PRO-2-01/02 RR:CR:DR 228560BJB
Port Director of Customs
U.S. Customs Service
Attn: Edward H. Webb
300 South Ferry Street
Room 1011
San Pedro, CA 90731-7495
RE: Application for Further Review of Protest 2704-98-102675; Titron Media Company; check re-issuance; interest; Denied.
Dear Sir:
We have received the above-referenced protest and related documents and application for further review. We have considered the facts and the issues raised, and our decision follows:
FACTS:
Titron Media, Company (“protestant” or “Titron”) filed the present protest and application for further review on November 20, 1998. Titron has protested Customs calculation of interest with respect to a set of checks issued by Customs. The Port Director, Los Angeles-Long Beach Seaport, referred the protest to Headquarters for further review.
Titron made 242 entries of video cassettes in April and May of 1994. Titron entries were originally assessed with duty at 5.3% ad valorem under 3926.90.9050 HTSUS. Customs liquidated the 242 entries in July, August, and September of 1994. Pursuant to Titron’s Protest No. 2704-94-102483, filed on September 19, 1994, liquidation was suspended, pending a decision from the Court of International Trade in Technicolor Videocassette, Inc., v. The United States, 896 F. Supp. 1220 (CIT 1995). The decision, the results of which required Customs to reliquidate the entries, was affirmed on appeal. CAFC Appeal 95-1548 (1996). On October 16, 1997, the Office of the Clerk of the Court of International Trade issued a letter of “Notice Regarding the Final Determination of Test Case, Technicolor Videocassette Inc. v. United States, Court No. 90-08-00400,” informing the protestant that the test case, “decided by Slip Opinion 95-127,” “ha[d] become final.”
On February 20, 1998, Customs reliquidated the 242 entries at 3.9% ad valorem. On February 23, 1998, Customs issued 242 checks, one check for each entry, to Titron for its overpayment of duty required under the initial liquidation. Titron claims it never received 50 of these 242 checks. Titron has alleged that the checks were “stolen while in the custody of U.S. Customs or the U.S. Postal Service.” An investigation was conducted by the U.S. Secret Service. Titron sent at least two checks to the U.S. Secret Service Agent in Los Angeles, California, on May 12, 1998 and July 16, 1998. Titron Media Company reported that these two checks were endorsed and cashed by an individual unknown to Titron.
During a telephone conversation on October 13, 1999, with a Supervisory Field Agent of the United States Secret Service, located in Los Angeles, California, Customs was informed that the U.S. Secret Service had determined that a number of the checks issued on February 23, 1998, were in fact lost, stolen, or never reached the protestant. In this present case, protestant claims 50 of the checks originally issued were stolen.
On August 24, 1998, Customs issued 50 substitute checks. Titron stated that the checks did not include interest for the period dating from the issuance of the first set of checks through August 24, 1998, and seeks payment of interest for that period.
ISSUE:
Whether Customs is obligated to pay Titron interest on its overpayment of duty, for the time period dating from the issuance of the first set of checks, through the issuance of the second set of checks.
LAW AND ANALYSIS:
On November 20, 1998, Titron filed a protest and application for further review with respect to Customs calculation of interest. The Customs Regulations pertaining to protests, issued to implement 19 U.S.C. §1515, are found in 19 C.F.R. Part 174. Under 19 C.F.R. §174.24, further review shall be accorded a party when the decision against which the protest was filed, among other things, is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts. Under 19 C.F.R. §174.26(b), a protest with an application for further review shall be reviewed (as pertinent to the grounds under which further review was requested in this matter) by the Commissioner of Customs or his designee if the protest and application for further review raise an issue involving questions which have not been the subject of a Customs ruling or court decision.
As provided for in 19 U.S.C. §1514, (with certain exceptions not applicable in this matter) certain listed decisions (including the legality of all orders and findings entering into the same) of the Customs Service are final and conclusive on all persons unless a protest is filed in accordance with section 1514, or unless a civil action contesting the denial of a protest, in whole or in part, is commenced in the United States Court of International Trade in accordance with chapter 169 of Title 28, United States Code.
