LIQ-9-02-LIQ-10-LIQ-11
RR:CR:DR 228645 IOR
Port Director
U.S. Customs Service
New York/Newark Area
1210 Corbin St.
Elizabeth, NJ 07201
Attn: Chief, Residual Liquidation
And Protest Branch
Re: Protest Application for Further Review No. 1001-99-103656; GSP retroactive application; liquidation; gold jewelry from Thailand; 19 U.S.C. §1501; 19 U.S.C. §1514; 19 CFR 159.1; 19 CFR 159.9
Dear Madam:
The above-referenced protest was forwarded to this office for further review. Our decision follows:
FACTS:
The protest is of the liquidation of eight entries of jewelry from Thailand. The entries were made from September 1, 1998 through October 5, 1998. The merchandise was entered with the classification of subheading 7113.19.5000, Harmonized Tariff Schedule of the United States (HTSUS). The subheading contained the prefix “A” which denotes the Generalized System of Preferences (GSP).
For the period of July 1, 1998 to October 20, 1998, GSP had lapsed. The 1998 Omnibus Budget Bill of 1998 (P.L. 105-277) renewed GSP and provided for refunds for GSP eligible merchandise that had been entered while the program was lapsed. Subsequently the entries were subject to initial refund liquidations on November 13, 1998, and December 11, 1998 (one of the eight entries was liquidated on December 11, 1998), as part of Customs retroactive refund process used whenever GSP is reinstated after a lapse. After a lapse, upon reinstatement and provision for retroactive treatment, duties collected during the lapse are refunded en masse via automated programming rather than individual review and action, in accordance with the “A” prefix and HTSUS subheading. Customs believed that an error was made with respect to jewelry from Thailand entered under subheading 7113.19.5000, and that it was not eligible for retroactive GSP treatment. The error was communicated to the field by a Headquarters memorandum dated January 29, 1999. Because of a lack of time, Customs was not able to execute on-line reliquidations in the Automated Customs System (ACS).
On February 8, 1999, Customs posted an off-line liquidation bulletin which includes all eight subject entries. The bulletin contains an asterisk in the “remarks” column. The asterisk indicates that the “remarks” for all of the entries listed on the bulletin notice state “RELIQUIDATION – INCREASE.” Customs was aware in reliquidating the entries, that the increase would be in the amount of the prior refund attributable to the merchandise entered under subheading subheading 7113.19.5000, HTSUS. In order to issue bills, to collect the refunded duties, Customs was required to reliquidate the affected entries on-line through ACS. The bills were issued by on-line actions on April 30, 1999. In the protest report it is stated that through an oversight, the field did not red-line the bulletin notice, therefore the entries were reliquidated again on April 30, 1999. The protestant received courtesy notices of an April 30, 1999 liquidation, showing the increased liquidation amount, and bills dated April 30, 1999 for the increased duties. According to the field the delay in billing was caused by Customs creation of a “scripting” program that would automatically bill all of the entries for the correct reliquidated amount.
According to the protestant, on May 24, 1999, a representative of counsel for the protestant reviewed the entry files at issue, maintained at the U.S. Customshouse, at 6 World Trade Center in New York. According to that review, there was no evidence or indication, in the form of a stamp, notation, recalculation, or otherwise, on the documents in the entry jacket, that a reliquidation had taken place. The field agrees that the entries themselves contained no information relating to the increase reliquidations, and states that this lack of information is because the billings were executed via electronic scripting. The documents themselves can no longer be examined as they were destroyed in the September 11, 2001 destruction of the World Trade Center.
The entry, liquidation, reliquidation, and billing dates for the subject entries, are as follows:
Entry No.
Entry Date
Liquidation Date
Manual Reliquidation
Billing Date
362-xxxx818-9
10/05/98
12/11/98
02/08/99
04/30/99
875-xxxx966-3
09/01/98
11/13/98
02/08/99
04/30/99
875-xxxx985-3
09/03/98
11/13/98
02/08/99
04/30/99
875-xxxx029-9
09/08/98
11/13/98
02/08/99
04/30/99
875-xxxx286-5
09/29/98
11/13/98
02/08/99
04/30/99
875-xxxx340-0
10/05/98
11/13/98
02/08/99
04/30/99
875-xxxx346-7
10/05/98
11/13/98
02/08/99
04/30/99
875-xxxx360-8
10/06/98
11/13/98
02/08/99
04/30/99
ACS records show the following, using entry no. 875-xxxx985-3 as an example:
The ENXI screen indicates three liquidations, the last one being April 30, 1999, and a “note” is indicated;
The NOTE screen states:
Re-collection of retroactive GSP. Certain Thailand Merchandise not eligible as of 7/1/98. See HQ Memo FO:OB:TA JAP, dated Jan. 29, 1999.
