LIQ-9-01-RR:IT:EC 226722 IOR
Port Director
U.S. Customs Service
200 Granby Street
Norfolk, Virginia 23510
RE: Application for further review of Protest No. 1401-95-100287; 19 U.S.C. 1520(c)(1); Mistake of fact;
Classification of counterweights; Classification ruling
Dear Sir:
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).
This protest concerns ten entries filed by the protestant
from December 25, 1994 through February 27, 1995, covering cast
counterweights. Two representative entries (CF 7501s), entry no.
100-01xxx61-6, made on February 19, 1995, and entry no. 100-01xxx59-6, made on February 27, 1996, each describe the imported
merchandise as "CAST ARTICLES OF STEEL." The accompanying
invoice for each representative entry describes the merchandise
as "CSTING-CTWT." In both entries, the merchandise is classified
under subheading 7325.99.5000 of the Harmonized Tariff Schedule
of the United States (HTSUS). Subheading 7325.99.5000, HTSUS,
provides for "Other cast articles of iron or steel: Other: Other:
Other" dutiable at a rate of 5.1%. The subject entries were
liquidated from April 14, 1995 through June 16, 1995 under
subheading 7325.99.5000, HTSUS.
The file includes NY Ruling 810668, dated June 9, 1995,
which responds to a May 18, 1996 tariff classification ruling
request from the protestant. NY Ruling 810668 states that the
counterweights consisting of a grey iron casting, made to
specification established by the protestant to fit certain models
of fork-lift trucks are classified under subheading 8431.20.0000,
HTSUS. Subheading 8431.20.0000, HTSUS, provides for "Parts
suitable for use solely or principally with the machinery of
headings 8425 to 8430: Of machinery of heading 8427" dutiable at
a free rate of duty.
By letter dated September 19, 1995, on behalf of the
protestant, the broker for the protestant requested that the
subject entries be reliquidated under 19 U.S.C. 1520(c)(1). The
request for reliquidation states the following as grounds for
reliquidation:
We originally classified counterweights as articles of
metal. At suggestion of inspector, we requested a
binding ruling, attached with classification
determination of 8431.20.0000 (parts of forklift).
Corrected 7501's attached along with original next step
entries.
The file contains a representative copy of a corrected CF 7501.
On that CF 7501, the entered merchandise is described as "MACH
PARTS UNDER 8427", and is classified under 8431.20.0000, HTSUS.
The request for reliquidation was denied on December 7, 1995,
stating that "errors in classification are considered errors in
the construction of the law and cannot be addressed under 19
U.S.C. 1520(c)(1)."
The protestant filed the subject protest on December 11,
1995 against the refusal to reliquidate the ten entries of
counterweights under 19 U.S.C. 1520(c)(1). The protestant
incorporates the documentation submitted with its 1520(c)(1)
claim, and as additional grounds for the protest states:
As per attached copy of Court of Appeals decision [ITT
Corporation v. United States, 24 F.3d 1384 (Fed. Cir.
1994)], "the trial court and the appellate court both
upheld the importer's claim that where the true nature
of the merchandise was not understood by the broker at
the time of entry, a mistake of fact had occured
[sic].["] (Emphasis supplied).
The protestant cites to a summary of the ITT decision published
in an International Trade & Transportation Law Bulletin,
published by Sonnenberg, Anderson & Rodriguez.
ISSUE:
Whether relief may be granted under 19 U.S.C. 1520(c)(1) to
correct an alleged mistake of fact 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 December 7, 1995, and the protest was filed on
December 11, 1995. In addition, the refusal to reliquidate an
entry under 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) is an exception to the finality of
1514. Under 1520(c)(1) 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)).
Essentially the protestant's claim is that the subject
merchandise was classified under the wrong HTSUS provision. The
mistake alleged by the protestant appears to be that either the
protestant or the broker did not understand the nature of the
merchandise, and that a binding Customs ruling either was not
known to, or was overlooked by, the appropriate Customs officials
with respect to these subject entries. The protestant has failed
to provide any evidence that the subject imported merchandise was
the same merchandise as that for which the June 9, 1995 ruling
was issued. Therefore, the protestant has failed to establish
that any error has occurred, as is required under 19 U.S.C.
1520(c)(2).
However, assuming that a classification error was made, we
will address the alleged mistakes of fact. The courts have
consistently taken the position that an erroneous classification
of merchandise is not a clerical error, mistake of fact, or other
inadvertence within the meaning of 19 U.S.C. 1520(c)(1), but is
an error in the construction of a law. See, Mattel Inc. v.