Thus, a protest must be based on, or in response to, a decision made by the Customs Service. Such decisions are:
(1) the appraised value of merchandise;
(2) the classification and rate and amount of duties chargeable;
(3) all charges or exactions of whatever character within the jurisdiction of the Secretary of the Treasury;
(4) the exclusion of merchandise from entry or delivery or a demand for redelivery to customs custody under any provision of the customs laws, except a determination appealable under [19 U.S.C. §1337];
(5) the liquidation or reliquidation of an entry, or reconciliation as to the issues contained therein, or any modification thereof;
(6) the refusal to pay a claim for drawback; or
(7) the refusal to reliquidate an entry under [19 U.S.C. §1520(c)]. (Emphasis added)
19 U.S.C. §1514.
The procedures for filing a protest of one of the above decisions are provided in 19 U.S.C. §1514(c). Section 1514(c)(1) provides that only one protest may be filed for each entry of merchandise (with certain exceptions inapplicable in this matter). Section 1514(c)(3) provides that a protest of a decision, order, or finding described in section 1514(a) shall be filed with Customs within 90 days after but not before the notice of liquidation or reliquidation or the date of the decision as to which protest is made (if the requirement for filing within 90 days before the notice of liquidation or reliquidation is inapplicable).
The claimant’s protest is not within any of the foregoing decisions. There is no issue here relevant to 19 U.S.C.§1514(a)(1), relating to the appraised value of the subject merchandise. Section 1514(a)(2), relating to the “classification and rate and amount of duties chargeable,” is also not at issue here. The Court of International Trade in Technicolor Videocassette, Inc., v. United States, 896 F. Supp. 1220 (Ct. Int’l Trade 1995) affirmed, CAFC Appeal 95-1548 (1996), determined the classification and the rate and amount of duties chargeable. Customs followed the court’s instructions and reliquidated the protestant’s entries at a 3.9% rate of duty. Neither Customs nor Protestant dispute the classification, or the rate and the amount of duties chargeable. Rather, protestant requests that interest covering the period of time between the issuance of the first set of checks and the issuance of the substitute checks be paid.
Protestant’s claims also fail to come within section 1514(a)(3), which relates to “all charges or exactions of whatever character within the jurisdiction of the Secretary of the Treasury. In Swisher Intern., Inc. v. United States, 27 F. Supp. 2d. 234, 237 (CIT 1998), where the plaintiff attempted to “shoe-horn” recovery of Harbor Maintenance Taxes into Customs’ protest procedures, the plaintiff argued that “Customs’ ‘decision’ to deny its refund request was a decision regarding the ‘amount of duties chargeable’ or a ‘charge or exaction.’” In that case, the court cited Alberta Gas Chemical, Inc. v. Blumenthal, 82 Cust. Ct. 77, 82, 467 F. Supp. 1245, 1249-50 (1979), as the basis for the “traditional definition of charge or exactions.” The court concurred that charges and exactions were, “specific sums of money (other than ordinary customs duties) on imported merchandise.” In the present case, the protestant is not seeking refund of duty but rather interest it claims should have been paid due to a delay in the receipt of the refund. Further, the court in Swisher held, “‘refusals to refund money are not 19 U.S.C. §1514 ‘charges or exactions,’” (citing Carlingswitch, Inc., v. United States, 68 C.C.P.A. 49, 55, 651 F.2d. 768, 773 (1981)). Thus, the Court held there was nothing which could be protested as a prerequisite to 28 U.S.C. §1581(a) in that case as related to refunds, a fortiori, as related to interest upon a refund.
Section 1514(a)(4) pertaining to the exclusion of merchandise from entry or delivery or a demand for redelivery to Customs custody under any provision of the customs laws except a determination appealable under [19 U.S.C. § 1337], is clearly not germaine, while the next provision, 1514(a)(5), dealing with a “liquidation or reliquidation of an entry, or reconciliation as to the issues contained therein, or any modification thereof,” also fails to encompass protestant’s issue.
Protestant has argued that the issuance of the substitute checks pursuant to 31 U.S.C. 3331 constitutes a reliquidation, in which event, if true, a protest would be valid pursuant to 19 U.S.C. 1514(a)(5). Section 1514(a)(5) provides that matters subject to protest include “the liquidation or reliquidation of an entry, or reconciliation as to the issues contained therein, or any modification thereof . . . .” This does not conform to the definition of the term liquidation. The definition of liquidation was affirmed in Swisher International, Inc., v. U.S., 27 F. Supp. 2d. 234 (CIT 1998). “‘[L]iquidation means the final computation or ascertainment of the duties or drawback accruing on an entry.’” The Court found that it “is a liquidation which settles ‘the amount of duties owing.’” Id., 237. Based on the facts presented by Titron, there is no dispute between Titron and Customs over the “amount of duties owing.” The only identifiable reliquidation occurred on February 20, 1998, when Customs acted pursuant to the court’s order. As discussed elsewhere in this decision, the action taken pursuant to 31 U.S.C. 3331, bears none of the indicia of a reliquidation under Customs law. That action did not result in fixing the final appraisement of the merchandise, the final classification of the merchandise, or the rate of duty applicable to the merchandise. Thus, protestant has no valid claim pursuant to section 1514(a)(5) and no protestable issue under this provision.
