Customs Ruling HQ 228136 - Protest and Application for Further Review no. 1512-98-100023; Lackawanna Leather Company; clerical error, mistake of fact or other inadvertence; 19 U.S.C. 1520(c)(1); Executone Information Systems v. United States; Degussa Canada Ltd. v. United States; uniqueness of each entry and protest; availability of remedies

Star
Send

HQ 228136
May 11, 1998

Type : Reliquidation • HTSUS :

LIQ-9-01 RR:CR:DR
228136 CK

Category: Reliquidation

Port Director of Customs
U.S. Customs Service
Attn: Protest Unit
1901 Cross Beam Drive
Charlotte, NC 28217-2823

RE: Protest and Application for Further Review no. 1512-98-100023; Lackawanna Leather Company; clerical error, mistake of fact or other inadvertence; 19 U.S.C. 1520(c)(1); Executone Information Systems v. United States; Degussa Canada Ltd. v. United States; uniqueness of each entry and protest; availability of remedies

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the evidence provided, the arguments made by the Protestant, and Customs records. Our decision follows.

FACTS:

The subject entry covers one entry, 101-xxxx206-4, which was entered into the United States on 7/29/96. The importer of record is Lackawanna Leather Company, who is the Protestant in this case.

The entry was liquidated on 11/8/96, and the CF 7501 contains one line of merchandise, which consists of: UPHOLSTERY LEATHER: BOVINE; tariff classification is 4104.31.4000; rate of duty of 3.6% ad valorem; and a duty amount of $5808.71. Listed as the importer of record is Lackawanna Leather, and the exporting country and country of origin is listed as Argentina.

Attached is a bill of sale from Cuero Art S.C.A., dated 7/19/96, listed is 8 pallets of upholstery leather, the unit price, the amount, and states, “ shipment from Buenos Aires, Argentina airport to Charlotte, NC airport, USA.” Handwritten on the page is “A4104.31.4000 M²”, with other markings, and “1/1."

Also attached is a packing list for Lackawanna Leather, listing pallets, clasif, unid, sqft, weight and OBS. It is stamped Cuero Art S.C.A., and is dated 7/18/96. Handwritten is a mark and note, “1/2.” Next is a letter from Cuero Art S.C.A., dated 7/19/96, stating the leather hasn’t been treated with and contains no residues of any dyes or chemical restricted by AZO regulations dated September 1994. Handwritten note “1/3.”

Also attached is a “Generalized System of Preferences Certificate of Origin,” dated 7/19/96, issued by the Argentine Republic covering 8 pallets of upholstery leather, and contains information of weight, number, and date of invoices. Handwritten note, “1/4.” Attached are two air waybills, one a master, and one a house air waybill. They are dated 7/19/96, list 8 pallets of upholstery, list the carrier and country of departure, as Argentina, and the destination as Charlotte.

Also attached is a Transportation Entry and manifest of goods subject to Customs inspection and permit. Lists the port of entry as Miami International Airport, from Buenos Aires, consigned to Charlotte, exported from Argentina on 7/21/96, and consists of 16 pcs of leather.

Protestant first submitted a petition for administrative review and voluntary reliquidation with a refund under authority of 19 U.S.C. 1520(c)(1). The petition is dated 10/29/97. Protestant submits that they have satisfied the requirements of 1520(c) as a matter of law and are entitled to a refund since, “correction pursuant to 520(c)(1), Tariff Act of 1930, as amended, may be made in entry, liquidation, or other Customs transaction if the clerical error, mistake of fact, or other inadvertence: (1) does not amount to an error in the construction of a law; (2) is adverse to the importer; and (3) is manifest from the record or established by documentary evidence.”

Protestant claims that with respect to the clerical error and/or inadvertence having had an effect which is adverse to the importer, the result of the error was liquidation as entered of a consumption entry on which duty in the amount of $5808.71 was paid, and that except for the clerical error and/or inadvertence would have been refunded by Customs at liquidation.

Protestant claims with respect to facts manifest from the record or established by documentary evidence, we submit that the record establishes that the merchandise, by virtue of its classification and country of origin, would have been eligible for duty free entry had the Generalized System of Preferences not lapsed prior to its importation. Protestant offers as evidence that the single cause for the merchandise not to have ultimately been accorded the benefit of duty free entry as provided for by law when the Generalized System of Preferences was renewed with retroactive effect, documentary evidence in the form of an affidavit dated 10/24/97, sworn by the entry filer’s clerk.

