PRO-2-02; LIQ-9-01; LIQ-11; LIQ-15
RR:CR:DR 229281 IDL
Port Director of Customs
Arthur J. Lipp, SIS
111 West Huron St.
Buffalo, NY 14202
Re: Protest No. 0901-01-100256; 19 U.S.C. 1514; 19 U.S.C. 1520(c); 65 FR 16449; Exaction
Dear Mr. Lipp:
This is in response to your correspondence dated August 24, 2001, concerning Niagara Peninsula Specialty Food, Protest No. 0901-01-100256 (related to Protest No. 0901-01-100257).
FACTS:
On November 18, 1999, Niagara Peninsula Specialty Food (“Niagara”) imported Frozen Boneless Bison Meat from Canada, Entry No. 310-xxxx260-9. Niagara incorrectly classified the bison meat as Beef, 0202.30.50, HTSUS on the Entry Summary. On March 23, 2000, the port sent Niagara a Notice of Action, citing a Rate Advance requiring Niagara to tender additional duties, with the following explanation:
“Bison meat is not beef. The correct classification of frozen boneless bison meat is at HTS# 0202.30.8000/27.2%, MPF @ .21%….”
On April 7, 2000, Customs, based on numerous pieces of documentary evidence in the entry file describing the meat as bison, liquidated the entry as classifiable under the subheading, 0202.30.80, HTSUS.
On August 10, 2000, Customs received payment of $691.92 in full satisfaction of the Rate Advance, plus Merchandise Processing Fee (“MPF”) and interest from the date of entry.
On February 14, 2001, Niagara filed a petition for reliquidation under 19 U.S.C. 1520(c)(1). On May 22, 2001, the port denied the 1520 petition, citing 19 U.S.C. 1514 as the correct recourse Niagara should have taken within 90 days of liquidation.
On June 7, 2001, Niagara filed CF 19 Protest, citing Federal Register, Volume 65, No. 60, March 28, 2000. It listed May 22, 2001, the date the port denied the 1520(c)(1) petition, as a “date of exaction.”
Niagara contends that the entry contains an error, correctable per 65 FR 16449 (discussed below); that a rectification took effect on January 1, 1995 to allow Canadian Bovine to be “classified” duty free under 0201 and 0202, HTSUS, after January 1995. Niagara seeks a refund of duty, MPF, and interest in the amount of $691.92.
The port rebuts that the Federal Register Notice of March 28, 2000 qualified rectification on condition that liquidation of duties has not become final under 19 U.S.C. 1514. The port concludes that since the entry under protest liquidated on April 7, 2000, that liquidation became final 90 days later, on July 6, 2000, and, thus, request for reliquidation under 19 U.S.C. 1520(c)(1) should be denied as outside that provision or as an untimely protest.
ISSUES:
Whether the denial of the 1520(c)(1) petition was proper?
Whether the port assessed an exaction affecting the 90-day statutory period under 19 U.S.C. 1514?
LAW AND ANALYSIS:
Issue (1)
Whether the denial of the 1520(c)(1) petition was proper?
Niagara protests classification and liquidation of the subject entry, claiming that “Bovine with a country of origin of Canada” should be “classified duty free.” However, it appears that Niagara confused the phrase “classified duty-free” with “liquidated duty-free.” Since the protest is based on the Notice of Action, which provides for duty-free treatment of meat classifiable under 0202.30.80, HTSUS, Niagara can’t seriously be challenging the liquidated classification. There is no real dispute as to tariff classification. Rather, it appears that Niagara is challenging liquidation at 27.2% duty, and 0.21% Merchandise Processing Fee.
19 U.S.C. 1520
(c) Reliquidation of entry or reconciliation
Notwithstanding a valid protest was not filed, the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry or reconciliation to correct-
(1) a clerical error, mistake of fact, or other inadvertence, whether or not resulting from or contained in electronic transmission, not amounting to an error in the construction of a law, adverse to the importer and manifest from the record or established by documentary evidence, in any entry, liquidation, or other Customs transaction, when the error, mistake, or inadvertence is brought to the attention of the Customs Service within one year after the date of liquidation or exaction;… 19 U.S.C. 1520(c)(1).
