PRO-2-06
RR:CR:DR 229377 IDL
Customs and Border Protection
Attn: Robyn Dessaure
610 S. Canal St.
Room 300
Chicago, Illinois 60607
Re: Protest No. 3901-01-101051; 19 U.S.C 1514; 19 U.S.C. 1520(c)(1)
Dear Port Director:
This is in response to your correspondence concerning ACCO Brands, Inc. of Lincolnshire, Illinois, Protest No. 3901-01-101051.
Protestant requested that the exact amount of duty paid and the reported value of the merchandise be treated as confidential. We have granted that request to the extent that a meaningful decision can be issued.
FACTS:
On June 16 and June 22, 1998, ACCO Brands, Inc., North America, (“ACCO”) entered unassembled “sheet extruders”, Entry Nos. 231-xxxx622-4 (“Entry 622-4”) and 231-xxxx583-7 (“Entry 583-7”), respectively. ACCO claims that, at the time of entries, two errors occurred with respect to valuation: (1) ACCO made two payments (instead of one) for Customs duties and merchandise processing fees, and (2) ACCO overstated the value of the merchandise, causing ACCO to overpay Customs duties and fees on both entries.
According to ACCO, the merchandise arrived in two shipments because it was necessary to partially disassemble it for shipment. The merchandise, which ACCO claims was 24 years old, was not sold, but was provided by a related party, ACCO Ireland.
On June 25, 1998, ACCO paid, based on the invoice value, about $20,000 for Customs duties and about $500 for merchandise processing fees on Entry 622-4. On July 1, 1998 ACCO again paid, based on the invoice value, about $20,000 for Customs duties and about $500 for merchandise processing fees on Entry 583-7. On April 30, 1999, the port liquidated Entry 622-4. On May 7, 1999, the port liquidated Entry 583-7.
On March 9, 2000, ACCO filed a petition with the port, pursuant to 19 U.S.C. 1520(c)(1), requesting a refund due to clerical error consisting of the use of a single invoice showing the total value of the merchandise for each of the partial shipments. The petition requested that the entries be reliquidated for the refund of slightly more than the duty paid on one of the entries. Additionally, in a footnote, ACCO stated that it had received an appraisal of the merchandise that was substantially less than the invoice value.
Exactly one year later, on March 9, 2001, Customs granted the request and upon reliquidation issued a refund that exceeded the amount requested.
On June 7, 2001, ACCO filed protest, pursuant to 19 U.S.C. 1514, on the reliquidation of Entries 622-4 and 583-7. In addition to the valuation issues discussed above, ACCO asserted that: (1) Entry 622-4 was incorrectly classified under subheading 8477.80.00, HTSUS, and (2) Entry 583-7 should have been classified individually (in subheadings 8428.90.80, 8428.44.80. 8465.96.00, 8416.69.00, 8413.81.00, 8477.90.85, and 8477.90.85, HTSUS), rather than as a complete extruder.
ISSUES:
(1) Whether ACCO timely raised issues of classification and valuation of the merchandise with its filing of the March 9, 2000 petition for reliquidation and subsequent protest?
(2) Whether there was an error in the valuation on the reliquidations of the two entries?
LAW & ANALYSIS:
Initially, we note that the protest was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. § 1514 and 19 CFR Part 174).
Issue (1)
Whether ACCO timely raised issues of classification and valuation of the merchandise with its filing of the March 9, 2000 petition for reliquidation and subsequent protest?
Although ACCO raised valuation issues in its 1520(c)(1) petition of March 9, 2000, ACCO failed to summon any classification issues. On March 9, 2001, Customs, agreeing with ACCO that clerical errors were committed, reliquidated the subject entries based on the 1520(c)(1) petition. On June 7, 2001, ACCO filed protest on the reliquidation of the subject entries, claiming only partial relief was granted on reliquidation. In addition, ACCO raised the issue of classification errors for the first time.
The court in Woolworth v. United States, 26 C.C.P.A. 157, C.A.D. 10 (1938) at 161, recognized the statutory amendment of the principle by quoting from the House Report on the bill that enacted the language currently set forth in 19 U.S.C. 1514(d). The Committee on Ways and Means of the House of Representatives considered situations such as this when it wrote
“Under the existing law, it has been held that a reliquidation opens up the whole entry to protest. It is thus possible for an importer having an entry with a large number of items to protest one item at a time and thereby keep the entire entry from final liquidation indefinitely. Your committee proposes the imposition of a limitation that reliquidation of an entry will not open the entry to protest upon any question not involved in the reliquidation.”
This limitation on the protestability of reliquidation specifically includes a provision that states that “the reliquidation of an entry shall not open such entry so that a protest may be filed against the decision of the Customs Service upon any question not involved in such reliquidation”.