The affidavit states, that Kathleen Holbrook Egnor Dover, an employee of Kuehne & Nagel, Inc, who has been employed in a clerical position continuously since 10/31/94, has been handling entries for the account of Lackawanna Leather since shortly after the commencement of that employment. The affiant states that she has specific knowledge regarding the preparation of entry 101-xxxx206-4, dated 7/24/96. Affiant states that with regard to the omission of the special program indicator prefix from HTSUS subheading used to classify the merchandise for entry, this was due solely to carelessness on her part. Affiant further stated that at no time did she draw any conclusion of law regarding the potential for a claim of duty free entry under the then expired Generalized System of Preferences. The date of the affidavit is 10/24/97.

Finally Protestant states that in regards to the third requirement for a 1520(c)(1) petition they did not make an error in the construction of the law since, on the expiration of the Generalized System of Preferences, by administrative messages, but through administrative action not involving rule making, Customs implemented a procedure to facilitate automatic liquidation with a refund of estimated duties collected at the time of entry, on merchandise that would have been accorded duty free entry as a benefit of the Generalized System of Preferences had the program not expired. The procedure called for the importer to prefix the HTSUS subheading, with the special program indicator that would have been applied had the Generalized System of Preferences not expired. Protestant states that since this was to accommodate automated processing , and was not law, the failure to comply with these procedures therefore could not be, and was not, an error in the construction of the law.

Protestant argues in the alternative that the law according certain merchandise duty free entry under the Generalized System of Preferences had expired on 7/10/96, which is prior to the entry of the subject merchandise. Protestant argued that at the time of entry there was no law governing the entry of merchandise under the Generalized System of Preferences, and where there is no governing law, there can be no error in the construction of the law, and the legal requirements for entry under the Generalized System of Preferences lost legal effect. Protestant argued that the only error in the instant case was an omission by inadvertence, which resulted in an unintended automated process, by which the entry liquidated as entered. Had the special program indicator been used in making entry, it would have triggered another automated process, causing liquidation to be delayed, and a refund of duty on liquidation of the entry.

Protestant’s petition for reliquidation under 1520(c)(1) was denied by the Port of Charlotte, on 3/10/99. The Port denied the petition for relief stating the Act of August 20, 1996, 110 Stat. 1755, Pub. L. Title 1, Subtitle J, required all Generalized System of Preferences claims had to be made by 2/16/97.

Protestant then filed the current protest and application for further review under 19 U.S.C. 1514(a)(7) on 6/5/98, for the refusal of Customs to reliquidate under 19 U.S.C. 1520(c)(1). Protestant states in its protest that the decision protested herein, is inconsistent with a decision made at the Port of Philadelphia with respect to the same or substantially similar merchandise, under 19 CFR 174.24(a). Additionally the protest involves a question of law, the impact of the the Act of August 20, 1996, 110 Stat. 1755, Pub. L. Title 1, Subtitle J, which appears to require the reliquidation of the subject consumption entry could only be granted where a suitable request for same had been filed with Customs by 2/16/97, on authority provided Customs to remedy certain errors and/or mistakes in 19 U.S.C. 1520(c)(1).

Protestant made the following arguments in support of its protest: all requirements of 1520(c)(1) have been met. A clerical error and/or inadvertence resulted in the failure of the importer to obtain the benefits of GSP for the subject merchandise, which was the omission of the SPI “A.” An error in construction of the law did not result in the omission of the SPI ‘A” from the classification on the ABI entry summary transmission, because upon expiration of GSP benefits, no legal antecedent for that usage pertained to the subject transmission. Furthermore, the government has no cognizable interest in retaining duties which were improperly collected as a result of clerical error, mistake of fact, or inadvertence. Additionally, collection of these types of duties on the subject goods would frustrate the purpose behind the GSP, which is to provide duty free treatment for these types of entries.