The “note” was created on April 14, 1999;
the first LQ1I screen indicates that the liquidation date of July 16, 1999 was unset on October 29, 1998, and red lined. According to this screen the total amount of duty paid was $2210.12;
the second LQ1I screen indicates that on November 13, 1998, the entry was liquidated with a refund amount of $2210.12, plus interest. The reason given for the refund is “GSP-Retroactive Renewal”;
the third LQ1I screen indicates that on April 30, 1999, the entry was liquidated and billed in the amount of $1673.52, plus interest. The reason given for the bill is “valuation”.
According to the CF 7501, entry no. 875-xxxx985-3 consisted of 2 line items. The amount of duty paid for the first line item, which consisted of merchandise under subheading 7113.19.5000, HTSUS, was $1673.52. That amount was included in the total refund of $2210.12. The amount of $1673.52 billed on April 30, 1999 reflects the duty refunded for the first line item. The amount refunded for the second line item, under a different HTSUS subheading was not billed on April 30, 1999.
The subject protest and AFR was filed on July 23, 1999. The protestant takes the position that 1) the reliquidations of the protested entries were invalid because Customs failed to provide the importer with a “final computation or ascertainment of the duties or drawback accruing on an entry” within 90 days of the liquidation, 2) if the reliquidations were valid, Customs failed to give or transmit notice of such reliquidation within 90 days of the liquidation; 3) Customs made unlawful exactions on April 30, 1999; and 4) the subject merchandise was retroactively eligible for GSP.
ISSUES:
Whether the subject merchandise qualified for the retroactive application of GSP.
Whether the entries were timely reliquidated.
Whether the protest was timely filed.
LAW AND ANALYSIS:
GSP expired on June 30, 1998. On October 21, 1998, Congress passed legislation providing for a one-year renewal of GSP, retroactive to July 1, 1998. The legislation provided as follows:
…any entry—
(i) of an article to which duty-free treatment under title V of the Trade Act of 1974 would have applied if such entry had been made on July 1, 1998, and such title had been in effect on July 1, 1998, and
(ii) that was made—
(I)after June 30, 1998, and
(II)before the date of enactment of this Act,
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.
Preferential tariff treatment under the GSP for certain merchandise from Thailand, including merchandise in subheading 7113.19.50, HTSUS, was restored by Federal Register notice dated June 30, 1998 (63 Fed. Reg. 35632). The notice stated that the preferential treatment is restored “effective with respect to articles entered or withdrawn from warehouse, on or after the 15th day after the date of publication of this notice.” (Emphasis added).
Therefore, the preferential tariff treatment for the merchandise from Thailand was only effective for merchandise entered or withdrawn from warehouse on or after July 15, 1998. GSP itself was not reinstated until October 21, 1998. Furthermore the GSP reinstatement was only made retroactive for articles which could have received duty-free treatment if entry had been made on July 1, 1998. In accordance with the Federal Register notice, the subject merchandise could not have received duty-free treatment if entry had been made on July 1, 1998.
We do recognize that the June 30, 1998 notice is contrary to the statutory language on retroactivity. However, we cannot allow retroactivity, for the subject merchandise, as we are bound by the language of the statute. Furthermore, there is no indication that the June 30 notice was ever modified in any way, in order for the subject merchandise to be eligible for retroactive GSP treatment.
The reliquidation of an entry is a protestable matter under 19 U.S.C. §1514(a)(5). Under 19 U.S.C. §1514(c)(3), a protest must be filed within 90 days after a notice of liquidation or reliquidation. In this case, the protest was filed on July 23, 1999, more than 90 days after February 8, 1999, but within 90 days of April 30, 1999. We must determine both for purposes of timeliness of the protest, and timeliness of the reliquidation, the date of notice of the reliquidation.
The entries were manually reliquidated on February 8, 1999, which is within 90 days of November 13, 1998 and December 11, 1998. The applicable statute, 19 U.S.C. §1501 allows reliquidation in any respect of an entry, by Customs, within 90 days from the date on which notice of the original liquidation was given. There is no issue regarding notice having been given on November 13, 1998 and December 11, 1998. Section 1501 further provides that “[n]otice of such reliquidation shall be given or transmitted in the manner prescribed with respect to original liquidations under section 1500(e) of this title.”
