LIQ-5-PRO-2-01: RR:CR:DR:RDJ
229670RDJ
Port Director of Customs
Juarez/Lincoln Bridge
Administrative Building #2
Laredo, TX 78040
RE: Levi Strauss & Co.; reconciliation of entries; Deemed
Liquidation; 19 USC 1504, 19 USC 1484
Dear Sir:
Reference is made to Protest # 2304-2002-100201 dated June 11, 2002. Our decision follows:
FACTS:
Protest 2304-02-100201 involved five reconciliation entries filed by the importer of record, Levi Strauss & Co. ("Levi Strauss"). Reconciliation is the process that allows an importer to identify undeterminable information at the time an entry summary is filed (other than that affecting admissibility) and provide Customs that outstanding information on a later date. The outstanding information is submitted in the form of a reconciliation entry. The issues that Levi Strauss intended to reconcile were non-NAFTA issues involving value and subheading 9802, HTSUS. The details on each of the reconciliation entries are as follow:
Reconciliation Entry # 179-XXXX164-9:
Reconciliation entry # 179-XXXX164-9 consisted of 362 underlying entries entered between the period of April 19, 1999 through June 10, 1999. For non-NAFTA issues, the reconciliation entry must be filed within 15 months of the earliest underlying entry summary date 1. ACS records show that the earliest underlying entry summary date was May 10, 1999 (entry #179-03745911). ACS calculated the due date of this reconciliation entry to be August 7, 20002. It was also filed as an aggregate reconciliation, meaning that any adjustments to this entry would be made on an aggregate basis, rather than on an entry by entry basis. ACS records show that on July 24, 2000, the broker transmitted the reconciliation entry electronically via ABI (this is evidenced by ACS's "create date"). On file, there is a letter dated July 24, 2000, addressed to the Port, where the broker (Miami International Forwarders) made reference to reconciliation entry #179-XXXX164-9 (in addition to two other reconciliation entries not subject to this protest). The letter stated:
"Enclosed are three reconciliation entries... these entries have been
processed as "no change" entries. The figures necessary to
complete the reconciliations are not yet available. We
are working with the importer to obtain and process the finalized
figures within a reasonable period of time. As soon as the figures
are available, we will contact you regarding finalization of these
entries."
By submitting the reconciliation entry as "no change", Levi Strauss meant that it was not making any adjustments to the issues being "flagged" for reconciliation because the final figures were not yet available.
There is no Customs date stamp on this letter so as to establish the exact date that Customs received this letter along with the reconciliation package. ACS records do show a "reconciliation entry date" of January 30, 2001, a date that is 7 months after the ABI "create date" and the broker's letter. ACS records show that Customs did not place the subject reconciliation entry in "accepted status" until February 27, 2002. At no time did Levi Strauss submit the final figures to complete the reconciliation. ACS records show that the reconciliation entry "deemed liquidated" by operation of law on March 15, 2002.
Reconciliation Entry # 179-XXXX019-9:
Reconciliation entry # 179-XXXX019-9 contained only one underlying consumption entry to be reconciled. ACS records identified this entry as #179-XXXX455-4 with an entry summary date of November 10, 1999. As calculated by ACS, the due date for filing the reconciliation (non-NAFTA) was February 8, 2001, that is, 15 months from the underlying entry summary date. ACS records show that on December 14, 2000, the broker transmitted the reconciliation entry via ABI ( ACS "create date"). The broker transmitted the reconciliation entry as "no change", meaning that it was not making any adjustments to the figures contained in the underlying entry. The file contained a letter dated December 15, 2000, stating:
Enclosed please find the reconciliation entry noted above. This
entry has been prepared as "no change" reconciliation, due to the
fact that the importer has not yet been able to finalize the data
necessary to prepare the reconciliation.
We are requesting, on the importer's behalf, an extension of time
in which to finalize the data necessary to prepare the reconciliation.
When the importer has finalized figures available, we shall contact
you so that the entry may be re-transmitted.