Inadvertence has been defined by the Federal Circuit as "an oversight or involuntary accident, or the result of inattention or carelessness." Ford Motor Co. v. United States, 157 F.3d 849, 859 (CAFC 1998) (quoting Hambro Automotive Corp. v. United States, 603 F.2d 850, 854 (CCPA 1979)). A mistake of fact occurs when a person understands the facts to be other than what they really are and takes some action based on that erroneous information. See, e.g., C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, 336 F. Supp. 1395 (1972), aff'd, 61 CCPA 90, C.A.D. 1129, 499 F.2d 1277 (1974); Hambro Automotive Corp. v. United States, 458 F. Supp. 1220 (1978), aff'd, 66 CCPA 113, 603 F.2d. 850 (1979); and PPG Industries, Inc. v. United States, 7 CIT 118 (1984).
In Ford Motor, the Federal Circuit addressed the distinction between a mistake of fact and a mistake of law. According to the Federal Circuit,
[a] mistake of fact is any mistake except a mistake of law. It has been defined as a mistake which takes place when some fact which indeed exists is unknown, or a fact which is thought to exist, in reality does not exist. A mistake of fact exists where a person understands the facts to be other than they are, whereas a mistake of law exists where a person knows the facts as they really are but has a mistaken belief as to the legal consequences of those facts. Id. at 859. See also, Executone Information Systems v. United States, 96 F. 3d 1383, (Fed. Cir. 1996), and Degussa Canada Ltd. v. United States, 87 F. 3d 1301 (Fed. Cir. 1996).
A party challenging a decision of Customs has a burden of overcoming a statutory presumption of correctness by a preponderance of the evidence. Taban Company v. United States, 960 F.Supp 326 (C.I.T. 1997); see also 28 U.S.C.A. 2639(a)(1).
In the instant case, the United States Trade Representative (USTR) published in the Federal Register a rectification to the HTSUS. As discussed above, there is no dispute as to the correct classification. The statement by the port that 1520 does not apply to tariff errors misses the point. The issue is whether the liquidation was erroneous in failing to apply the rectification and that failure is correctable under 1520(c)(1).
Rectification to the Harmonized Tariff Schedule of the United States
…The United States Trade Representative (USTR) is providing notice of certain technical rectifications to subheadings in chapter 2 of the Harmonized Tariff Schedule of the United States (HTS)…. The effective date of the rectifications is January 1, 1995, for all goods entered, or withdrawn from warehouse for consumption, under the specified HTS subheadings, for which the liquidation of duties has not become final under [19] U.S.C. 1514…. [W]hen the HTS was modified in 1995 to reflect the creation of a U.S. tariff-rate quota consistent for beef with the World Trade Organization Agreement on Agriculture, the tariff subheadings related to imports of meat from bovine animals not included in the United States tariff-rate quota, which is set forth in additional U.S. note 3 to chapter 2 of the HTS, were inadvertently not modified to provide Canada a special rate of duty of “free” for six tariff subheadings in the HTS:…0202.30.80. This notice rectifies that omission in the HTS and reflects the duty-free treatment that should be accorded to meat of bovine animals…. 65 FR 16449.
Examination of the 1995 edition of the HTSUS (which the provision above rectifies) reveals that only Mexico was listed, but not Canada, in the Special “Free” rate of duty column.
The rectification amended the HTSUS to reflect that Boneless Bovine from Canada, entered under subheading 0202.30.80, HTSUS, liquidation which had not become final under 19 U.S.C. 1514, was entitled to a “Free” rate of duty. Thus, the rectification represented a correction of a typographical error, rather than an interpretation in the construction of a law. The rectification specifically mentioned that the tariff subheadings were “inadvertently not modified to provide Canada a special rate of duty”.
