Customs Ruling HQ 228838 - Review of Protest and Application for Further Review, Protest No. 2704-00-100062; Canon U.S.A., Inc.; antidumping; portable electric typewriters from Japan; Smith Corona v. United States, 915 F.2d 683 (Fed. Cir. 1990), reh’g denied, 1990 U.S. App. LEXIS 22511(Fed.Cir. Dec. 6, 1990); 19 U.S.C. §§ 1514(a), 1617, 1501, 1504(d); Xerox Corporation v. United States, 289 F.3d 792 (Fed. Cir. 2002); Fujitsu General America, Inc. et. al v. United States, 110 F. Supp. 2d 1061, 1069 (Ct. Int’l Trade 2000), aff’d, 283 F.3d 1364 (Fed. Cir. 2002); HQ 228678 (February 27, 2002); Nunn-Bush v. United States, 784 F.Supp. 892 (Ct. Int’l Trade 1992); International Trading Co v. United States, 281 F.3d 1268 (Fed. Cir. 2002); Travenol Laboratories v. United States, 118 F.3d 739 (Fed. Cir. 1997); United States v. Jick (USA) Industries, 27 F. Supp.2d 199 (Ct. Int’l Trade 1998)

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HQ 228838
Sep 27, 2002

Type : Liquidation • HTSUS :
Related: 228678; 228570

LIQ-11; LIQ-15 RR:CR:DR
228838 LLB

Category: Liquidation

Port Director of Customs
301 E. Ocean Blvd., 11th Floor
Long Beach, CA 90802

RE: Review of Protest and Application for Further Review, Protest No. 2704-00-100062; Canon U.S.A., Inc.; antidumping; portable electric typewriters from Japan; Smith Corona v. United States, 915 F.2d 683 (Fed. Cir. 1990), reh’g denied, 1990 U.S. App. LEXIS 22511(Fed.Cir. Dec. 6, 1990); 19 U.S.C. §§ 1514(a), 1617, 1501, 1504(d); Xerox Corporation v. United States, 289 F.3d 792 (Fed. Cir. 2002); Fujitsu General America, Inc. et. al v. United States, 110 F. Supp. 2d 1061, 1069 (Ct. Int’l Trade 2000), aff’d, 283 F.3d 1364 (Fed. Cir. 2002); HQ 228678 (February 27, 2002); Nunn-Bush v. United States, 784 F.Supp. 892 (Ct. Int’l Trade 1992); International Trading Co v. United States, 281 F.3d 1268 (Fed. Cir. 2002); Travenol Laboratories v. United States, 118 F.3d 739 (Fed. Cir. 1997); United States v. Jick (USA) Industries, 27 F. Supp.2d 199 (Ct. Int’l Trade 1998)

Dear Sir or Madam:

The above-referenced protest was forwarded to this office for further review. We have considered the arguments raised by the protestant, Canon U.S.A., Inc., as well as your office. Our decision follows.

FACTS

The subject protest covers 23 entries of typewriters made between May 20, 1985 and April 24, 1986. Some of the typewriters were entered under subheading 676.0510, of the Tariff Schedules of the United States (TSUS), which in 1985 and 1986, provided for “Typewriters not incorporating a calculating mechanism: Non-automatic with hand-operated keyboard, Portable: Electric” free of duty. The remainder of the typewriters were entered under subheading 676.0540, TSUS, which in 1985 and 1986, provided for “Typewriters not incorporating a calculating mechanism: Non-automatic with hand-operated keyboard, Other: Electric,” also free of duty. The CF 7501s described the typewriters as “TYPEWRITER N AUTO N CALC ELECT”. Out of the eight typewriter models that are the subject of this protest, the protestant provided sales literature for three of the models. In its protest, the protestant refers to its typewriters as “automatic portable electric typewriters”.

