LIQ-11-RR:CR:DR 227145 LTO
Port Director
U.S. Customs Service
c/o Residual Liquidation and Protest Branch
6 World Trade Center
Room 761
New York, New York 10048-0945
RE: Protest 1001-93-109065; 19 U.S.C. 1504; 19 U.S.C. 1514(c)(3); 19 U.S.C. 1515(c); HQ 225819; surety protest;
jewelry; deemed liquidation; canceled checks; 19 CFR 24.3; voluntary tender prior to liquidation
Dear Port Director:
This is in reference to Protest 1001-93-109065, filed by
Washington International Insurance Company, concerning the
importation of jewelry from the Dominican Republic and the
liquidation of eleven entries (entry numbers 336-xxxx545-0, 336-xxxx490-9, 336-xxxx716-7, 336-xxxx871-2, 336-xxxx008-9, 336-xxxx518-8, 336-xxxx635-1, 336-xxxx195-5, 336-xxxx595-5, 336-xxxx704-4 and 336-xxxx821-6). The merchandise in question was
entered between November 22, 1991 and January 16, 1992, and the
entries were liquidated between May 21, 1993 and June 25, 1993
(incorrectly listed as July 17, 1993 in the Protest Supplement).
The date of the formal demand on surety for all entries,
including the eleven under consideration, was November 30, 1993
(incorrectly listed as September 30, 1993 in the Protest
Supplement).
This protest was timely filed pursuant to 19 U.S.C.
1514(c)(2)(B) (1993) (currently, 19 U.S.C. 1514(c)(3)) on
December 22, 1993, and was denied on September 16, 1994.
Following the protest's denial, the protestant requested, by
timely letter dated November 15, 1994, that we set aside the
denial of the application for further review and void the denial
of the protest, pursuant to 19 U.S.C. 1515(c). By letter dated
January 12, 1995 (HQ 225819), we granted the protestant's
request.
FACTS:
The protestant is the surety for the delinquent debtor,
Yashie Dominicana Corp. (Yashie). The imported merchandise
consists of finished jewelry made from castings in the Dominican
Republic. Some of these castings were made in the United States.
The imported articles were entered under subheading 7113.20.50,
Harmonized Tariff Schedule of the United States (HTSUS), which
provides for other articles of jewelry, of base metal clad with
precious metal, and claimed to be duty-free under the Generalized
System of Preferences (GSP), or partially exempt from duty under
subheading 9802.00.50, HTSUS, which provides for articles
exported for repairs or alterations.
By letters dated February 12, 1992 (received by Customs on
March 12, 1992), Yashie attempted to tender additional duties on
the eleven entry transactions under consideration. The letters
indicate that the merchandise should have been entered under
subheading 7113.11.50, HTSUS, which provides for other jewelry of
precious metals. The rate of duty for articles of subheading
7113.11.50, HTSUS, was 6.5 percent ad valorem. According to the
letters, Yashie submitted checks totaling $8,092.42 (according to
the Protest Supplement, this figure represented the application
of the 6.5 percent ad valorem duty rate and a claimed exemption
under heading 9802, HTSUS, on the value attributable to the
castings made in the United States). Copies of the checks, as
written by Yashie were submitted with the Protest Attachment,
Exhibit I. Copies of the canceled checks, however, were not
provided.
Customs requested, by CF 28 "Request for Information," dated
January 5, 1993, that Yashie provide, for all entries made from
November 14, 1991 to January 5, 1993, the following: with
reference to items sent to the Dominican Republic, "[c]opy of
out-bound Air Way Bill; [c]opy of export declaration; copy of
export invoice" and a description of all materials, ingredients
and components furnished in the Dominican Republic, along with
the country of origin of each. There is no evidence in the
protest file indicating that the protestant responded to this
request. The protestant, however, argues that the "CF 28 failed
to identify and therefore inform the importer with sufficient
particularity which entry transactions [sic] information was
being sought."
On February 17, 1993, a CF 29 "Notice of Action" was issued
to Yashie indicating that "[u]pon Import Specialist review it was
determined that this merchandise does not fall within the purview
of: A7113.11.50005/Free and 9802.00.50607/7113.11.50005/Free.
The . . . entries [including the eleven under consideration] are
being returned 7113.11.50005/6.5%." As stated above, the entries
were liquidated between May 21, 1993 and July 16, 1993 (duty was
assessed at the rate of 6.5 percent ad valorem on the full value
of the imported articles). According to ACS entry records, the
liquidation dates for the eleven entries in question had been
extended on either August 31 or October 28, 1992 (by CF 4333-A).