On March 23, 2000, the port issued the Notice of Action (CF 29). That Notice indicated that Customs made its determination of dutiability before the rectification was published on March 28, 2000. Customs, pursuant to 19 U.S.C. 1500(e), published notice of the liquidation on April 7, 2000. No protest was filed before July 6, 2000 when the 90-day period set by 1514(c)(3)(A) expired.
Given the language of the rectification that it was to be applied to an entry where liquidation was not final on March 28, 2000, the liquidation appears to have been erroneous. However, under 1514(a), even an erroneous liquidation becomes final if a timely protest is not filed.
Notwithstanding finality of liquidation, if the liquidation is in error as the result of a mistake of fact, clerical error, or an inadvertence not amounting to an error in the construction of a law, that entry can be re-liquidated by compliance with 1520(a)(1).
However, when the Notice of Action was issued, the liquidation as dutiable was not in error since the rectification was not published. The liquidation became questionable when the rectification was published. There is no -evidence, documentary or otherwise, to indicate that Customs was unaware of the rectification. Under 44 U.S.C. 1507, publication of the rectification in the Federal Register was notice to the public. If the Port Director determined that the rectification required a reliquidation, that reliquidation could have been accomplished under 19 U.S.C. 1501. However, the protestant’s failure to timely protest the liquidation following publication of the rectification resulted in that liquidation becoming final. The determination of whether to apply the rectification to the entry is a legal decision. Such errors are correctable only by protest under 1514. There is no evidence to show that the error was the result of an inadvertence not amounting to an error in the construction of the rectification text itself.
The error appears to be a failure to recognize the significance of the rectification’s post-liquidation language to the entry for which the liquidation had not become final. The protestant argues that the entry was subject to the rectification and that Customs should have applied the rectification to the entry, presumably pursuant to 1501. That argument requires legal judgments by the Port Director. Errors in legal judgments have been held by the courts to be outside the scope of 1520(c)(1). Boast, Inc. v. United States, 17 CIT 114 (1993) (an alleged mistake with respect to the Customs application of the Explanatory Notes is not correctable under 1520(c)(1)); SCA International, Inc. v. United States, 14 CIT 59 (1990) (Customs assumption that notice of suspension of liquidation was sufficient to affect an extension of liquidation is an error in the construction of law, and is not correctable under 19 U.S.C 1520(c)(1)); Concentric Pumps Ltd. v. United States, 10 CIT 505 (1986) (unawareness of a tariff provision is not a mistake of fact under 1520(c)(1)).
Therefore, the error in the liquidation is not correctable under 1520(c)(1), and denial of the petition was proper.
Issue (2)
Whether the port assessed an exaction affecting the 90-day statutory period under 19 U.S.C. 1514?
Niagara claims that its protest was timely, pursuant to an “exaction” on May 22, 2001. An exaction can act as a trigger date for the purposes of filing a valid 1514 protest.
Charges and exactions are “specific sums of money (other than ordinary customs duties) on imported merchandise.” HQ 228560 (February 23, 2000). As mentioned above, Niagara tendered $691.92 in response to the Notice of Action of March 23, 2000. The additional monies tendered, including MPF and other outstanding ordinary Customs duties, are not regarded as exactions, but, rather, stem from Niagara’s classification error at the time of filing entry summary. Parenthetically, the courts have interpreted the terms “charge or exaction” as covering interest, under 1514(a)(3). HQ 228300 (August 22, 2000).
In any case, Niagara tendered the money on August 10, 2000. Even if that payment had constituted an exaction, Niagara would have had to file protest within the 90-day period after payment under 1514(c)(3)(B). The alleged date of exaction, May 22, 2001, merely represents the date of the port’s denial of the 1520(c)(1) petition.
Therefore, the port did not assess an exaction affecting the 90-day statutory period under 19 U.S.C. 1514.
HOLDING:
Accordingly, the protest should be DENIED for the reasons cited above.
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,
Myles B. Harmon
Acting Director,
Commercial Rulings Division