According to the record before us, the typewriters were manufactured by Canon, Inc. of Japan (Canon). At the time the subject entries were filed, portable electric typewriters (PETS) were the subject of an antidumping duty order issued by the Department of Commerce (Commerce). Portable Electric Typewriters from Japan, 45 Fed. Reg. 30618-19 (May 9, 1980); C.I.E. N-57/79, Suppl.#1 (June 3, 1980). The entries were also subject to liquidation instructions issued to Customs from Commerce that Customs require cash deposits of 3.8% of the entered value of PETS imported from Japan. Nevertheless, the protestant filed the entries without reference to antidumping duties and without payment of cash deposits. Subsequently, Customs issued CF 28s requiring the protestant to post cash deposits on the entries.

In 1986, liquidation of the entries was suspended as Commerce initiated review of PETS from Japan, pertinently, Canon’s imports between May 1985 through April 1986. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 51 Fed. Reg. 22843 (June 23, 1986). see C.I.E. N-57/79 dated February 1986.

In a separate administrative review, Commerce determined that the scope of the antidumping order excluded portable automatic (text memory) typewriters (PATS) and typewriters with calculating mechanisms. Portable Electric Typewriters from Japan; Final Results of Antidumping Review, 52 Fed. Reg. 1504 (January 14, 1987). A domestic company sought judicial review of Commerce’s scope determination in the Court of International Trade (CIT) who then remanded the case with instructions to Commerce to reconsider whether PETS incorporating a calculator or text memory were within the scope of the antidumping order. Smith Corona v. United States, 678 F.Supp. 285, 296 (Ct. Int’l Trade 1987)(Smith Corona I). Commerce submitted its revised scope determination to the CIT in which it determined that PETS with calculating mechanisms were within the scope of the order; however, PATS (text memory) were not. Smith Corona v. United States, 698 F.Supp. 240, 243-45 (Ct. Int’l Trade 1988)(Smith Corona II). The CIT upheld Commerce’s determination regarding the PETS with calculating mechanisms, but reversed the Commerce’s determination regarding the PATS and directed the Commerce to issue a redetermination that the PATS were within the scope of the order. Id. at 254.

A month after the CIT’s decision in Smith Corona II, Commerce published its final results of the administrative review for April 1, 1982 through April 30, 1986. Portable Electric Typewriters From Japan; Final Results of Antidumping Duty Administrative Review, 53 Fed. Reg. 40926 (October 19, 1988). Commerce prefaced its determination by stating that the products subject to the review were non-automatic PETS that do not incorporate a calculating mechanism. Id. at 40927. Further, Commerce stated that once the decision in Smith Corona II was affirmed, it would separately review unliquidated entries of PATS and PETS incorporating calculating mechanisms. Id. The subject merchandise exported by the protestant from May 1, 1985 to May 30, 1986 was found to have a weighted average margin of 5.51%. Id. at 40940. Commerce stated that it would determine, and Customs would assess, antidumping duties on all appropriate entries, and Commerce would issue appraisement instructions directly to Customs. Id.

On November 23, 1988, pursuant to the court’s interlocutory order issued in Smith Corona II, Commerce issued a redetermination regarding PATS indicating that they were within the scope of the May 9, 1990, antidumping order. Smith Corona v. United States, 706 F.Supp. 908, 910 (Ct. Int’l Trade 1989)(Smith Corona III). On February 3, 1989, the CIT affirmed Commerce’s redetermination thereto, as well as Commerce’s March 18, 1988, revised scope determination that PETS with calculating mechanisms were within the scope of the May 9, 1990, antidumping order. On the same day, the CIT issued a preliminary injunction enjoining the liquidation of all entries of PATS and PETS with calculating devices entered between May 1, 1982 and April 30, 1986. Commerce issued instructions to Customs instructing the same. On April 5, 1990, Commerce published notice of the CIT’s decision in Smith Corona III and in accordance thereto, suspended liquidation of all unliquidated entries of PETS and PATS, entered or withdrawn from warehouse, for consumption on or after February 3, 1989.