On November 30, 1993, a formal demand on surety for all
entries, including the eleven under consideration, was made. The
demand indicated that the surety was responsible for $14,417.74
($14,056.91, principal, plus $360.83, interest) for all entries,
including the eleven under protest. The protestant contends that
Customs failed to include the amounts tendered on March 12, 1992,
when computing the total amount owed by the importer. According
to Exhibit I, the total amount of duty assessed by Customs on the
eleven entries was $10,200.53, and therefore, taking into account
the amount claimed to have been paid by Yashie, the total amount
outstanding was $2,108.41 (Exhibit I apparently contains an
error, as $10,200.53 minus $8,092.42 equals $2,108.11, not
$2,108.41).
Customs, by letter dated June 20, 1994, informed the
protestant that the following information was necessary to give
its protest claim full consideration: "CF's 5104 and/or canceled
checks evidencing voluntary tenders." According to the
protestant, Yashie has since ceased operations and cannot be
located. Thus, the protestant states that it cannot obtain CF
5104s or the canceled checks. The protest was then denied on
September 16, 1994.
The protestant also contends that entry numbers 336-xxxx716-7 and 336-xxxx382-6 were liquidated by operation of law, one year
from the dates of entry (January 16 and March 6, 1992,
respectively), and that the subsequent liquidations were improper
(May 1 and June 18, 1993, respectively), pursuant to 19 U.S.C.
1504(a) and (b).
ISSUE:
1. Whether Customs, at liquidation, failed to take into account
the payment of additional duties owed.
2. Whether the entries should have been deemed liquidated by
operation of law, pursuant to 19 U.S.C. 1504.
LAW AND ANALYSIS:
1. Voluntary Tender of Duties Owed Prior to Liquidation
By letters dated February 12, 1992 (received by Customs on
March 12, 1992), Yashie attempted to make a "voluntary tender" of
duties on the eleven entry transactions under consideration. The
letters indicate that the merchandise should have been entered
under subheading 7113.11.50, HTSUS, with a rate of duty of 6.5
percent ad valorem. Yashie submitted checks (copies of which
were submitted with the Protest Attachment) totaling $8,092.42.
According to Exhibit I of the Protest Attachment, the total
amount of duty assessed by Customs was $10,200.53, and therefore,
taking into account the amount paid by Yashie, the total amount
outstanding was $2,108.41 ($2,108.11).
The protestant contends that Customs failed to include the
amounts tendered on March 12, 1992 when computing the total
amount owed by the importer. The protestant points to a similar
protest (protest 1001-94-101974) on another entry (entry number
173-xxxx780-4) which was approved. The CF 19 for that protest
indicates that a "voluntary tender" by the importer was
considered at liquidation ("bill for increase is in the amount of
$170.43 ($13376 x 6.5% = $869.44 - 699.01 = 170.43)"). Copies of
a letter dated February 12, 1992, and a copy of a check in the
amount of $699.01 were submitted with the protest.
The relevant Customs Regulations regarding evidence of
payment to Customs are found in 19 CFR 24.3. 19 CFR 24.3(b)
provides that "[a] receipt for the payment of estimated Customs
duties shall be provided a payer at the time of payment if he
furnishes with his payment an additional copy of the
documentation submitted in support of the payment. The
appropriate Customs official shall validate the additional copy
as paid and return it to the payer. Otherwise, a copy of the
document filed by the payer and the payer's cancelled check shall
constitute evidence of payment." 19 CFR 24.3(c) provides that
"[a] copy of a Customs bill validated as paid will not normally
be provided a payer. If a bill is paid by check, the copy of the
Customs bill identified as 'Payer's Copy' and the payer's
cancelled check shall constitute evidence of such payment to
Customs."
In each instance (the eleven entries and the entry involved
in protest 1001-94-101974), the protestant was unable to provide
adequate proof that Customs had received and accepted the
voluntarily tendered duties. The protestant has not provided
validated copies of the documentation submitted in support of
Yashie's alleged payments, nor copies of the documents filed or
copies of the canceled checks, in accordance with section
24.3(b). The protestant has also not provided copies of the
"Payer's Copy" of the bills or copies of the canceled checks, in
accordance with section 24.3(c). As there is no evidence that
payment of the additional duties was made to Customs, liquidation
of the subject entries without subtracting the amounts of the
alleged payments was proper.
2. Deemed Liquidation
The protestant contends that entry numbers 336-xxxx716-7 and
336-xxxx382-6 were liquidated by operation of law, one year from
the dates of entry (January 16 and March 6, 1992, respectively),
and that the subsequent liquidations were improper (May 1 and
June 18, 1993, respectively), pursuant to 19 U.S.C. 1504(a) and
(b). 19 U.S.C. 1504(a)(1), as amended (see section 641, Public
Law 103-182; 107 Stat. 2204), provides that an entry not
liquidated within one year from the date of entry shall be deemed
liquidated at the rate of duty, value, quantity and amount of
duties asserted at the time of entry by the importer of record,
unless liquidation is extended, as provided in that section, or
suspended as required by statute or Court order. 19 U.S.C.