The liquidation statute, 19 U.S.C. §1500, provides in pertinent part:
The Customs Service shall, under rules and regulations prescribed by the Secretary—
…
(e) give or transmit, pursuant to an electronic data interchange system, notice of such liquidation to the importer, his consignee, or agent in such form and manner as the Secretary shall by regulation prescribe.
The protestant asserts that Customs did not give notice pursuant to an electronic interchange system within 90 days from the date of reliquidation.
It is well settled that the only notice of liquidation that is statutorily mandated is bulletin notice. See Goldhofer Fahrzeugwerk GmbH & Co. v. United States, 13 CIT 54, 706 F. Supp. 892 (1989), aff’d, 885 F.2d 858 (Fed. Cir. 1989); Tropicana Products, Inc. v. United States, 13 CIT 390, 395, 713 F.Supp. 415 (1989). The bulletin notice is the only effective notice of liquidation and the courtesy notice is predictive only. SSR v. Robles, 18 C.I.T. 475, 476, 853 F. Supp. 451 (1994). The Court of International Trade has held that the importer has the burden to check for posted notices of liquidation and to protest in a timely manner. See, Juice Farms, Inc. v. United States, 18 CIT 1037, 1040 (1994) (stating that although Customs erroneously liquidated entries, protestant had no relief to protest after the running of 90 day periods after the posting of the bulletin notices of liquidation); Penrod Drilling Co., v. United States, 13 CIT 1005, 1009, 727 F.Supp. 1463 (1989), reh’g denied, 14 C.I.T. 281, 740 F.Supp. 858 (1990), aff’d. 925 F.2d 406 (Fed. Cir. 1991). In addition, a presumption of regularity attaches to the acts of government officials. See, e.g., International Cargo & Surety Ins. Co., v. United States, 15 CIT, 544, 779 F. Supp. 174, 177 (1991).
The requirements for bulletin notices of liquidation are set forth in Customs Regulations 159.9 (19 C.F.R. §159.9):
(a) Bulletin notice of liquidation. Notice of liquidation of formal entries shall be made on a bulletin notice of liquidation, Customs Form 4333.
(b) Posting of bulletin notice. The bulletin notice of liquidation shall be posted for the information of importers in a conspicuous place in the customhouse at the port of entry (or Customs station, when the entries listed were filed at a Customs station outside the limits of a port of entry), or shall be lodged at some other suitable place in the customhouse in such a manner that it can readily be located and consulted by all interested persons, who shall be directed to that place by a notice maintained in a conspicuous place in the customhouse stating where notices of liquidation of entries are to be found.
(c) Date of liquidation—(1) Generally. The bulletin notice of liquidation shall be dated with the date it is posted or lodged in the customhouse for the information of importers. This posting or lodging shall be deemed the legal evidence of liquidation. For electronic entry summaries, the date of liquidation will be the date of posting of the bulletin notice of liquidation. Customs will endeavor to provide the filer with electronic notification of this date as an informal, courtesy notice of liquidation.
The regulations do not require an electronic notice. The statute on liquidation procedure, 19 U.S.C. §1500, was amended by section 638, title VI - Customs Modernization, Pub. L. No. 103-182, the North American Free Trade Agreement Implementation (NAFTA) Act (107 Stat. 2057), enacted December 8, 1993, to allow Customs to give notice of liquidation pursuant to an electronic data interchange system. House Report 103-361, 103d Cong., 1st Sess., 137 (1993), describes that the amended provision “authorizes Customs to give or electronically transmit notice of liquidation in such form and manner as is prescribed by regulation.” The House Report, at page 137, explains that the amendment would allow Customs to utilize electronic means to transmit notices of liquidation. Similarly, the Senate Report for the NAFTA Act (S. Rep. 103-189, 103d Cong., 1st Sess., 88-89 (1993)), states that the amendment updates the law to acknowledge that information and data “may” be electronically transmitted, and “authorizes” Customs to give or transmit notice of liquidation electronically. The legislative history expresses the same intention with respect to notice of reliquidation, for the amendment of 19 U.S.C. §1501, which was amended by section 639 of the NAFTA. See House Report, at 138; Senate Report at 89. Nothing in the legislative history indicates that notice of the liquidation must be given by electronic data. The statute provides that notice of liquidation will be provided as prescribed by regulation.