The protestant appealed the CIT’s decision regarding the PATS, but did not challenge the CIT’s decision regarding the PETS with calculating mechanisms. Smith Corona v. United States, 915 F.2d 683, 685 n.2 (Fed. Cir. 1990), reh’g denied, 1990 U.S. App. LEXIS 22511(Fed.Cir. Dec. 6, 1990). The Federal Circuit affirmed the CIT’s decision and notice of this decision was published a month thereafter. Portable Electric Typewriters From Japan; Court of Appeal for the Federal Circuit Decision Concerning the Scope of the Antidumping Order, 55 Fed. Reg. 42423 (October 19, 1990). According to the Shepard’s citation service, a writ of certiorari was not filed with the United States Supreme Court.

On December 21, 1990, Customs received instructions from Commerce to continue to suspend liquidation of PETS and PATS. On August 17, 1999, Customs received liquidation instructions from Commerce indicating that the suspension for period May 1, 1995 through April 30, 1986 was lifted and to assess an antidumping liability of 5.51% of the entered value. The entries were liquidated according to the foregoing instructions between October 15, and December 27, 1999.

On January 13, 2000, the protestant filed its protest and application for further review arguing 1) Customs should not charge interest on the PET entries insofar as it took seven years to liquidate the entries; 2) Customs should exercise its discretion to compromise the protestant’s claims under 19 U.S.C. § 1617 reducing the interest charges to an amount that would have accrued had the entries been liquidated timely; 3) Customs should reclassify some of the merchandise from PETS to PATS; 4) Customs should reclassify entries of AP100 typewriters because they outside of the scope of the antidumping order; and alternatively, 5) the entries deemed liquidated. We note that the protest is timely insofar as it was filed within 90 days of the October 15, and December 27, 1999, liquidation dates. Although your office only seeks further review on the third issue, we will address each of the issues raised by the protestant.

ISSUES

1. Whether the issues raised by the protestant are protestable under § 1514

2. Whether the entries liquidated by operation of law pursuant to 19 U.S.C. § 1504(d)

3. Whether reclassification of the merchandise in the remaining entries from PETS to PATS would a) affect the protestant’s liability under the antidumping order

b) result in a refund of Customs duties

Issue 1

Pursuant to 19 U.S.C. § 1514(a),

. . .[d]ecisions of the Customs Service, including the legality of all orders and findings entering into the same, as to— (1) the appraised value of merchandise; (2) the classification and rate and amount of duties chargeable; (3) all charges and exactions of whatever character within the jurisdiction of the Secretary of Treasury; (4) the exclusion of merchandise from entry of delivery or a demand for redelivery to customs custody under any provision of the customs laws, except a determination appealable under section 1337 of this title; (5) the liquidation or reliquidation of an entry, or reconciliation as to the issues contained therein, or any modification therefor; (6) the refusal to pay a claim for drawback; or (7) the refusal to reliquidate an entry under section 1520(c) of this title;

shall be conclusive upon all persons (including the United States and any officer thereof) unless a protest is filed in accordance with this section . . .

The following is a discussion of whether each of the protestant’s claims is protestable under the foregoing statute.

(a) 19 U.S.C. § 1617 claims

Pursuant to § 1617,

Upon a report by a customs officer, United States attorney, or any special attorney, having charge of any claim arising under the customs laws, showing the facts upon which such claim is based, the probabilities of recovery and the terms upon which the same may be compromised, the Secretary of the Treasury is authorized to compromise such claim, if such action shall be recommended by the General Counsel for the Department of Treasury.

(emphasis added). The regulations promulgating the same provide,

An offer made pursuant to . . . 19 U.S.C. § 1617, in compromise of a Government claim arising under Customs laws and the terms upon which it shall be stated in writing addressed to the Commissioner of Customs. . . .