Enclosed please find the following documents relative to the above-noted
reconciliation entry:
1. Reconciliation Header
2. Reconciliation Association Report
3. Reconciliation Detail Report
There is no Customs date stamp on this letter to reveal the exact date in which Customs received this letter along with the reconciliation entry. ACS records do show a "reconciliation entry date" of January 30, 2001. The request for an extension of the liquidation was made by Levi Strauss under the provisions of 19 C.F.R. 159.12. There is no evidence that Customs granted the request for an extension. ACS records reveal that Customs did not place the subject reconciliation entry on "accepted status" until February 27, 2002. No additional figures were provided by Levi Strauss so as to finalize the reconciliation. ACS records show that the reconciliation entry was "deemed liquidated" by operation of law on March 15, 2002.
Reconciliation Entry #179-XXXX029-8:
Reconciliation entry # 179-XXXX029-8 contained 11 underlying entries to be reconciled. The earliest underlying entry summary date was August 13, 1999. ACS records show that the due date to file the reconciliation was November 13, 2000, that is, 15 months (non-NAFTA issues) from the date of the earliest entry summary. Two months after the due date, on January 12, 2001 (ACS's "create date"), the broker transmitted the reconciliation entry via ABI as "no change", meaning that it was not making any adjustments to the figures already contained in the underlying entries. The file contains a letter dated January 16, 2001 in which the broker notified the following to Customs:
Enclosed please find the reconciliation entry noted above. This
entry has been prepared as "no change" reconciliation, due to the
fact that the importer has not yet been able to finalize the data
necessary to prepare the reconciliation.
We are requesting, on the importer's behalf, an extension of time
in which to finalize the data necessary to prepare the reconciliation.
When the importer has finalized figures available, we shall contact
you so that the entry may be re-transmitted.
Enclosed please find the following documents relative to the above-noted
reconciliation entry:
1. Reconciliation Header
2. Reconciliation Association Report
3. Reconciliation Detail Report
The request for an extension was made under the provisions of 19 C.F.R. 159.12. There is no evidence that Customs granted the request for extension. There is no Customs date stamp on this letter so as to establish the exact date that Customs received the reconciliation entry package. However, ACS records do show a "reconciliation entry date" of January 30, 2001. ACS records also reveal that Customs did not place the reconciliation entry on "accepted status" until February 27, 2002 (and made another update on March 22, 2002). At no time did Levi Strauss submit the final figures it needed in order to finalize the reconciliation. ACS records reveal that the reconciliation entry was "deemed liquidated" by operation of law on April 12, 2002.
Reconciliation Entry #179-XXXX030-6:
Reconciliation entry # 179-XXXX030-6 contained 3 entries to be reconciled. The earliest underlying entry summary date was November 16, 1999. According to ACS records, the due date for the reconciliation entry to be filed was February 14, 2001, that is, within 15 months (non-NAFTA) from the earliest entry summary date. On January 12, 2001, the broker electronically transmitted via ABI the reconciliation entry. There is a letter on file dated January 16, 2001, where the broker notifies Customs of the submission of the reconciliation and requests an extension to the liquidation. It stated:
Enclosed please find the reconciliation entry noted above. This
entry has been prepared as "no change" reconciliation, due to the
fact that the importer has not yet been able to finalize the data
necessary to prepare the reconciliation.
We are requesting, on the importer's behalf, an extension of time
in which to finalize the data necessary to prepare the reconciliation.
When the importer has finalized figures available, we shall contact
you so that the entry may be re-transmitted.
Enclosed please find the following documents relative to the above-noted
reconciliation entry:
1. Reconciliation Header
2. Reconciliation Association Report
3. Reconciliation Detail Report
There is no Customs date stamp on this letter to reveal the exact date in which Customs received this letter along with the reconciliation package. ACS records do reveal a "reconciliation entry date" of January 30, 2001. The request for an extension of the liquidation was made under the provisions of 19 C.F.R. 159.12. There is no evidence that Customs granted the request for extension. ACS records reveal that Customs did not place the reconciliation entry on "accepted status" until February 27, 2002. At no time did Levi Strauss submit any figures so as to finalize the reconciliation. ACS records show that this reconciliation entry was "deemed liquidated" by operation of law on March 15, 2002.