Finally, protestant failed to raised an issue related to a refusal to pay a drawback claim or of a refusal to reliquidate an entry under section 1520(c) relating to a mistake of fact, inadvertence, or clerical error, as provided for under §§1514(a)(6) and 1514(a)(7). Fundamentally, there is no basis for the protestant to claim relief pursuant to 19 U.S.C. §1514.
Here, Titron has on the one hand, failed to raise a protestable issue pursuant to section 1514, and on the other, even failed to do this in a timely manner. Although the protestant had 90 days to file its protest and application for further review from the date of liquidation or reliquidation, its protest was untimely, where the date of Customs only reliquidation of Titron’s entries was on February 20, 1998. Titron’s filing of its protest and application for further review were filed on November 20, 1998. The protest was untimely as to prevent the November 20, 1998 reliquidation from becoming final and conclusive under 19 U.S.C. 1514(c)(3)(A). Thus, not only did Titron fail to raise a protestable issue under section 1514, as noted above, but, because the reissuance of the checks did not constitute a reliquidation, Titron’s filing was well beyond the 90 days allowable from the date of reliquidation and untimely filed. Filing a CF19 (protest and application for further review) within 90 days of the re-issuance of checks, is a nullity on the basis stated above, that the reissuance of the checks is not a reliquidation.
Only if the reissuance of the checks qualified as a reliquidation, would Titron’s protest have both fallen within a protestable claim and been timely, pursuant to 19 U.S.C. 1514(c)(3)(A) or (B). Where Titron filed its protest and application for further review, 79 days after Customs issued the 50 substitute checks on August 24, 1998, and sought recalculation of interest on November 20, 1998, it would have been considered timely filed. However, under 19 U.S.C. 1514(c)(3)(B), Titron’s protest and application for further review fail to qualify because the reissuance of checks (as noted above) fails to constitute one of the seven listed protestable events in 19 U.S.C. 1514(a). Further, because the reissuance of the checks is not a charge, exaction, or an exclusion which are the only protestable events not encompassed by a liquidation or reliquidation, filing a CF19 as Titron did, against that event, is nullity under 19 U.S.C. 1514(c)(3)(B).
We note that the date of reliquidation is not the only critical moment addressed in
19 U.S.C. 1514(c)(3): a protest may be filed within 90 days “of the date of the decision as to which protest is made.” Apparently protestant alleges that the protestable decision is the failure to include interest in the 50 substitute checks, and the date of that decision was August 24, 1998. We say “apparently” because the date of this protest is November 20, 1998, a date 79 days from August 24, 1998. Assuming, in arguendo, that the refusal to include interest in the refund is the pivotal decision, 19 U.S.C. 1505(b) provides in part that “[d]uties, fees, and interest determined to be due upon . . . reliquidation are due 30 days after issuance of this bill for such payment. Refunds . . . shall be paid within 30 days of . . . reliquidation.” Thus, the relevant dates are February 20, 1998 (reliquidation) and November 20, 1998 (protest).
However, the relevant dates are not the dates the substitute checks were issued (August 24, 1998), and the claim made for interest (ostensibly when the “protest” was filed on November 20, 1998). In other words, 19 U.S.C. §1514(c)(3)(A) controls in the present situation. The determinative dates are the date of liquidation or reliquidation, and the date that marks the end of the 90 day period immediately following the date of reliquidation. The date of issuance of the substitute checks does not constitute the “circumstances” envisioned under section 1514(c)(3)(B) where the date of notice of liquidation or reliquidation, as established in section 1514(c)(3)(A), would be inapplicable. Given the definition of “liquidation” affirmed in Swisher, supra., the relevant dates are the date of the reliquidation, February 20, 1998, and the date the protest was filed, November 20, 1998. Issuance of substitute checks does not constitute a liquidation or a reliquidation. On the basis of these dates, protestant’s protest is untimely. (19 U.S.C. §1514(c)(3)).
With respect to Protestant’s arguments that Titron be paid interest in reliance upon 19 U.S.C. §1505(b), we find that even had Titron’s protest come within the confines of 19 U.S.C. §1514, and had been timely filed, the Court of International Trade determined otherwise, when it held that the issuance of replacement checks does not involve the interpretation of any area of international trade law and therefore is not within the CIT’s jurisdiction.
