LIQ-9-01 RR:CR:DR 228764 LLB
Category: Liquidation
Port Director of Customs
One East Bay Street
Savannah, Georgia 31401
RE: Internal Advice; Protest No. 1703-00-100026; Coastal Paper Co., Inc. (Importer of Record); The Hipage Company, Inc. (Customs Broker); 19 U.S.C. § 1520 and 1514; Computime, Inc. v. United States, 622 F. Supp. 1083 (Ct. Int’l Trade 1985); Concentric Pumps, Ltd. v. United States, 643 F. Supp. 623 (Ct. Int’l Trade1986); Executone Information Systems v. United States, 96 F. 3d 1383, 1386 (Fed. Cir. 1996); Boast, Inc. v. United States, 17 C.I.T. 114, 117 (1993); Fibrous Glass Products, Inc. v. United States, 63 Cust. Ct. 62 (1969); Fabrene, Inc. v. United States, 17 C.I.T. 911, 914-15 (1993). C.J. Tower and Sons of Buffalo, Inc. v. United States, 499 F.2d 1277 (1974); Taban Co. v. United States, 960 F. Supp. 326, 334-35 (Ct. Int’l Trade 1997); Zaki Corp. v. United States, 960 F. Supp. 350, 359-360 (Ct. Int’l Trade 1997); HQ 223524 (February 13, 1992); ITT v. United States, 24 F.3d 1384, 1387 (Fed. Cir. 1994); HQ 226151(October 6, 1996); HQ 220042 (April 10, 1989); PPG Industries, Inc. v. United States, 7 C.I.T. 118, 121, 126 (1984)
Dear Sir or Madam:
The above-referenced protest has been forwarded to our office for further review. As explained below, because the requirements for further review have not been met, we are treating the application as a request for internal advice per 19 C.F.R. § 177.11. We have considered the points raised by the protestant and your office. Our decision follows.
FACTS:
The subject merchandise of this protest was entered by Coastal Paper, Inc. The protestant, a customs broker, filed the entry, classifying the merchandise under 4811.39.2000, HTSUS (1998), which provides for the payment of duty at the rate of 1.5% (general), of “Paper, paperboard, cellulose wadding and webs of cellulose fibers, coated, impregnated, covered, surface-colored, surface-decorated or printed, in rolls or sheets, other than goods of the kind described in heading 4803, 4809, 4810; Other: Printing paper.” The three entries were filed on May 14, July 14, and October 14, 1998, and were liquidated on March 26, May 28, and August 27, 1999, respectively. No protests were filed thereto.
On December 10, 1999, the protestant requested reliquidation of the subject entries pursuant to 19 U.S.C. § 1520(c)(1), alleging that the importer brought to their attention that the principal use of the subject merchandise is to laminate furniture. The protestant argued that insofar as the principal use of the subject merchandise is to laminate furniture, not paper for printing, the proper classification is 4811.39.4040, HTSUS (1998), which allows the subject merchandise to be entered duty-free. In support of its argument, the protestant provided a letter dated June 5, 1999, from the importer, to an import specialist, which alleges, inter alia, that its competitor, who imports the same merchandise, receives the benefit of the duty-free classification and accordingly, gives the competitor an unfair advantage over it. The importer’s letter also requested that Customs either levy the unpaid duties on the subject merchandise imported by its competitor or refund the duties it paid. The protestant also argued in its request for reliquidation that the subject merchandise should be classified pursuant to its controlling use pursuant to what appears to be page 6 of a document the protestant alleges is a ruling provided to the importer by U.S. Customs port in South Carolina. Our research revealed that the foregoing page is from HQ 958368 (January 18, 1996), which was issued after further review of protest number 1303-94-100302, filed by Chiyoda America, Inc.
Customs denied the protestant’s request for reliquidation and the protestant filed a protest thereto arguing that the protestant and the importer were not aware of the “principal/controlling use” provisions in the HTSUS and that the protestant was not aware of the principal use of the paper.
ISSUE
Whether Customs properly denied the protestant's request to reliquidate the subject entries under 19 U.S.C. §1520(c)(1)
LAW and ANALYSIS
Initially we note that the protestant’s December 10, 1999, § 1520(c)(1) petition was timely, inasmuch as it was filed less than one year after the subject entries were liquidated. (March, May, and August 1999). The protest was timely filed, (i.e. within 90 days from the January 3, 2000, denial of reliquidation) under 19 U.S.C. § 1514(c)(3) and the matter is protestable under § 1514(a)(7).
We also note that the protestant’s application for further review (AFR) does not meet the requirements set forth in 19 C.F.R. § 174.24, which provides:
Further review of a protest which would otherwise by denied by the port director shall be accorded a party filing an application for further review which meets the requirements of § 174.25 when the decision against which the protest was filed:
(a) Is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise;
(b) 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;
(c) Involves matters previously ruled upon by the Commissioner of Customs or his designee or by the Customs courts but facts are alleged or legal arguments presented which were not considered at the time of the original ruling; or
(d) is alleged to involve questions which the Headquarters Office, United States Customs Service, refused to consider in the form of a request for internal advice pursuant to § 177.11(b)(5) of this chapter.
Therefore, further review will be accorded to the party filing an application for further review which meets the requirements of § 174.25 and at least one of the criterion in § 174.24. In the subject protest, although the port approved the AFR, it did not offer any explanation as to why the AFR was approved nor does the protestant allege any of the conditions required in § 174.24 of the decision protested. Consequently, the criteria for further review have not been met and therefore, we are treating protestant’s application as a request for internal advice.