RECONCILIATION ENTRY #179-XXXX032-2:
Reconciliation entry # 179-XXXX032-2 consisted of 176 underlying entries entered between the period of November 3, 1999 and November 30, 1999. According to ACS, the reconciliation entry was due to be filed by February 8, 2001, that is, within 15 months (being non-NAFTA issues) from the earliest underlying entry summary date. ACS records show that on January 9, 2001 (ACS's "create date"), the broker transmitted the reconciliation entry electronically via ABI. The file contains a letter dated January 10, 2001, in which the broker notified Customs that it was filing the reconciliation entry as "no change" because the final figures were not yet completed by the importer. The letter also requested an extension of the liquidation in order to submit the figures in order to finalize the reconciliation. It stated:
"Enclosed please find the reconciliation entry noted above. This
entry has been prepared as "no change" reconciliation, due to the
fact that the importer has not yet been able to finalize the data
necessary to prepare the reconciliation.
We are requesting, on the importer's behalf, an extension of time
in which to finalize the data necessary to prepare the reconciliation.
When the importer has finalized figures available, we shall contact
you so that the entry may be re-transmitted.
Enclosed please find the following documents relative to the above-noted
reconciliation entry:
4. Reconciliation Header
5. Reconciliation Association Report
6. Reconciliation Detail Report
The request to extend the liquidation was submitted under the provisions of 19 C.F.R. 159.12. There is no Customs date stamp so as to ascertain the exact date that the Port received this letter. However, ACS records show a "reconciliation entry date" of January 30, 2001. According to the evidence on file, Customs did not approve or deny the request to extend the liquidation. ACS records reveal that the subject entry was not placed on "accepted status" until February 27, 2002. At no time did Levi Strauss submit any final figures in order to finalize the reconciliation. ACS records show that the reconciliation entry was "deemed liquidated" by operation of law on March 15, 2002.
On June 11, 2002, Levi Strauss protested the liquidation of these five reconciliation entries. The protest stated the following:
" The liquidation of these entries is being protested because the
entries were liquidated prior to the completion of the reconciliations involved
therein. As noted in the attached letter from MIF, Levi & Co.'s broker,
the reconciliations were filed initially with no changes pending the completion
of the company's determination of the actual values for the subject entries.
These liquidations occurred before those determinations had been finalized
and transmitted to Customs. Accordingly, these protests are being filed
in the event that refunds are determined to be owing."
The Port states that the entries were liquidated by operation of law despite the fact that both Customs and Levi Strauss had agreed that all reconciliation entries involving underlying entries filed in the year 1999 would be reconciled by June 30, 2002. As evidence of that agreement, the Port included a copy of a letter from the FP&F Officer dated April 19, 2002, addressed to Ms. Teresa Polino of Sandler, Travis & Rosenberg. This letter made reference to an agreement that all 1999 reconciliation entries would be reconciled by June 30, 2002. The protestant has not submitted the information.
The Customs liquidation module of the Automated Commercial System (ACS) is programmed to prevent a Customs officer from inadvertently liquidating an entry in violation of deemed liquidation provisions of 19 U.S.C. 1504. That is, unless an entry has been extended or suspended consistent with paragraphs (b) or (c), the system is programmed to show an entry as having been liquidated by operation of law upon expiration of the applicable period in 19 U.S.C. 1504(a).
The ACS computer program uses the entry date and the entry acceptance date to calculate whether a deemed liquidation occurs. Consequently, recordation of erroneous dates will result in the generation of erroneous liquidation information. The program will not allow a liquidation to occur before any entry acceptance date. Also, the program has a two-week delay in the publication of the liquidation date.