1504(b) provides that "[t]he Secretary may extend the period in
which to liquidate an entry if . . . the information needed for
the proper appraisement or classification of the merchandise, or
for insuring compliance with applicable law, is not available to
the Customs Service." 19 U.S.C. 1504(b) also states that the
Secretary shall provide notice of an extension to the importer of
record and surety for the importer of record, and that such
notice "shall be in such form and manner . . . as the Secretary
shall by regulation prescribe." That regulation, 19 CFR
159.12(b), provides that "[i]f the port director extends the time
for liquidation, as provided in paragraph (a)(1) of this section,
he promptly shall notify the importer or the consignee and his
agent and surety on Customs Form 4333-A, appropriately modified,
that the time has been extended and the reasons for doing so."
Failure to provide such notice results in liquidation by
operation of law. See, e.g., Enron Oil Trading and
Transportation Co. v. United States, 15 C.I.T. 511 (1991) (citing
Pagoda Trading Co. V. United States, 9 CIT 407, 411, 617 F. Supp.
96, 99 (1985), aff'd, 804 F.2d 665 (Fed. Cir. 1986)).
In this case, the evidence in the file is sufficient to
create the presumption that proper notice of extension was given
(see e.g., International Cargo & Surety Insurance Co. (Data
Memory Corp.) v. United States, 15 CIT 541, 779 F.Supp. 174
(1991)). As stated above, ACS entry records indicate the
liquidation dates for the eleven entries in question, including
entry numbers 336-xxxx716-7 and 336-xxxx382-6, were extended
within one year from the date of entry on August 31 or October
28, 1992 (by CF 4333-A). Moreover, the record is devoid of any
evidence substantiating the protestant's contention of
unreasonableness on the part of the Customs in extending the
liquidation date. See, e.g., St. Paul Fire & Marine Ins. Co.
[Carreon] v. United States, 6 F.3d 763 (Fed. Cir. 1993) ("[A]n
abuse of discretionary authority [by Customs in extending the
liquidation date] may arise only when an extension is granted
even following elimination of all possible grounds for such an
extension"). Thus, the protestant's argument regarding the
extensions is without merit.
3. Miscellaneous
The protestant also contends that the final appraised value
of the imported articles is "unreasonable, unsupported and
contrary to the guidelines set forth in 19 U.S.C.A. 1401a (1993
Supp.) and therefore the appraisement decisions were arbitrary,
capricious, an abuse of discretion, and otherwise in violation of
the law and the conditions of the bond."
Section 402(a) through (f) of the Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 (TAA), codified at 19
U.S.C. 1401a, provides the hierarchy of methods used when
appraising imported merchandise. The preferred method of
appraisement is transaction value pursuant to section 402(b) of
the TAA. Section 402(b)(1) of the TAA provides, in pertinent
part, that the transaction value of imported merchandise is the
"price actually paid or payable for the merchandise when sold for
exportation to the United States," plus enumerated statutory
additions.
Section 500 of the TAA, codified at 19 U.S.C. 1500, provides
the general authority under which Customs appraises merchandise.
Section 500(a) states that the appropriate Customs officer shall,
under rules and regulations prescribed by the Secretary:
appraise merchandise by ascertaining or estimating the
value thereof, under section 1401a of this title, by
all reasonable ways and means in his power, any
statement of cost of costs of production in any
invoice, affidavit, declaration, other document to the
contrary notwithstanding . . . .
The Statement of Administrative Action further provides
that:
[s]ection 500 of the TAA allows Customs to consider the
best evidence available in appraising merchandise . . .
[It] authorize[s] the appraising officer to weigh the
nature of the evidence before him in appraising the
imported merchandise. This could be the invoice, the
contract between the parties, or even the recordkeeping
of either of the parties to the contract.
The protestant has not provided any documentation or
evidence indicating that Customs employed unreasonable ways and
means to ascertain the value of the imported merchandise. Hence,
it has not been demonstrated that the appraising officer under
authority of section 500, apparently utilizing a method of
appraisement in accordance with section 402, failed to
appropriately consider all of the evidence made available by the
protestant and to use "all reasonable ways and means in his
power" to appraise the merchandise.
Finally, the protestant contends that if the bond issued by
the protestant was issued to guarantee payment of increased
duties on the subject entries, the protestant "is not obligated
for the default of the importer in any amounts in excess of the
principal amount of that bond." Insofar as the protestant's
obligation for the default of the bond principal is concerned, we
agree that the protestant is only bound for the amount, each
year, equal to the principal amount of that bond. In this
regard, we note that the language found on the Customs Bond, CF
301, provides that the principal and surety bind themselves in
the amounts as set forth on the bond. See HQ 546057, dated March
14, 1996. Despite our request, your office has not provided us
with the CF 301s for the entries in question. Thus, we are
unable to determine whether the amount due exceeds the principal
amount of the bonds in question.
HOLDING:
The protest should be DENIED. However, the amount due may
not exceed the principal amount of the bonds in question.
In accordance with section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision, together with the Customs Form 19,
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 the 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,
John Durant, Director
Commercial Rulings Division