LIQ-9-01-RR:IT:EC 227308 LTO
Port Director
Port of New York
c/o Chief, Residual Liquidation and Protest Branch
6 World Trade Center, Room 761
New York, New York 10048-0945
RE: Protest 1001-96-105799; 19 U.S.C. 1520(c)(1); mistake of fact; para-amino benzamide; subheadings 2924.29.75, 9817.29.01; Computime, Inc. v. United States; C.J. Tower & Sons of Buffalo, Inc. v. United States; Boast, Inc. v. United States; Fabrene, Inc. v. United States; George Weintraub & Sons, Inc. v. United States; Aviall of Texas,Inc., v. United States; Taban Co. v. United States; ZakiCorp. v. United States; HQs 225412, 226395; ORR Ruling 75-0026
Dear Port Director:
This is in reference to Protest 1001-96-105799, which was
filed on behalf of Aceto Corporation, concerning the denial of
relief under 19 U.S.C. 1520(c)(1). The merchandise under
consideration was entered on January 9, 1995, and the entry was
liquidated on April 28, 1995. By letter dated August 28, 1995,
Aceto timely filed a request for reliquidation under section
1520(c)(1), which was denied on May 1, 1996. This protest was
then timely filed on July 29, 1996.
FACTS:
The imported chemical, para-amino benzamide, was entered
under subheading 2924.29.75, Harmonized Tariff Schedule of the
United States (HTSUS), which provides for other aromatic, cyclic
amides (including cyclic carbamates) and their derivatives.
According to the protestant, the chemical had been imported for
use by Eastman Chemical Company in the production of photographic
color couplers. Accordingly, the protestant contends that the
chemical was, therefore, entitled to duty-free treatment under
subheading 9817.29.01, HTSUS, which provides for:
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Cyclic organic chemical products in any physical form
having an aromatic or modified aromatic structure,
however provided for in chapter 29 . . ., to be used in
the manufacture of photographic color couplers;
photographic color couplers . . . (all of the foregoing
goods however provided for in chapter 29 . . .)
(emphasis added).
Subheading 9817.29.01, HTSUS, became effective on January 1,
1995, eight days before the subject entry. The protestant
contends that it failed to enter the chemicals under this
subheading because the HTSUS "contained no footnotes indicating
that certain chemicals classifiable under 2924.29.75 were
eligible for special tariff treatment under 9817.29.01." The
protestant had made entries under the predecessor to subheading
9817.29.01, HTSUS, which expired at the end of 1992. At that
time, there were footnotes in the HTSUS indicating special
treatment under chapter 98.
ISSUE:
Whether the failure to enter merchandise under a duty-free
provision because the tariff schedule did not contain footnotes
indicating that the merchandise was eligible for special tariff
treatment under chapter 98 constitutes a mistake of fact,
correctable under 19 U.S.C. 1520(c)(1).
LAW AND ANALYSIS:
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
section 1514. Under section 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 alleged "error" in the instant case was
brought to the attention of your office, within one year from the
date of liquidation, by letter dated August, 28 1995). The
relief provided for in 19 U.S.C. 1520(c)(1) is not an alternative
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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. See, e.g., Computime, Inc. v.
United States, 9 CIT 553, 555, 622 F.Supp. 1083 (1985).
For section 1520(c)(1) purposes, a mistake of fact 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." C.J. Tower & Sons of Buffalo, Inc. v.
United States, 68 Cust. Ct. 17, 21, C.D. 4327, 336 F.Supp. 1395,
1398 (1972), aff'd, 61 CCPA 90, C.A.D. 1129, 499 F.2d 1277
(1974). Inadvertence, on the other hand, has been defined as "an
oversight or involuntary accident, or the result of inattention
or carelessness, and even as a type of mistake." Id.
Generally, an error in the classification of merchandise is
not a clerical error, mistake of fact or inadvertence within the
meaning of section 1520(c)(1), but an error in the construction
of law. Customs has found that an exception exists and
reliquidation is proper when a Customs officer is not aware of a
classification ruling issued prior to liquidation. See ORR
Ruling 75-0026, dated January 24, 1975. This 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 and is excluded from relief under section 1520(c)(1). The
limited exception described in ORR Ruling 75-0026 does not apply
to the subject entries.
There have also been several court decisions regarding the
application of section 1520(c)(1) and errors in classification.
In C.J. Tower, the U.S. Court of Customs and Patent Appeals found
a mistake of fact existed where neither the importer nor Customs
was aware that the merchandise under consideration was emergency
war materials entitled to duty-free entry under a separate item
of the tariff schedule until after liquidation. The court found
that this mistake of fact was correctable under section
1520(c)(1) because it was a mistake that went to the nature of
the merchandise and was the underlying cause for its incorrect
classification. See Taban Co. v. United States, 960 F.Supp. 326
(CIT 1997) and Zaki Corp. v. United States, 960 F.Supp. 350 (CIT
1997) (wherein the U.S. Court of International Trade (CIT) found
that there was a mistake of fact, rather than one of law, because
"the 'exact physical properties' of the merchandise were not
known to the broker or to Customs in this case"); HQ 223524,
dated February 13, 1992 (wherein we found a mistake of fact where
merchandise was classified as a wool fabric, because it had been
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identified on an invoice as "chief value wool" when in fact it
was "chief value silk").