The result of the recordation of erroneous entry dates is illustrated by entry 179-XXXX0199-9. The entry date was recorded in error as January 30, 2001. The entry acceptance date was recorded as February 27, 2002. The one -year gap between entry
and acceptance, coupled with the absence of any extension notice resulted in the program showing that the entry was liquidated by operation of law. The two-week delay in the program resulted in the publication of March 15, 2002 as the deemed liquidation date in ACS.
Issue:
Whether the subject entries were liquidated by operation of law and, if deemed liquidated, whether Levi Strauss can protest the liquidation "in the event that refunds are determined to be owing" as expressed in their CF19?
Law & Analysis:
Initially, we note that the protest was filed (19 U.S.C. 1514(c)(3)(a)) on June 11, 2002 within 90 days from the March 15, 2002 and April 12, 2002 dates of notices of liquidation.
The protest was filed within 90 days of the notice of liquidation by operation of law. The relevant text of 19 U.S.C. 1514(a) limits protests to decisions of the Customs Service. The court, in Fujitsu General America v U.S. 110 F. Supp. 2d 1061 (CIT, 2000), aff'd. 283 F.3d. 1364 (Fed. Cir. 2002) held that Customs does not make a decision in order to effect a deemed liquidation and that if Customs has not actively liquidated the entries anew, the remedy is to seek a declaratory judgment from the court whether a liquidation by operation or law occurred rather than a protest.
Title VI of the North American Free Trade Agreement Implementation Act (the Act), Pub.L. 103-182, 107 Stat. 2057 (December 8, 1993), contains the provisions pertaining to the Customs Modernization (107 Stat. 2170). Subtitle B of Title VI established the National Customs Automation Program (NCAP)-an automated and electronic system for the processing of commercial importations. Title 19 U.S.C. sections 1411 through 1414 describe the implementation of the components of the National Customs Automation Program. Section 637 of the North American Free Trade Agreement Implementation Act amended Section 484 of the Tariff Act of 1930 to establish a new subsection (b), entitled "Reconciliation", a planned component of the NCAP. Section 101.9(b) of the Customs Regulations (19 CFR 101.9(b)) provides for the testing of NCAP components. The test procedures serve as the regulations to implement the statutes by virtue of 19 USC 1411-1414 and 19 C.F.R. 101.9. The ACS Reconciliation Prototype was established pursuant to these regulations. The two-year prototype testing period commenced on October 1, 1998, and was extended indefinitely on October 1, 2000 (65 FR 55326, Extension of the ACS Reconciliation Prototype,(September 13, 2000).
It is 19 U.S.C. 1484(b) that establishes the right of an importer of record to file a reconciliation entry in order to reconcile the issues it considers to be uncertain at the time of entry. Title 19 U.S.C. 1484(b)(1) states:
A party may elect to file a reconciliation with regard to such entry elements
as are identified by the party pursuant to regulations prescribed by the Secretary.
If the party so elects, the party shall declare that a reconciliation will be filed.
The declaration shall be made in such manner as the Secretary shall prescribe
and at the time the documentation or information required by subsection (a)(1)(B)
of this section or the import activity summary statement is filed with, or transmitted
to, the Customs Service, or at such later time as the Customs Service may, in its
discretion, permit. The reconciliation shall be filed by the importer of record
at such time and in such manner as the Secretary prescribes but not later than 15
months after the date the importer declares his intent to file the reconciliation.
As such, the process of reconciliation allows an importer to identify ('flag") certain entries (known as "underlying entries") and notify Customs of its intention to reconcile on a later date, certain information (other than that related to the admissibility of merchandise) that is not determinable at the time of the submission of the entry summary. The "notice of intent" to reconcile is done by the actual "flagging" (see, 63 FR 6257, February 6, 1998 Revised National Customs Automation Program Test Regarding Reconciliation). The adjustments are limited to the following areas: value, value aspects of entries filed under heading 9802, HTSUS, classification (on a limited basis) and eligibility under NAFTA. A reconciliation of value, HTSUS heading 9802 and/or classification shall be filed within 15 months of the date of the oldest (or earliest) entry summary flagged for or grouped on that reconciliation (see, 63 FR 6257 (February 6, 1998) Revised National Customs Automation Program Test Regarding Reconciliation )3.