United States, 377 F. Supp. 955, 72 Cust. Ct. 257, C.D. 4547
(1974); and C.J. Tower & Sons of Buffalo, Inc. v. United States,
336 F.Supp. 1395, 68 Cust. Ct. 17, C.D. 4327, aff'd. 499 F.2d
1277, 61 CCPA 90 (1972). In Degussa Canada Ltd. v. United
States, 87 F.3d 1301 (Fed. Cir. 1996), where the District
Director was unaware, when he liquidated certain entries, that
the classification of other entries of the same merchandise by
another district was under review by Customs headquarters, the
court found that there was no factual misapprehension about the
nature of the merchandise. Instead, the court found that "the
only misapprehension was about the proper classification of the
merchandise and that..., is a question of law, not a fact." Id.,
at 1304.
Here, the only error set forth by the protestant is one
involving the classification of the imported merchandise.
Customs has found that an exception exists and reliquidation is
proper when a Customs officer is not aware of a classification
ruling. ORR Ruling 75-0026, dated January 24, 1975. That ruling
also states, however, that if an import specialist takes note of
a Headquarters ruling, and decides it is not applicable to the
merchandise, that decision is an error in the construction of the
law, excluded from relief under 19 U.S.C. 1520(c)(1).
As stated above, a mistake of fact must be manifest from the
record or established by documentary evidence. The CIT has ruled
that mere assertions by a complainant without supporting evidence
will not be regarded as sufficient to overturn a Customs
official's decision. Bar Bea Truck Leasing Co., Inc. V. United
States, 5 CIT 124, 126 (1983). Further, upon an assertion that
merchandise has been wrongly classified due to a mistake of fact,
"it is incumbent on the plaintiff to show by sufficient evidence
the nature of the mistake of fact." PPG Industries, Inc. v.
United States, 4 CIT 143, 147-148 (1982), citing Hambro
Automotive Corp. v. United States, 81Cust. Ct. 29, 31, 458 F.
Supp. 1220,1222(1978) aff'd 66 CCPA 113, C.A.D. 1231, 603 F.2d
850 (1979).
For seven of the ten entries, liquidation occurred prior to
the issuance of the NY Ruling. Consequently, the limited
exception provided for by ORR Ruling 75-0026 cannot apply to the
seven entries liquidated before June 9, 1995. Such a
conclusion is consistent with HQ 222895, dated March 12, 1992.
In that decision, entries were liquidated within three months of
the issuance of a headquarters ruling which changed the
classification of similar merchandise. In HQ 222895 the
following was stated:
Of significant note is the date of the ruling; it was
issued almost three months after the liquidation date
.... Obviously, [the ruling] was not in effect at the
time of liquidation. Therefore, the ruling could not
possibly have any bearing on the importer's (or
broker's) classification decision in this case. See,
e.g., Customs ruling HQ 722299 (June 24, 1983).
Consequently, no mistake of fact, arising out of the
issuance of the NY ruling, is present here, with respect to seven
of the ten entries. With respect to the three entries liquidated
on and after June 9, 1995, the protestant has provided no
documentary evidence to show that the responsible import
specialist was unaware of the NY ruling letter. Thus, with
respect to the allegation that the issuance of the NY ruling
letter is evidence of a mistake of fact, we find there is no
evidence presented to establish that any error in the
classification of the subject entries was a mistake of fact, and
not an error in the construction of the law.
Relief may be granted under 19 U.S.C. 1520(c)(1) when it is
established by sufficient evidence that merchandise has been
wrongly classified due to a mistake of fact. See PPG Industries,
Inc.v. United States, 4 CIT 143, 147-148; see also Fabrene, Inc.
v. United States, 17 CIT 911, Vol. 27, Customs Bulletin, No. 36,
p. 9,11 (1993) ("A mistake sufficient to invoke the relief
provided for by 1520(c)(1), is one which goes to the nature of
the merchandise and is the underlying cause for its incorrect
classification'.") (citing Boast, Inc. v. United States, 17 CIT
114 (1993)). In Degussa Canada Ltd. v. United States, 87 F.3d
1301 (Fed. Cir. 1996), where the District Director was unaware,
when he liquidated certain entries, that the classification of
other entries of the same merchandise by another district was
under review by Customs headquarters, the court found that there
was no factual misapprehension about the nature of the
merchandise. Instead, the court found that "the only
misapprehension was about the proper classification of the
merchandise and that..., is a question of law, not a fact." Id.,
at 1304. Under the foregoing cases, a mistake in the tariff
classification of merchandise may only be corrected under 19
U.S.C. 1520(c)(1), if the mistake goes to the factual nature of
the goods (e.g., if the importer thought the goods were watches
with a mechanical display when they were actually watches with an
opto-electric display) and if that mistake is satisfactorily
established (i.e. not only the mistake, but also that the mistake
was factual in nature, must be established). For an example of
such an application of 19 U.S.C. 1520(c)(1), see, HQ Ruling
225399, dated March 8, 1994 (which discusses carelessness by a
broker in classifying merchandise even though the broker had a
clear and correct invoice description of the merchandise).