The applicable regulations have not been revised since the amendment of the statute. We find that the existing regulation is not inconsistent with the amended statute, as it implements the statute by specifying how notice of liquidation is to be given. There is no requirement that an agency must re-promulgate a pre-existing regulation that is not inconsistent with a subsequent statute, in order for the regulation to remain effective. The relationship between regulations and statutes, and annulment of regulations upon enactment of statutes is stated as follows:
Administrative rules must conform to the laws enacted by the legislature.
....
A regulation, valid when promulgated, becomes invalid upon the enactment of a statute in conflict with the regulation. However, an administrative regulation will not be considered as having been impliedly annulled by a subsequent act of the legislature unless the two are irreconcilable, clearly repugnant, and so inconsistent that they cannot have concurrent operation. Moreover, implied repeal of a regulation by a statute is disfavored, especially where the regulation has been approved by the legislative regulation review committee.
....
If a regulation has been in existence for a substantial period of time and the legislature has not sought to override the regulation, this fact, although not determinative, provides persuasive evidence of the continued validity of the regulation.
2 Am. Jur. 2d Administrative Law §227 (1994) (emphasis added). We do not find that the statute is in conflict with the regulation, irreconcilable with the regulation, clearly repugnant or so inconsistent that the statute and regulation cannot have concurrent operation.
In this case, according to the date of the bulletin notice, notice of the reliquidation was given on February 8, 1999. The fact that the date of reliquidation in ACS is April 30, 1999, does not mean that the bulletin notice was not posted on February 8, 1999. The reliquidation that was posted at the customhouse was the only legal notice of reliquidation. The follow-up date that appeared in ACS did not amount to a subsequent reliquidation. Due to limitations in the computer system, ACS does not reflect the date of the reliquidation that was posted in the bulletin notice. The “liquidation date” in ACS is simply the billing date. See HQ 956588, dated October 28, 1999; HQ 957062, dated April 5, 1995.
The distinction between a liquidation and a billing date, is based on whether a decision was made by the appropriate Customs officer. The distinction was addressed in HQ 228571, dated November 27, 2001 and HQ 228570, dated December 10, 2001. In those decisions, we found that “billings” made by Customs, were actually liquidations because the actions included calculating the duties due, marking the file as liquidated and posting a bulletin notice of the liquidation. In making the distinction, we referred to the decision in LG Electronics U.S.A., Inc. v. United States, 21 C.I.T. 1421, 991 F.Supp. 668 (1997), and the following description of a Customs liquidation as a decision:
The erroneous "no change liquidations" were protestable decisions as defined
by statute. 19 U.S.C. §1514(a) (1988). Customs decisions are
"substantive determinations involving the application of pertinent law and
precedent to a set of facts, such as tariff classification and applicable rate
of duty." United States Shoe Corp. v. United States, 114 F.3d 1564,
1569-70 (Fed. Cir. 1997) (collecting harbor maintenance tax a purely
"ministerial task" not requiring a decision by Customs), cert. granted, 118 S. Ct. 361, 139 L. Ed. 2d 281, 1997 WL 561769 (1997). A passive activity is not a decision. Id.; see also Dart Export Corp. v. United States, 43 C.C.P.A. 64, 69-70, 74 (1956) (accepting duty deposits falls short of decision-making). Where Customs only collects antidumping duties and does not determine the rate or amount of duties, Customs has not made a protestable decision. Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973, 976-77 (Fed. Cir. 1994). By contrast, calculation of antidumping duties by Commerce is a decision. Id. In the instant case, Customs has more than merely received duties. The actions here were more than merely ministerial. Relatively soon after entry, Customs decided for each "no change" entry that the rate of duty imposed at the time of deposit was correct and that the entry should be liquidated at that rate. By ordering the liquidations, Customs went beyond ministerial acts; Customs determined the amount of duty imposed.
Plaintiff fails to persuade the court that Customs' failure to stamp some
files "liquidated" indicates a lack of decision to liquidate. Stamping the files
is not required, although a stamped file is prima facie evidence of
liquidation. Tropicana Prods., Inc. v. United States, 909 F.2d 504, 506
(Fed. Cir. 1990). Stamping "simply provides the importer with a form of
documentary proof that liquidation has taken place." Id.
Therefore, we conclude that notice of reliquidation was given on February 8, 1999. The protestant also asserts that Customs failed to provide it with a “final computation or ascertainment of the duties or drawback accruing on an entry” within 90 days. The regulation relied upon, 19 CFR 159.1 defines a “liquidation” as “the final computation or ascertainment of the duties…accruing on an entry.” At the time of reliquidation, the Customs officers knew that the entries were being reliquidated for the purpose of assessing the duty that had been erroneously refunded for merchandise entered under subheading 7113.19.5000, HTSUS.