Reconciliation procedures are designed to allow an importer the opportunity to reconcile up to 9,999 underlying entries within one reconciliation entry. By "flagging" an underlying entry, the importer identifies an undeterminable issue, transfers liability for that issue to a reconciliation and permits the liquidation of the underlying entry summary as to all issues other than those which are transferred to the reconciliation (see 63 FR 6257, February 6, 1998, Revised National Customs Automation Program Test Regarding Reconciliation). Upon liquidation of any underlying entry, any decision by Customs entering into that liquidation may be protested pursuant to section 1514. The flagged underlying entry summary is liquidated for all aspects of the entry except those issues that were flagged. The means of providing the outstanding information at a later date is through the filing of a reconciliation entry. The flagging of an entry summary creates an obligation on the part of the importer to file a reconciliation entry within the allotted time (see 64 FR 73121 Modification of National Customs Automation Program Test Regarding Reconciliation).
Once flagged, ACS is programmed to establish a due date for the filing of the reconciliation entry. The due date calculation is based on the Julian calendar and is generally, calculated on the payment due date plus 456 days. If the issue to be reconciled is still unknown by the time the reconciliation is due, the importer of record may request an extension to the liquidation pursuant to 19 C.F.R. 159.12. The statutory deadline to file a reconciliation entry is 15 months from the earliest entry summary date as provided by 19 U.S.C. 1484(b)(1). However, the liquidation may be extended for value, 9802 or classification provided that the importer can substantiate why the outstanding information would not be available at the time of the reconciliation filing deadline. Since the reconciliation entry is identical to a consumption entry for legal purposes, its liquidation may be withheld or extended under 19 U.S.C. 1504(b) as implemented by 19 C.F.R. 159.12.
The reconciliation entry comprises of three components: the header, the association file and the summarized line item data spreadsheet (64 FR 73121 Modification of National Customs Automation Program Test Regarding Reconciliation). In order for a reconciliation entry to be considered filed, all three components must be received by the Customs processing port assigned to the importer. Accordingly, the actual filing date for each reconciliation is the date when all of these components have been properly presented to Customs (64 FR 73121 Modification of National Customs Automation Program Test Regarding Reconciliation). In cases where a reconciliation is filed with no adjustments to value and other elements of the underlying transactions the spreadsheet need not be provided ( 63 FR 44303 Modification of National Custom Automation Program Test Regarding Reconciliation). When the reconciliation is filed with the intended corrections, Customs will review and liquidate accordingly. The liquidation of the reconciliation will be posted to the Bulletin Notice of Liquidation, and may be protested pursuant to section 1514 but the protest may only pertain to the issue(s) flagged for reconciliation (i.e., the protest may not re-visit issues previously liquidated on the underlying entry summary).
The statute, 19 USC 1504, establishes the limitation on liquidation. It states that, one year after a reconciliation is filed or should have been filed, the reconciliation shall be deemed liquidated at the rate of duty, value quantity and amount of duties asserted by the importer of record unless suspended or extended. The intent of this statute is to relieve importers and their sureties of prolonged uncertainty regarding duty liability (see, S. Rpt. 95-778, 95th Cong. 2d. Sess. at 32., reprinted in 1978 U.S. Code Cong. and Adm. News at 2243) . Because the legal effect of an extension or suspension is to delay the liquidation, the expiration of the one-year period, absent a valid extension or suspension, results in the entries being deemed liquidated by operation of law. Section 159.12(a) of the Customs Regulations which implements 19 U.S.C. 1504 states that the port director may extend the period for liquidation for an additional period, not to exceed one year if the importer requests an extension in writing before the statutory period expires and shows good cause why the extension should be granted. Good cause is demonstrated when the importer satisfies the port director that more time is needed to present to Customs information which will effect the pending action, or there is a similar question under review by Customs. Under 19 U.S.C. 1504(b), as implemented by 19 C.F.R. 159.12(b), if the port director extends the time for liquidation, as provided in paragraph (a)(1) of this section, he promptly shall notify the importer or the consignee and his agent and surety on Customs Form 4333-A, appropriately modified, that the time has been extended and the reasons for doing so.