In the instant case, after the expiration of the 90-day period for protesting the classification and appraisement of the merchandise covered by the two entries, the protestant filed a request for reliquidation under 19 U.S.C. 1520 (c)(1). That request was filed within the one-year period of that statute for both entries and was timely. The request raised only the valuation issues- that the liquidations of both entries were in error because one invoice was used for both entries, and the overstated value of the merchandise. ACCO requested a refund on those errors. There was no denial of the request for reliquidation. Instead, Customs granted the request and reliquidated the entries pursuant to 19 U.S.C. 1520(c)(1).
Thus, the reliquidation triggered a new statutory time period for filing protest, enabling ACCO to protest only an issue involved in the reliquidation, i.e., valuation, within 90 days of the reliquidation date.
Issue (2)
Whether there was an error in the valuation on the reliquidations of the two entries?
ACCO submitted as evidence a waybill for a “sheet extruder”, shipped by ACCO Ireland, Ltd., with an arrival date of June 7, 1998, indicating a value of 75% of the total stated value of both shipments, and containing the words “partial shipment”. ACCO included another waybill for a sheet extruder, also shipped by ACCO Ireland, Ltd., with an arrival date of June 13, 1998, indicating a value of the other 25% of the total stated value of both shipments, and again containing the words “partial shipment”. In addition, ACCO included an invoice, dated May 28, 1998, from ACCO Ireland to consignee, Polyblend, for the merchandise. As evidenced by the CF 7501 Entry Summaries for both entries, ACCO arrived at the stated value as the entered value by multiplying the stated value by the foreign currency conversion rate in effect. However, according to counsel, ACCO failed to account for the age and depreciated value of the merchandise, and erroneously stated “the original value” of the merchandise.
The Customs position on the CF 6445A states that the value on the invoice was used to appraise the merchandise on the reliquidation. The ACS records on the entries indicate that the data on the reliquidation of Entry 622-4 was a function of about 75% of the original invoice value at the rate applicable to the merchandise. Likewise, the duty on the reliquidation of Entry 583-7 appears to be a function of 25% of the original invoice value at the rate applicable to the merchandise.
As such, a mistake seems to have occurred, in that the merchandise was incorrectly appraised pursuant to transaction value, section 402(b) of the Trade Agreements Act of 1979 (“TAA”). Transaction value is defined as the price actually paid or payable, plus certain enumerated additions, for the imported merchandise when sold for exportation to the United States. Since there was no sale for export, transaction value is eliminated as a means of appraisement.
Proceeding sequentially through the remaining methods of appraisement, it is unlikely that there is a transaction value of identical or similar merchandise pursuant to section 402(c) available. Counsel for ACCO indicates that the imported merchandise is 24 years old. Presumably, there are no importations that are either identical or similar to the instant merchandise in order to base a section 402(c) appraisement.
Further, it appears that deductive value, section 402(d) of the TAA, is not applicable, as there was no resale of the merchandise. Computed value, section 402(e), is also not applicable, since obtaining a figure for a computed value appraisement on this merchandise is not possible.
Therefore, that leaves section 402(f) of the TAA as the only means of appraisement in this case. Essentially, this method of appraisement derives a value from the methods set forth above, with reasonable adjustments to the extent necessary to arrive at a value. The merchandise is 24 years old, and the appraised value should be determined by adjusting downward the article’s purchase price to reflect reasonable depreciation for the period that the article was used abroad. These figures must be in accordance with generally accepted accounting principles.
ACCO submitted a document purporting an appraisal value for the merchandise. Actually, it appears that the “appraisal” document is merely an offer to sell certain used equipment, and not an appraisal. Furthermore, the document describes merchandise other than what ACCO actually entered. The “appraisal” document describes a “65”wide Johnson sheet” extruder, while the invoice submitted refers to a “Battenfeld” unit. Based upon the circumstances, the port may reject the “appraisal” document as not being relevant to the merchandise being appraised.
With respect to used merchandise, relying upon section 402(f), Customs has based the value on the original purchase price of merchandise, adjusted downward to reflect reasonable depreciation for the period that the article was used. The figures relied upon must be determined in accordance with generally accepted accounting principles. In addition, the value resulting from this downward depreciation must approximate the actual market value of the article at the time of its exportation to the United States. See HQ 543263 dated July 2, 1985; HQ 543970 dated March 13, 1989.
As mentioned above, Protestant has provided an original invoice value for the equipment. This figure, if verified and accepted by the appraising officer, should be adjusted downward to reflect reasonable depreciation for prior use (i.e., 24 years) in determining the value of the merchandise for appraisement purposes. The port should use the best available evidence to appraise the merchandise.
HOLDING:
With regard to the valuation issue, the port should GRANT the protest IN-PART, and reliquidate consistent with the discussion on appraisement. With regard to the classification issue, the port should DENY the protest, since that issue was not involved in the reliquidation.
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.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon
Director,
Commercial Rulings Division