The second argument contends that the provision in the Act of August 20, 1996, 110 Stat. 1755, Pub. L. Title 1, Subtitle J, which appears to require the reliquidation of the subject consumption entry could only be granted where a suitable request for same had been filed with Customs by 2/16/97, can not and does not in any way diminish the legal right guaranteed by the importer, or limit the remedies provided for in 19 U.S.C. 1520(c).

ISSUES:

1. Is one port bound by the decision of a different port, when the protests are substantially similar?

2. Are other remedies available to a Protestant who failed to use the remedy provided in the Act of August 20, 1996, 110 Stat. 1755, Pub. L. Title 1, Subtitle J?

3. Was the Port correct in denying Protestant’s petition for a refund of its duties under 19 U.S.C. 1520(c)?

LAW AND ANALYSIS:

We note that the original petition for relief under 19 U.S.C. 1520(c)(1), dated October 29, 1997 was timely filed as it was filed within one year of liquidation, which occurred on November 8, 1996. Additionally we note, that the refusal to reliquidate under 1520(c) is a protestable issue under 19 U.S.C. 1514(a)(7), as long as the protest is filed within 90 days, of the denial of the reliquidation. Here, Protestant filed this protest on June 5, 1998, which was within 90 days of the denial of the 1520(c) claim, dated March 10, 1998.

Issue #1:

Protestant argues that the protest herein is inconsistent with a decision made at the Port of Philadelphia with respect to the same or substantially similar merchandise.

One port of Customs is not bound by the decision of another Customs port, when two separate entries are involved and two separate protests have been filed, one for each entry. Each entry must stand alone. In Alyeska Pipeline Service, Co. v. United States, 10 C.I.T. 510, 643 F. Supp. 1128 (1986), reh’g granted, 11 C.I.T. 931, 683 F. SUPP. 817 (1987), vacated as moot on other grounds, unpublished order (May 19, 1988), the CIT stated, “the law does not permit the Customs Service to assign to one entry the values of merchandise in other entries owing on them. 19 U.S.C. §1500 provides for separate, unitary appraisement of entries as follows: § 1500 Appraisement, classification, and liquidation procedures:

The appropriate customs officer shall, under rules and regulations prescribed by the Secretary--

(a) appraise merchandise by ascertaining or estimating the value thereof, under section 402 [19 U.S.C. §1401a], by all reasonable ways and means in his power, any statement of cost of production in any invoice, affidavit, declaration, other document to the contrary notwithstanding;

(b) ascertain the classification and rate of duty applicable to such merchandise;

(c) fix the amount of duty to be paid on such merchandise and determine any increased or additional duties due or any excess of duties deposited;

(d) liquidate the entry of such merchandise; and

(e) give notice of such liquidation to the importer, his consignee, or agent in such form and matter as the Secretary shall prescribe in such regulations.”

Additionally, in Degussa Canada Ltd. v. United States, 87 F.3d 1301 (Fed. Cir. 1996), the Court of Appeals for the Federal Circuit dealt with a 1520(c) mistake of fact claim, where entries were made covering apparently identical goods two different ports, and each shipment was classified under the same classification number, to which the importer objected. In one port the importer failed to file a protest. In the second port, the importer filed a protest and application for further review, with Customs headquarters. Headquarters instructed the Port Director to grant the protest in accordance with the Protestant’s classification, and the importer sought to have the other entry reliquidated as a mistake of fact under 1520(c), stating that the port was unaware that there was a protest at Headquarters and the first branch may have deferred liquidation of the other entry if they had known this fact. The court did not agree that this situation or the importer’s argument involved a genuine mistake of fact. The court stated that there was no factual misapprehension about the nature of the imported merchandise in this case, but instead, involved a question of the proper classification of merchandise, and that is a question of fact, not of law. The court held, “ since the allegations in Degussa’s complaint did not establish that there had been a ‘mistake of fact in [the] liquidation’ of the Detroit entries, the Court of International Trade correctly dismissed the complaint for failure to state a claim upon which relief could be granted.”

It is clear that at no time, did either court make any statements that one port was bound to follow the decision of another port, when two separate entries and protests involved. Therefore, Protestant’s reasoning that the Port of Charlotte is bound by the decision of the Port of Philadelphia, in regards to this separate entry and protest, is not true.