19 C.F.R. § 161.5 (emphasis added). The protestant argues, with regard to all of the entries, that since “delay in liquidation is wholly attributable to inaction on the part of the government[,]” Customs should “reduce the interest charges to those that would have accrued had the entr[ies] been liquidated on a timely basis.” The protestant has not presented any terms as to what it will do in exchange for Customs compromising its claim for interest; rather, it argues that Customs should forgo its claim for interest, because imposing “significant interest charges” is “manifestly inequitable.” Hence, the protestant has not made a valid offer, but an equitable argument, which is not within the purview of § 1617. In addition, rejections of such offers do not fall within a Customs decision enumerated in § 1514(a) and therefore, are not protestable.

(b) Reclassification Claims

With regard to 14 of the entries, the protestant claims that the classification of these typewriters should have been 676.0700, TSUS, and therefore, the typewriters would be dutiable at 3% ad valorem. The merchandise was entered under 676.0510 and 676.0540, TSUS, which in 1985 and 1986, provided for “duty free” entry. Pursuant to § 1514(a)(2), the classification of merchandise is protestable.

(c) Scope Claims

With regard to 2 of the 14 entries discussed in foregoing subsection (b), the protestant argues that these entries include machine model AP-100 which are automated office machines and therefore, not within the scope of the antidumping order. The protestant argues that pursuant to the final results issued on January 14, 1987, Commerce stated that office typewriters are excluded from the scope of the antidumping order. Commerce did make the following statement; however, the protestant has omitted the context in which the statement was made. The notice states in pertinent part:

Brother . . . argues that the Department must exclude any and all merchandise which is used in an office environment, marketed through office equipment dealers, or which provides the purchaser with useful office environment capabilities.

Department’s Position: The original petition was brought only on portable electric typewriters from Japan and it specifically excluded office typewriters. Therefore, office typewriters are excluded from the class or kind of merchandise and from the scope of the order. Because of the number of factors to be considered, however, there is no clear delineation between PETS and office machines. We will take the various model specifications into consideration for scope inclusion and at a later date will make a determination on a model-by-model basis.

52 Fed. Reg. 1504 (Jan. 14, 1987)(emphasis added).

First, we note that based on our research of the Federal Register database in Lexis, to date, several companies have sought and received scope rulings regarding specific models of office typewriters. These scope rulings are consistent with the liquidation instructions received by Customs, e.g. liquidation instructions received by Customs with regard to office typewriters have been manufacturer and model specific. Our research has not revealed, nor does the protestant assert, that it sought a scope ruling regarding the AP-100.

Second, pursuant to Xerox Corporation v. United States, 289 F.3d 792, 795 (Fed. Cir. 2002), scope determinations are protestable only if it is shown that Customs misinterpreted the scope of the order by including within the order, goods that are clearly outside the scope of the order. The protestant has not provided this office with a description of the features of the AP-100 relevant to the determination of whether it is an office machine; therefore, it has not shown that the goods are clearly outside the scope of the order. Thus, the matter is not protestable.

(d) Deemed Liquidation Claims

If Customs does not grant its protest based on the foregoing claims raised, the protestant alternatively argues that the entries were deemed liquidated pursuant to 19 U.S.C. § 1504(d). The Court of Appeals for the Federal Circuit recently affirmed a decision of the Court of International Trade which held that deemed liquidation occurs by operation of law, and, therefore, does not involve a Customs decision. Fujitsu General America, Inc. et. al v. United States, 110 F. Supp. 2d 1061, 1069 (Ct. Int’l Trade 2000), aff’d, 283 F.3d 1364 (Fed. Cir. 2002). However, “[a] Customs decision to liquidate certain entries anew after the entries had already deemed liquidated is a protestable decision under 19 U.S.C. § 1514(a)(5).” Id. (internal citation omitted): see also, HQ 228678 (February 27, 2002). As discussed below, the entries were not deemed liquidated, therefore, the entries are protestable under § 1514(a)(5).

In summary, as explained above, the protestant’s claims pursuant to 19 U.S.C. § 1617 and which raise whether the AP-100 is within the scope of the antidumping order are not protestable under 19 U.S.C. § 1514(a). The remaining issues regarding deemed liquidation and reclassification of the entries are protestable to the extent they raise issues of classification and liquidation, which are protestable under 1514(a)(2) and (5).