Under 19 U.S.C. §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 and adverse to the importer, when certain conditions are met. 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 Godchaux-Henderson Sugar Co., Inc., v. United States, 496 F. Supp. 1326 (1980); see also, Computime, Inc. v. United States, 622 F. Supp. 1083 ( Ct. Int’l Trade 1985); Concentric Pumps, Ltd. v. United States, 643 F. Supp. 623 (Ct. Int’l Trade1986)).
The protestant argues that a mistake of fact occurred when entering the merchandise. [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)(emphasis in original) 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). Specifically, the protestant argues that the protestant nor the importer were aware of U.S. Rule of Interpretation 1(a), HTSUS, which allows merchandise to be classified according to its controlling use if the principal use of the product does not conform to the heading under which the principal use falls. Thus, since the paper in question is allegedly used for laminating furniture, not for printing upon, protestant argues that classification under 4811.39.2000, HTSUS, would be inappropriate.
In support of its argument, the protestant attached page 6 of HQ 958368 (January 18, 1996). HQ 958368, was issued after further review of protest number 1303-94-100302, filed by Chiyoda America, Inc. The issue raised in that case was whether the sample submitted was properly classified in heading 4802 or 4804, neither heading of which is at issue in this case. The protestant highlighted the legal conclusion of the ruling which was made pursuant to U.S. Rule of Interpretation 1(a). The foregoing is not evidence of a mistake of fact, rather it is an attempt to present a legal argument. “Courts have consistently held that § 1520(c)(1) may not be used to rectify incorrect interpretations of law or mistake in the application of law.” Computime, 622 F.Supp. at 1085; Fibrous Glass Products, Inc. v. United States, 63 Cust. Ct. 62 (1969); see, Fabrene, Inc. v. United States, 17 C.I.T. 911, 914-15 (1993). In Boast, Inc. v. United States, 17 C.I.T. 114, 117 (1993), the CIT held particularly that a mistake in application of the Explanatory Notes cannot be corrected by § 1520(c)(1). Here, the protestant is arguing that it failed to apply U.S. Rule of Interpretation, which is similar in purpose as the Explanatory Notes. Such a mistake of law is only correctable when a valid protest is filed under 19 U.S.C. § 1514. Concentric Pumps, Ltd. v. United States, 643 F.Supp. 623, 626 (Ct. Int’l Trade 1986). A protest was not filed in this case.
However, if the mistake concerns the nature of the merchandise and was the underlying cause for its incorrect classification, relief is available pursuant to § 1520(c)(1). C.J. Tower and Sons of Buffalo, Inc. v. United States, 499 F.2d 1277 (1974); Taban Co. v. United States, 960 F. Supp. 326, 334-35 (Ct. Int’l Trade 1997); Zaki Corp. v. United States, 960 F. Supp. 350, 359-360 (Ct. Int’l Trade 1997); see HQ 223524 (February 13, 1992)(finding a mistake of fact where merchandise was classified as wool fabric based on an invoice identifying the merchandise as “chief value wool” when, in fact, it was “chief value silk”). The protestant conclusionally argues that it did not know the principal use of the paper until the protestant was informed by the importer that the paper was used to laminate furniture. The foregoing mistake is not manifest from the record; therefore, must be established by documentary evidence. ITT v. United States, 24 F.3d 1384, 1387 (Fed. Cir. 1994). In support of the protestant’s argument, the protestant provided a letter dated June 15, 1999, from the importer to an import specialist at the Port of Customs in South Carolina. We fail to see how the foregoing letter demonstrates that the protestant did not know the nature of the merchandise. The letter does demonstrate, particularly, in the first paragraph, that the importer was fully aware, as early as June 1993, of the nature of the merchandise.
The protestant does not allege how or when the importer supplied this information nor does the protestant allege what it believed the merchandise to be or the basis for that belief. HQ 226151(October 6, 1996). Nevertheless, even if the importer did not communicate the foregoing to the protestant (broker), “[t]he broker has an independent obligation to determine the correct tariff classification and duty rate for a client.” HQ 220042 (April 10, 1989); see PPG Industries, Inc. v. United States, 7 C.I.T. 118, 121, 126 (1984)(finding that although the importer advised the broker as to how the merchandise should be entered, there is no presumption that the broker, experienced in Customs matters, would evaluate the evidence in the same matter as the importer). Pursuant to 19 U.S.C. § 1641(a)(4), a customs broker “shall exercise responsible supervision and control over the customs business that it conducts.” Such “customs business” includes, inter alia, the “admissibility of merchandise [and] its classification.” 19 U.S.C. § 1641(a)(2). No evidence has been provided that the protestant attempted to get the merchandise information from the importer prior to filing the entries.
Inasmuch as no evidence of the broker’s knowledge of the nature of the merchandise has been presented, there is no basis on which to find that the broker made a mistake of fact regarding the classification of the merchandise. Therefore, relief may not be granted under 19 U.S.C. § 1520(c)(1). See ITT, 24 F.3d at 1388(holding that a petitioner’s failure to timely submit documentary evidence supporting a § 1520(c)(1) petition “risks an adverse decision by Customs in the interim.”); HQ 226151(October 2, 1996).
HOLDING
Relief should not be granted inasmuch as protestant has not established a mistake of fact within the meaning of 19 U.S.C. § 1520(c)(1).
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