In Kuang Yi, Inc., v. United States, 967 F. Supp. 1308 (CIT 1997), Aff’d without opinion, 155 F. 3d 571 (Fed. Cir. 1998), a case with largely identical facts, the Court of International Trade held that 31 U.S.C. §3331(a)(1)(C) governs the issuance of substitute checks. Specifically, 31 U.S.C. § 3331, addresses the need for the issuance of substitute checks to replace original checks. 31 U.S.C. §3331(a)(1)(C).
Section 3331 provides in part as follows:
“(b) When the Secretary of the Treasury is satisfied that an original check is lost, stolen, destroyed in any part, or is so defaced that the value to the owner or holder is impaired, the Secretary may issue a substitute check to the owner or holder of the original check. Except as provided in subsection (c) or (f) of this section, the substitute check is payable from the amount available to pay the original check.” (Emphasis added.)
“(c) When the Secretary is satisfied that an original check drawn on a depositary in a foreign country or a territory or possession of the United States is lost, stolen, destroyed in part, or is so defaced that its value to the owner or holder is impaired, the drawer of the original check (or another official designated by the Secretary with the approval of the head of the agency on whose behalf the original check was issued) may issue to the owner or holder of the check a substitute check.”
“(f) Under conditions the Secretary may prescribe, the Secretary may delegate duties and powers of the Secretary under this section to the head of an agency. Consistent with a delegation from the Secretary under this subsection, the head of an agency may delegate those duties and powers to an officer or employee of the agency.”
31 U.S.C. §3331.
Customs complied with 31 U.S.C. §3331 when it issued the substitute checks. Customs issued the substitute checks payable to Titron “from the amount available to pay for the original check[s].” 31 U.S.C. § 3331(b). Moreover, Customs fully complied with all of the provisions of § 3331, and no additional interest on any funds is owed.
In Kuang Yi, Inc., v. United States, supra., 1308,1309, merchandise was imported into the United States at a duty rate of 17% ad valorem but was later liquidated under another HTSUS subheading, at a rate of 9% ad valorem. Customs mailed duty refund checks to plaintiff’s address contained in Customs’ importer records file. Id., at 1309. When the checks failed to arrive, Kuang Yi requested that Customs issue substitute checks. In due course, substitute checks were issued. The court held, “[t]he present action is not one arising out of federal statutes governing import transactions. Once Customs liquidated the entries at the appropriate rate, issued duty refund checks to the address of record and denied plaintiff’s protest, Customs performed its duties under the statute governing importations.” Id., at 1310. The court further stated that, section 3331, “addresses the need for substitute checks to replace original checks ‘drawn by an authorized disbursing official or agent of the United States Government.’” 31 U.S.C. §3331(a)(1)(C). “Clearly,” the court held, “the statute is not limited to checks issued by Customs for duty refunds but, rather, encompasses funds disbursed by various agencies of the United States.” Id.
“In other words,” the Court held, “plaintiff’s dispute involves the Secretary of Treasury’s procedure for issuing replacement checks rather than Customs’ actions regarding the importation of merchandise.” Id. In Kuang Yi, the court found that the issuance of the replacement checks did not “in any way change the original duty rate assessed by Customs,” but rather the “plaintiff’s claim of entitlement to interest arises out of the delay of Treasury’s issuance of substitute checks and, therefore, the merits of [the] case do not involve any area of international trade law.” Id. The Court concluded it lacked jurisdiction over the action and dismissed the case in Customs favor.
As in Kuang Yi, the issuance of replacement checks in the present case did not alter the duty rate applied by Customs. The sums appearing on the substitute checks reflected those appearing on the original set of checks. As the court recognized in Kuang Yi, a prolonged process of tracing the original refund checks and issuing substitute checks occurred in the Protestant’s case as well. Thus, the court in Kuang Yi, considered the very type of delay Titron experienced here. In Kuang Yi the court found that a question of additional interest was not a
question of interpreting any area of international trade law but was only a question involving the delays inherent to Treasury’s issuance of replacement checks.
HOLDING:
Protestant’s demand for recalculation of interest is not a protestable issue, inasmuch as it involves the Secretary of Treasury’s procedure for issuing replacement checks, and not Customs actions regarding the importation of merchandise, or pursuant to protestable issues provided for pursuant to 19 U.S.C. §1514. The protest is therefore DENIED.
Furthermore, since Customs reliquidated the protestant’s entries and issued checks for duty refund payments on February 20, 1998, and the protest was filed November 20, 1998, the protest was untimely as it was not filed within 90 days of reliquidation as required by 19 U.S.C. 1514(c)(3).
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, 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