The record shows that Levi Strauss submitted reconciliation entry # 179-XXXX164-9, in order to reconcile 362 underlying entries. The earliest entry summary date was May 10, 1999. The issues for reconciliation were value and 9802, HTSUS. Since the issues did not pertain to NAFTA, the time period to file the reconciliation was 15 months from the date of the earliest entry summary date. Under the test program, the due date for this reconciliation was August 7, 2000. ACS reveals that, on June 24, 2000, the broker transmitted the reconciliation entry via ABI. Levi Strauss's letter dated June 24, 2000 stated that it was submitting the reconciliation entry as "no change". There is no Customs date stamp on this letter but it reveals that Levi Strauss was filing the reconciliation with the three principal components, the reconciliation header, the reconciliation association report and the reconciliation detail report. Levi Strauss informed Customs that the reconciliation was being filed as "no change" since the figures necessary to complete the reconciliation were not yet available but would submit them on a future date. By announcing the submission of a "no change reconciliation" Levi Strauss meant that it was not making any adjustments to the underlying entries. There was no formal request for an extension of the liquidation nor any showing of good cause in order to substantiate the extension of the liquidation.
Having filed an "aggregate reconciliation", the filer is considered to have waived his right to refunds due to downward adjustments. Aggregate reconciliations are permitted to be filed showing absolute increases or decreases in "duties, taxes and fees otherwise due". However, a showing of a decrease in duties would have been liquidated but without refund or reduction of "duties, taxes, and fees otherwise due" since participants to the prototype waive all claims for refunds due to downward adjustments (see 64 FR 39187, Modification of National Customs Automation Program Test Regarding Reconciliation dated July 21, 1999). As such, we find that Levi Strauss, not only failed to request an extension in accordance to 19 C.F.R. 159.12, but by filing an "aggregate reconciliation", Levis Strauss also waived any claims for refunds due on this reconciliation entry.
After receiving the reconciliation entry as "no change", the Port did not place it in "accepted status" until February 27, 2002. The "accepted status" would have enabled the Port to effectively monitor the reconciliation entry. When the Port sought to extend the liquidation, it placed a "reconciliation entry date" of January 30, 2001 in the ACS record. The reconciliation entry had liquidated by operation of law in accordance to section 1504, a year after the reconciliation was filed or should have been filed, that is, the entry liquidated by operation of law on August 6, 2001.