Issue 2

Canon challenges the liquidation as illegal and alleges that the entry was liquidated by operation of 19 U.S.C. § 1504, as interpreted by Nunn-Bush v. United States, 784 F.Supp. 892 (Ct. Int’l Trade 1992). In Nunn-Bush, the court held that the lifting of the court-ordered injunctions against the liquidation terminated the suspension of liquidation. The court held that because the suspension of liquidation was removed before the end of the four-year period set in 19 U.S.C. § 1504(d)(1984 ed.), the entries were liquidated by operation of law. The Nunn-Bush decision interpreted 19 U.S.C. § 1504 before the December 3, 1993 and December 8, 1994 amendments. Pursuant to Nunn- Bush, a deemed liquidation occurred if an entry remained unliquidated at the end of the fourth year from the date of entry, unless liquidation had been extended. 784 F. Supp. at 896. The current version of 19 U.S.C. 1504(d) requires the suspension of liquidation to be removed and Customs to be notified before liquidation by operation of law occurs. Fujitsu General America, Inc. et. al v. United States, 110 F. Supp. 2d 1061, 1069 (Ct. Int’l Trade 2000), aff’d, 283 F.3d 1364 (Fed. Cir. 2002); International Trading Co v. United States, 281 F.3d 1268 (Fed. Cir. 2002).

The first point to be determined is when the suspension of liquidation was removed. The Federal Circuit’s decision in Smith Corona, became final when the period of certiorari to the Supreme Court expired. The Federal Circuit’s mandate could not have issued until December 18, 1990; therefore, pursuant to 28 U.S.C. § 2101(c), the protestant’s 90-day period to petition the Supreme Court for a writ of certiorari expired on March 18, 1991. Thus, pursuant to Fujitsu General, suspension of liquidation was removed on March 18, 1991. The subject entries were made between May 20, 1985 and April 24, 1986. Four years from those dates respectively occurred between May 20, 1989 and April 24, 1990. Since the court did not act on the rehearing request until December 6, 1990, and the period for certiorari did not expire until March 18, 1991, the liquidation of the entries remained suspended beyond the fourth year and the Nunn-Bush decision does not apply. See also, Smith Corona v. United States, 915 F.2d at 688 (discussing the trial court’s failure to continue suspension of liquidation). Commerce did not publish amended final results reflecting the Federal Circuit’s opinion. The only notice received by Customs, which lifted the suspension for the entry, was in message # 9229115 dated August 17, 1999. Because the suspension continued until after the 1993 amendments to 19 U.S.C. § 1504, pursuant to the holding in Travenol Laboratories v. United States, 118 F.3d 739 (Fed. Cir. 1997), the 1993 amendment would apply. Because the protestant has not identified any earlier event, such as the publication of final results, message 9229115 appears to have lifted the suspension. See United States v. Jick (USA) Industries, 27 F. Supp.2d 199 (Ct. Int’l Trade 1998). Insofar as Customs liquidated the entries between October 15, and December 27, 1999, within six months of the lifting of suspension of the entries, the entries did not deem liquidate pursuant to 19 U.S.C. § 1504.

Issue 3

(a) Antidumping Duties The protestant asserts that merchandise represented by 14 of the entries should have been entered as PATS; however, its broker mistakenly entered the merchandise as PETS and posted antidumping duties thereon. The protestant argues that by reclassifying the PETS as PATS, it will avoid antidumping liability because the the April 5, 1990, Federal Register notice, 55 Fed. Reg.12701, only applied to PATS entered on or after February 3, 1989. Thus, the protestant concludes, PATS entered prior to February 3, 1989, were not subject to antidumping duties and since its merchandise was entered before that date, it would not be subject to antidumping duties. First, the protestant has misconstrued the April 5, 1990, Federal Register notice. The protestant states in its protest:

After much litigation, the antidumping duty order on PETs from Japan was later expanded to cover PATs and PETs with calculating mechanisms that were entered, or withdrawn from warehouse, for consumption on or after February 3, 1989. See 55 Fed. Reg. 12701 (1990).