On the other hand, in Boast, Inc. v. United States, 17 CIT
114 (1993) and Fabrene, Inc. v. United States, 17 CIT 911 (1993),
the CIT considered situations where a Headquarters ruling (first
ruling) had been modified or revoked by a subsequent ruling
(second ruling), resulting in the change in the tariff
classification of merchandise. In each case, the plaintiff
argued that the error in the classification of entries,
liquidated after issuance of the first ruling but prior to
issuance of the second ruling, was a mistake of fact and sought
reliquidation of its entries under 19 U.S.C. 1520(c)(1) based on
the classification in the second ruling. The court found that,
unlike the error in C.J. Tower, the errors in judgement on the
part of Customs in classifying the merchandise were mistakes of
law.
In the present case, as in Boast and Fabrene, and unlike
C.J. Tower, Taban and Zaki, Aceto makes no reference to a mistake
in the nature of the merchandise. In Boast, "the only
inadvertence or mistake alleged therein goes to Customs'
application of the Explanatory Notes to the subject merchandise."
In the present case, the only inadvertence or mistake alleged is
the failure of the importer (and Customs) to classify the
merchandise in the correct tariff provision. Aceto does not
contend that it was unaware, at any time, that the merchandise,
an aromatic cyclic amide, was to be used in the manufacture of
photographic color couplers. Aceto, admittedly, knew the "nature
and use" and "exact physical properties" of the imported
merchandise (the protestant states, for example, that it had made
entries of the chemical under the predecessor to subheading
9817.29.01, HTSUS, which expired at the end of 1992). See Taban
at pg. 334 (court decisions have found a "distinction between
cases involving a mistake of law and those involving a mistake of
fact based on whether the importer had actual knowledge of the
nature and use of the good at issue").
That there was no footnote indicating that some of the
merchandise of subheading 2924.29.75, HTSUS, was eligible for
special tariff treatment under subheading 9817.29.01, HTSUS, is
irrelevant to Aceto's 1520(c)(1) claim. In fact, this situation
is no different than classifying the merchandise in a dutiable
provision of chapter 29, rather than a duty-free provision
somewhere else in the tariff schedule--for example, chapter 31
(the chapter 29 notes indicate that the chapter does not include
certain articles of heading 3102, HTSUS, a duty-free provision).
Such a mistake is a mistake in the construction of law. It is
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not manifest from the entry records that Aceto's failure to
classify the merchandise under subheading 9817.29.01, HTSUS, was
anything other than negligent inaction. As such, there is no
basis for relief under section 1520(c)(1). For other rulings
where we found a classification error to be a mistake of law,
see, e.g., HQ 225412, dated June 1, 1995; HQ 226391, dated April
5, 1996.
Finally, with regard to the cases cited by Aceto, we note
that the protestant's reliance on George Weintraub & Sons, Inc.
v. United States, 12 CIT 643, 691 F.Supp. 1449 (1988), rehearing
denied, 12 CIT 1107, 703 F.Supp. 1107 (1988), and Aviall of
Texas, Inc., v. United States, 70 F.3d 1248 (CAFC 1995), in
support of its claim for relief is misplaced. The Weintraub
decision was vacated on August 22, 1989 (see 855 F.Supp. 401 (CIT
1994)), and therefore has no precedential value, while the Aviall
decision is distinguishable from the case at hand.
In Aviall, the broker had filed a blanket certificate for
aircraft parts under the Civil Aircraft Agreement. The
certificate was valid for one year. The broker failed to renew
the certificate, and when Customs failed to grant duty-free
treatment for the imported merchandise, Aviall protested,
claiming that its failure to renew was a "clerical error."
Customs denied the protest, contending that there was no proof of
clerical error. The U.S. Court of Appeals for the Federal
Circuit found that because (1) Aviall regularly renewed its
blanket certificate, (2) the certificate on file was accurate,
though out-dated, and (3) Customs had notice of the error (entry
summaries were marked with a "C" indicating Civil Aircraft
Agreement), Aviall was entitled to relief under section
1520(c)(1) for its "inadvertent" failure to timely renew its
certificate. As the Aviall decision was tied to the filing of
civil aircraft documentation, did not involve the classification
of the merchandise in question and, in the present case, Customs
had no notice of Aceto's error (no reference to duty-free
treatment on entry documentation), it is not relevant to the case
at hand.
HOLDING:
For the above-stated reasons, the protest should be DENIED.
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
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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,
Director, International Trade
Compliance Division