Issue #2:

The second issue is whether the Act of August 20, 1996, 110 Stat. 1755, Pub. L. Title 1, Subtitle J is Protestant’s exclusive remedy. The Act of August 20, 1996, 110 Stat. 1755, Pub. L. Title 1, Subtitle J renewed the Generalized System of preferences, and made application retroactive. Section 1953, Effective date, states:

“(a) In General- The amendments made by this subtitle apply to articles entered on or after October 1, 1996.

(b) Retroactive Application- (1) General Rule- Notwithstanding section 514 of the Tariff Act of 1930 or any other provision of law and subject to subsection (c)- (A) any article that was entered- (i) after July 31, 1995, and (ii) before January 31, 1996, and to which duty-free treatment under title V of the Trade Act of 1974 would have applied if the entry had been made on July 31, 1995, shall be liquidated or reliquidated as free of duty, and the Secretary of the Treasury shall refund any duty paid with respect to such entry, and

(B) any article that was entered- (i) after December 31, 1995, and (ii) before October 1, 1996, and to which duty-free treatment under title V of the Trade Act of 1974 (as amended by this subtitle) would have applied if the entry had been made on or after October 1, 1996, shall be liquidated or reliquidated as free of duty, and the Secretary of the Treasury shall refund any duty paid with respect to such entry.

(2) Limitation on Refunds- No refund shall be made pursuant to this subsection before October 1, 1996.

(3) Entry- As used in this subsection, the term “entry” includes a withdrawal from warehouse to consumption. (c) Requests- Liquidation or reliquidation may be made under subsection (b) with respect to an entry only if a request therefor is filed with the Customs Service, within 180 days after the date of the enactment of this Act, that contains sufficient information to enable the Customs Service- (1) to locate the entry; or (2) to reconstruct the entry if it cannot be located.”

It is clear from reading the above cited public law that the Protestant had the ability to claim a refund on the duties it paid on entry 101-xxxx206-4, which was entered July 24, 1996. Protestant was in the time frame for a refund under section 1953(b)(1)(B), as the entry was after December 31, 1995 and before October 1, 1996. Therefore, according to the retroactive application for a refund, the Protestant could have applied for a refund within 180 days from the date of the enactment of the Act, as found in the Act of August 20, 1996, 110 Stat. 1755, Pub. L. Title 1, Subtitle J. The last day to apply for a refund would have been February 16, 1997.

Additionally, the liquidation was correct on November 8, 1996, since the Port liquidated the entry in accordance with the entry documents submitted on July 24, 1996. Because paragraph (a) of section 1953 applied only to merchandise entered on or after October 1, 1996, that paragraph could not affect the liquidation of the entry made on July 24, 1996. Paragraph (b) provided the exclusive remedy and set a procedure for its application. It was the failure to follow the provisions of paragraph (b) that caused the error. Issue #3:

The third issue involves whether the Port was correct in denying Protestant’s petition for a refund of duties under 19 U.S.C. 1520(c), because of a mistake of fact and/or inadvertence.

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 relief provided for in 19 U.S.C. §1520(c)(1) is an exception to the finality of section 1514. 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) has frequently been interpreted by the Courts. It has been stated that "[a] clerical error is a mistake made by a clerk or other subordinate, upon whom devolves no duty to exercise judgement, in writing or copying the figures or in exercising his intention" (see PPG Industries, Inc., v. United States, 7 CIT 118, 124 (1984), and cases cited therein). It has been stated that: "[M]istakes of fact occur in instances where either (1) the facts exist, but are unknown, or (2) the facts do not exist as they are believed to [and] [m]istakes of law, on the other hand, occur where the facts are known, but their legal consequences are not known or are believed to be different than they really are" (Executone Information Systems v. United States, 96 F.3d 1383, 1386 (Fed. Cir. 1996), citing Hambro Automotive Corporation v. United States, 66 CCPA 113, 118, C.A.D. 1231, 603 F.2d 850 (1979); see also, Degussa Canada Ltd. v. United States, 87 F.3d 1301 (Fed. Cir. 1996)). Inadvertence has been defined as "an oversight or involuntary accident, or the result of inattention or carelessness, and even as a type of mistake" (Aviall of Texas, Inc. v. United States, 70 F.3d 1248, 1249 (Fed. Cir. 1995), citing Hambro, supra).