As described in LG Electronics, the subject reliquidation decisions were substantive decisions of Customs officers, because they consisted of a determination that duties previously refunded were refunded in error and should be collected. Similarly, as described in LG Electronics, the fact that there was nothing inidicated on or in the entry files, does not mean that a reliquidation did not occur. In contrast, the billing of April 30, 1999 in this case, was the ministerial act of simply billing in accordance with the foregoing reliquidation decision. In this case the reliquidation decision was to collect the duties incorrectly refunded. Similarly, in the other decisions cited above, which distinguished between the liquidation and billing dates, the billing dates were ministerial acts of billing, following liquidation decisions. See HQ 956588, and HQ 957062, supra.
However, we do agree that prior to April 30, 1999, the protestant may not have known the reason for the reliquidation or the amount at issue, as the amount was not on the bulletin notice, and the entry itself did not contain any information. The issue is whether the lack of information regarding the reliquidation tolls the running of the protest period.
It has been held by the United States Customs Court, that the protest period for a liquidation does not begin to run until entry papers containing information regarding the liquidation are made available to the importer. In Lansdowne Distillery v. United States, 39 Cust. Ct. 190, CD 1925 (1957), the Customs Court held that “liquidation was complete on…the date that the misplaced entry papers were found and were available to plaintiff, and that the running of the statute of limitations commenced on that day.” The beginning of the protest period was tolled until the entry information was available to the importer. Similar to the instant protest, the bulletin notice had simply identified the entry and under “remarks” had the word “decrease”. The bulletin notice was posted on May 22, 1946. At the time, it was Customs practice to send the interested parties a notice of the adjustment. This was not done in Lansdowne Distillery. Instead, the entry papers were referred for adjustment, a question was raised by Customs, and the papers were misplaced until March 16, 1950. In 1950, after the papers were found, a formal notice of duties due was sent to the importer and its broker, reflecting “increased and additional duties”. The importer filed a protest within the protest period from the date of the notice of duties due.
The subject protest is distinguishable on the facts from Lansdowne Distillery. In Lansdowne Distillery, the bulletin notice did not notify the importer of an increase in duties. In Lansdowne Distillery , at the time of the bulletin notice Customs had not made its final determination. In the instant case, the protestant was aware, or should have been, from the bulletin notice that there was an increase in duties, yet did not examine the entry file until May 24, 1999, after the 90-day protest period had already expired. Had there been information regarding the reliquidation in the entry file, this protest still would not have been timely, because the files were not examined until after the 90-day protest period had expired. Customs had also made its final determination.
The fact that there was no information in the entry file regarding the increase, did not preclude the protestant from filing a timely protest. The protestant’s failure to take action after the reliquidation precluded the filing of a timely protest. We note that the file was not examined by the protestant until after the billing dates for duties due. In Gruen Industries, Inc. v. United States, 21 C.I.T. 333 (1997), aff’d. 135. F.3d 778 (Fed. Cir. 1998), the Court of International Trade stated that following liquidation, an importer has ninety days to request examination of the relevant entry papers, and to file a protest. In that case the importer had failed to request the entry papers in writing as required by policy in that region, prior to the expiration of 90 days, and did not file a protest until it received a written denial to a written request made more than four years later. The written denial was protested and denied, and the action in the CIT was filed. The Court found that the importer had failed to satisfy the precondition to the Court’s jurisdiction, of filing a timely protest.
The protestant asserts that the protest is timely because it was filed within 90-days after the billing date. The protestant takes the position that the April 30, 1999 bills were protestable exactions. In American Motorists, Ins. Co. v. United States, 8 F. Supp. 2d 874, 876 (Ct. Intl. Trade, 1998), an “exaction” was described as a “wrongful demand for payment under color of official authority, where no payment is due.” An exaction is protestable under 19 U.S.C. §1514(a)(3). However, in this case, the reliquidation was timely, and thus the subsequent billing was not a wrongful demand for payment, where no payment is due. The April 30, 1999 action is not protestable as a liquidation, because it was not a liquidation. There is no requirement that a bulletin notice of a bill be red-lined. The purpose of a red-line is to unset a Customs action. The billing was not required to be unset.
HOLDING:
The subject merchandise did not qualify for the retroactive application of GSP.
The entries were timely reliquidated in accordance with 19 U.S.C. §1501.
The protest was not timely filed with respect to the February 8, 1999 reliquidation.
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 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 make the decision available to Customs personnel, and to the public on the Customs Home
Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant
Director, Commercial
Rulings Division