.S.C. 1514 protest within 90 days of liquidation; relief is not available under 19 U.S.C. 1520(c)(1).
Consistent with the decision set forth above, you are hereby directed to deny the subject protest. 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,
Director, International
Trade Compliance Division