Reconciliation entry # 179-XXXX019-9 contained only one underlying consumption entry to be reconciled. ACS records identified this entry as #179-XXXX455-4, entered on November 3, 1999. The entry summary date was November 10, 1999. Based on the test program, the due date for filing the reconciliation was February 8, 2001. ACS records show that on December 14, 2000, the broker transmitted the reconciliation entry via ABI (ACS's "create date"). Levi Strauss transmitted the reconciliation entry as "no change". In a letter dated December 15, 2000, Levi Strauss informed Customs that it was submitting the reconciliation entry package as "no change", meaning that it was not making any adjustments to the original figures recorded in the underlying entry because these figures were not yet available. Having submitted the reconciliation with no changes, Levi Strauss requested an extension in the liquidation under the provision of 19 U.S.C. 1504 (b) as implemented by 19 C.F.R. 159.12 in order to finalize the figures. However, Customs did not act on this request. Customs did not place the reconciliation entry on "accepted status" until February 27, 2002. When the reconciliation entry was placed in "accepted status", Customs placed January 30, 2001 as the reconciliation entry date. We find that Levi Strauss did file the reconciliation entry (before its due date, February 8, 2001) and it made use of its right to request an extension under the provisions of 19 C.F.R. 159.12. There is no evidence that any of the entries were extended or suspended. The ACS record shows no extension notice was ever issued. While there is a letter in the file said to be dated April 19, 2002, that grants an extension of time to file reconciliation entries in connection with a submission of a prior disclosure of a section 1592 violation, there is no evidence that an extension of liquidation was granted in accordance to 19 U.S.C. 1504(b), as implemented by 19 C.F.R. 159.12. The letter contains no reference to liquidation or extension of liquidation; instead, it deals exclusively with contemplated penalty action under 19 U.S.C. 1592. With respect to the extensions of liquidation, 19 U.S.C. 1504(b) requires the Secretary to give notice of an extension to the importer of record and the surety of such importer in the form and manner as may be prescribed by the regulation. The relevant regulation, 19 C.F.R. 159.12(b), provides for notification of an extension to be given to the importer and the importer's surety on a modified CF 4333-A, with a statement of reason for the extension. While the letter to the protestant's attorney might be a notice to the importer, it could not possibly satisfy the requirement that the surety of the importer be notified. The court, in Pagoda Trading Corp. v U.S. 617 F. Supp. 96 (CIT, 1985), aff'd. 804 F. 2d. 665 (Fed Cir., 1986), held that the failure to give a proper instruction results in a liquidation by operation of law. The court in International Cargo & Surety Ins. Co. (Data Memory Corp.) v. U.S. 779 F. Supp. 174, 15 CIT 541, 543 (1991), observed that to extend the time to liquidate, Customs must give notice of the extension to the importer of record in the form and manner prescribed in the regulations and that a failure to provide proper notice results in a liquidation by operation of law. The protestant does not allege that any extension was granted pursuant to the protestant's requests on some of the entries here. Moreover, there is no evidence that the protestant ever submitted the value information for which it requested extension of liquidation.
While the notice of liquidation was generated as a result of the computer program, this situation is distinguishable from the situation in L.G. Electronics U.S.A. Inc. v U.S. 991 F.Supp. 668 (CIT, 1997). In that case, the issuance of a notice of an automatic liquidation
before the one-year period of 19 U.S.C. 1504(a) expired was held not to be a liquidation. The court also held that, because liquidation was suspended, no deemed liquidation could occur; that is, the issuance of a notice contrary to 19 U.S.C. 1504, does not result in a liquidation by operation of law. Here, the period set by 19 U.S.C. 1504 expired because the liquidation of the entries was neither extended or suspended. The reconciliation entry had liquidated by operation of law in accordance to section 1504, a year after the reconciliation was filed or should have been filed, that is, the entry liquidated by operation of law on February 7, 2002.
Reconciliation entry # 179-XXXX029-8, consisted of 11 underlying consumption entries to be reconciled. The earliest underlying entry summary was dated August 13, 1999. Under the test program, the due date for this reconciliation entry was November 13, 2000. Being a non-NAFTA entry, the due date was 15 months from the earliest entry summary date. ACS records show that the reconciliation entry was filed electronically via ABI on January 12, 2001, that is, almost 2 months after the reconciliation entry was due. The file shows that on January 16, 2001, Levi Strauss submitted a letter stating that they were filing the subject reconciliation as "no change" and requested that the liquidation be withheld pending the submission of the final value figures. We find that the submission of this reconciliation entry was untimely since it was filed past its due date of November 13, 2000. As such, we conclude that this reconciliation entry liquidated by operation of law, under the provisions of section 1504, one year after the entry should have been filed as noted above with respect to reconciliation entry 179-XXXX019-9. The entry liquidated by operation of law on November 12, 2001. However, on February 27, 2002, the Port placed the entry on "accepted status" and placed the date of January 30, 2001 as the reconciliation entry date. However, those actions could not reverse the effect of the prior liquidation by operation of law.