As stated above, a mistake of fact must be manifest from the
record or established by documentary evidence. The CIT has ruled
that mere assertions by a complainant without supporting evidence
will not be regarded as sufficient to overturn a Customs
official's decision. Bar Bea Truck Leasing Co., Inc. V. United
States, 5 CIT 124, 126 (1983). Further, upon an assertion that
merchandise has been wrongly classified due to a mistake of fact,
"it is incumbent on the plaintiff to show by sufficient evidence
the nature of the mistake of fact." PPG Industries, Inc. v.
United States, supra, 4 CIT at 147-148 (citing Hambro Automotive
Corp. v. United States, 81Cust. Ct. 29, 31, 458 F. Supp.
1220,1222(1978) aff'd 66 CCPA 113, C.A.D. 1231, 603 F.2d 850
(1979)). In ITT Corp. v. United States, 24 F.3d 1384, 1387 (Fed.
Cir. 1994), the court found that reliquidation under 19 U.S.C.
1520(c) requires both notice and substantiation. Notice of a
clerical error, mistake of fact, or other inadvertence includes
asserting the existence of a clerical error, mistake of fact, or
other inadvertence "with sufficient particularity to allow
remedial action."
With respect to the allegation that the protestant or its
broker was unaware of the nature of the subject merchandise, it
appears that the protestant's claim for relief under 19 U.S.C.
1520(c) is that 1) the merchandise consisted of counterweights,
2) the protestant's broker believed the merchandise to be
articles of metal, and 3) ITT Corp. v. United States, supra,
supports the protestant's claim. The protestant appears to
conclude that the subject entries should be reliquidated with the
subject merchandise classified under subheadings 8431.20.0000,
HTSUS.
The protestant has failed to meet either the notice or
substantiation requirements for relief pursuant to 19 U.S.C.
1520(c)(1). The protest consists of an assertion regarding
classification of counterweights and virtually no assertions
about the broker's belief regarding the nature of the
merchandise. The nature of the protestant's claim is unclear and
no assertion of the purported mistake has been presented in
sufficient particularity to allow relief.
Even if we were to find the protestant had met the notice
requirement, clearly the substantiation requirement has not been
met. A mistake of fact must be manifest from the record or
established by documentary evidence. See, ITT Corp. v. United
States, supra, ("Mistakes of fact that are not manifest from
[the] record ... must be established by documentary evidence."
24 F.3d at 1387. Clearly, there is no mistake of fact manifest
from the record. Although the protestant has submitted corrected
CF 7501's and some invoices, the protestant has failed to explain
in any way how the documents support any claim for relief under
19 U.S.C. 1520(c)(1). For example, the protestant has not
demonstrated how the submitted documents show that the protestant
or broker was unaware as to the nature of the merchandise, or any
other purported mistake, and how any such mistake was a mistake
of fact rather than a mistake of law. The protestant has failed
to explain how ITT Corp. v. United States, supra, is analogous to
its protest and supports its claim for relief.
Consequently, there has been absolutely no basis presented
for reliquidating the subject entries pursuant to 19 U.S.C.
1520(c)(1). The protestant's claim is therefore denied.
Finally, we note that the protest does not meet the
requirements for the contents of a protest, section 174.13 of the
Customs Regulations (19 CFR 174.13), which provides the
following:
(a) A protest shall contain the following information:
(6) The nature of, and justification for the
objection set forth distinctly and specifically with
respect to each category, payment, claim, decision, or
refusal.
Clearly, as discussed above, the protest does not contain a clear
explanation of the nature of or justification for the matter
protested. Consequently, the protest does not meet the
requirements of 19 CFR 174.13.
HOLDING:
The protestant has not established a mistake of fact in the
liquidation of the subject entries, and reliquidation of the
entries is not permissible pursuant to 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 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