(emphasis in original). Although the subject notice did indicate that the CIT determined PATS were within the scope of the order, it did not state that this decision only applied to PATS entered “on or after February 3, 1989.” Rather, the notice states that Commerce was suspending liquidation of all unliquidated entries of PATS entered on or after February 3, 1989. See 55 Fed. Reg. 12701.

Second, the protestant’s argument ignores that the CIT stated in its memorandum and order that its decision applied to all unliquidated entry of PATS. See Smith Corona v. United States, 706 F. Supp. 908, 909 (Ct. Int’l Trade 1989)(“Since we are not changing, but only clarifying, the scope of the antidumping order, our decision must apply to all unliquidated entries of portable electric typewriters incorporating text memory and portable electric typewriters incorporating a calculating mechanism.”). Third, the protestant describes its typewriters in its protest as portable and electric; hence, based on the Smith Corona decision, the typewriters are within the scope of the antidumping order. See 915 F. 2d at 686-88.

Last, the protestant’s statement is contrary to existing law insofar as it is illegal to expand an antidumping order. See Alsthom Atlantique v. United States, 787 F.2d 565, 571 (Fed.Cir. 1986)(holding that “[a]lthough the scope of a final order may be clarified, it cannot be changed in a way that is contrary to its terms). Further, the protestant’s statement is contrary to the Federal Circuit’s holding in Smith Corona inasmuch as the court determined that PATS were included within the scope of the antidumping order and thus, illegal expansion of the order did not occur. 915 F.2d at 687-88.

Based on the foregoing, the protestant’s argument that PATS entered prior to February 3, 1989 is without merit. Insofar as the CIT’s decision encompassed all unliquidated entries of PATS and PETS with calculating mechanisms, the protestant’s merchandise whether a PAT or a PET, would be subject to antidumping liability.

(b) Customs Duties

With regard, to Customs duties, reclassification would not result in a refund of Customs duties, rather, it would result in an assessment of a higher amount of duties than that assessed in the protested liquidation because the entries were liquidated free of duty as PETS and the entries reclassified as PATS would be 3% and 2.8% ad valorem. See subheadings 676.0510, 676.0540, and 676.0700, TSUS (1985 and 1986). Pursuant to 19 U.S.C § 1515(a), Customs cannot reliquidate the entries at a higher amount of duties than those assessed at liquidation. See HQ 220678(August 23, 1989)(holding that a protest must be denied when the correct classification results in a duty increase over the liquidated amount pursuant to 19 U.S.C. § 1515(a) unless the period for voluntary reliquidation by Customs under 19 U.S.C. § 1501 has not expired); HQ 228570 (December 10, 2001). Therefore, the protest must be denied as to this issue. HOLDING

The protest is DENIED IN FULL for the following reasons:

1. The protested entries are not protestable to the extent they raise claims pursuant to 19 U.S.C. § 1617. Notwithstanding the fact the protestant has not made a valid offer pursuant to 19 U.S.C. § 1617, rejection of such offers are not protestable issues under 19 U.S.C. § 1514(a). Further, the protested entries are not protestable to the extent they raise claims arguing that the Canon AP-100 is outside the scope of the antidumping order. The protestant has not provided evidence to show that Customs misinterpreted the scope of the order by including within the order, goods that are clearly outside of the scope of the order.

2. The entries did not deem liquidate, insofar as the only notice Customs received that the suspension of liquidation was lifted was through liquidation instructions received from the Department of Commerce and Customs liquidated the entries within 6 months of receiving such notice.

3. As discussed in the LAW and ANALYSIS section above, reclassification of certain entries would not result in a refund of antidumping duties. Further, with regard to Customs duties, since reclassification would result in an assessment of a higher amount of duties than assessed at liquidation, Customs cannot reliquidate the entries at a higher amount of duty than those assessed at liquidation.

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, with the Customs Form 19, 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 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,

Myles Harmon, Acting Director
Commercial Rulings Division