The conditions required to be met under 19 U.S.C. §1520(c)(1) are that the clerical error, mistake of fact, or other inadvertence must be adverse to the importer, manifest from the record or established by documentary evidence, and brought to the attention of Customs within one year after the date of liquidation of the entry. 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 GodchauxHenderson 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, supra).

Under 19 U.S.C. §1520(c)(1), the clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law must be "manifest from the record or established by documentary evidence." The alleged error in this case is not manifest from the record (see ITT Corp. v. United States, 812 F. Supp. 213 (CIT 1993), reversed, 24 F.3rd 1384 (Fed. Cir. 1994) at 1387, "... manifest from the record [means] apparent to Customs from a facial examination of the entry and the entry papers alone, and thus requir[ing] no further substantiation"). In ITT, the Court stated that "[m]istakes of fact that are not manifest from [the] record ... must be established by documentary evidence" (id.).

Additionally, Protestant cites Executone, supra, as authority that Customs should reliquidate the entry since “the error and/or mistake in question was manifest from the record or established by documentary evidence submitted with the “520(c)’ petition for administrative review they incorrectly entered due to a mistake of fact.” (Protestant’s attachment to CF 19) In Executone, the company alleged a mistake of fact: namely, Executone believed, at the time of importation, that valid Form A’s had been filed when, in fact, they had not. At all times, Executone was aware that the imported merchandise was entitled to duty-free entry as goods of a CERBA country. It was due to an inadvertence on the part of Executone’s brokers that the forms they thought had been filed with the entry documents, were inadvertently not filed with the entry documents. The court stated that the belief that the Form A’s had been filed when in fact they had not, causing Executone to pay the duty rate of 8.5% ad valorem for its imports is exactly the situation 1520(c) was created to correct.

However, the fact situation in Executone is not persuasive in the present case. Additionally, the present protest does not fall within the fact scenarios found in the other 1520(c) court cases. In this case, at the time of entry Protestant was not entitled to claim the preference. The Generalized System of Preferences had expired on July 10, 1996, as Protestant has noted, at the time of this entry on 7/24/96, there was in effect no Generalized System of Preferences. If there was no law in effect at the time of entry allowing duty free treatment under the Generalized System of Preferences, then it was not possible for Protestant to claim duty free treatment. Since it was not possible to claim duty free treatment under the Generalized System of Preferences, then Protestant had no right to put the SPI “A” on its CF 7501. If there is no right to put the SPI “A” on the CF 7501, then there cannot be a mistake of fact and/or inadvertence that caused the Protestant to fail to include the SPI “A.”

The error occurred when the Protestant failed to act after the statutory preference was re-enacted. The evidence presented relates the time of the entry rather than to the period following re-enactment of the preference where eligibility for the preference became available for prior entries. There is no evidence to show the reason for the failure to act after GSP was reinstated. The failure to claim preference when the entry was filed was the only legally correct option available at that time. The error, as to the liquidation, occurred after the re-enactment of the GSP and not before. The evidence is silent as to Protestant’s actions or omissions after GSP again became available. The Protestant does not explain why it failed to act under the remedy provided by section 1953 of the Act.

HOLDINGS:

1. One port is not bound by the determination of another port when two separate entries are involved, and each was protested at each respective port.

2. The language in the Act of August 20, 1996, 110 Stat. 1755, Pub. L. Title 1, Subtitle J, is clear that for retroactive applications of the GSP, a claim had to be filed within 180 days.

3. The port was correct in denying the Protestant’s claim for a refund under 19 U.S.C. 1520(c) due to a mistake of fact and/or inadvertence. When entry 101-xxxx206-4, was entered on 7/24/96, the GSP had already expired on July 10, 1996, and therefore, Protestant had no right to use the SPI “A” on its CF 7501, since there was no law in effect giving duty free treatment under the GSP. Protestant could not have made a mistake of fact, clerical error, or inadvertence by not using the SPI “A,” since at the time of the entry there was no law in effect allowing it to claim duty free treatment. The error consisted of failing to act under the provisions for retroactive claims and no evidence was presented as to that time period. There exists no evidence that a mistake of fact correctable under 19 U.S.C. 1520(c), caused the erroneous liquidation.

The protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John Durant, Director
Commercial Rulings Division