The reconciliation entry #179-XXXX030-6, involved 3 underlying entries to be reconciled. The earliest entry summary date was November 16, 1999. Since the issues were non-NAFTA, under the test program the due date was February 14, 2001, that is, fifteen months from the date of the earliest summary date. On January 16, 2001, Levi Strauss transmitted the reconciliation entry via ABI. By means of the letter dated January 16, 2001 (no Customs date stamp), Levi Strauss informed the Port that it was submitting the reconciliation entry as "no change" due to the fact that the importer had not been able to complete the data necessary in order to finalize the reconciliation. Levi Strauss requested an extension of the liquidation in order to file the final figures. Customs did not act on this request. Customs did not place the reconciliation entry in "accepted status" until February 27, 2002. On this date, a reconciliation entry date of January 30, 2001 was placed. However, those actions could not prevent the prior liquidation by operation of law. The reconciliation entry liquidated by operation of law in accordance to section 1504, a year after the reconciliation was filed or should have been filed, for the reason noted above with respect to reconciliation entry 179-XXXX019-9, the entry liquidated by operation of law on February 13, 2002.
Reconciliation entry 179-XXXX032-2 consisted of 176 underlying entries to be reconciled. Based on the test program, the due date of this (non-NAFTA) reconciliation was February 8, 2000, 15 months from the entry summary date of the earliest underlying entry. ACS records show that Levi Strauss transmitted the reconciliation electronically via ABI on January 9, 2001 (ACS's "create date"). The file contains the letter dated January 10, 2001 (but not date stamped by Customs) informing Customs of the submission of the reconciliation as "no change" meaning that Levi Strauss was not making any adjustments to the underlying entries since it did not have the complete figures to finalize the reconciliation. Levi Strauss requested, under the provisions of 19 C.F.R.159.12, an extension in order to finalize the figures. Customs did not act upon this request and ACS records reveal that the subject reconciliation entry was not placed in "accepted status" until February 27, 2002. The reconciliation entry date was recorded to be January 30, 2001. It was on this same date that Customs sought to extend the liquidation, however, the ACS program could not accept the extension because the entry liquidated by operation of law in accordance to section 1504, a year after the reconciliation was filed or should have been filed, as discussed above with respect to reconciliation entry 179-XXXX019-9, on February 7, 2001.
We conclude that these liquidations occurred by operation of law and these are now binding to both the government and the importer. Because liquidations by operation of law occur under the provisions of 1504(a)(4), deemed liquidations cannot be reliquidated.
By Levi Strauss filing this protest "in the event that refunds are determined to be owing", it would entail "reliquidating" these entries, an action that is not permissible under the statute. Where liquidation has occurred by operation of law, Customs cannot reliquidate because the ability of Customs to reliquidate is limited to those liquidations done pursuant to 19 U.S.C. 1500 (see, L.G. Electronics USA v US 21 CIT 1421, 991 F.Supp. 668 (Court of Int'l. Trade, 1997)). Once deemed liquidated, the liquidation is final to both the government and the importer.
In addition, because the failure or refusal of Customs to grant an extension under 19 U.S.C. 1504(b)(2) is not one of the acts listed in 19 U.S.C. 1514(a), such failure or refusal would not appear to be subject to challenge by protest under Playhouse Import & Export, Inc. v U.S. 843 F. Supp. 716, 719 (CIT, 1994) (A plain reading of the statute
[19 U.S.C. 1514(a)] indicates that the seven listed categories are exclusive) and Fujitsu Ten Corp. of America v U.S. 957 F. Supp. 245 (CIT, 1997), aff'd 164 F. 3d 596 (Fed Cir. 1998 (because Fujitsu's protests [challenging the scope of a dumping determination] fall outside the exclusive statutory categories of protestable matters, they are a nullity).
Please note that this decision is only relevant as to the issues contained and does not pertain any issues concerning prior disclosure or other FP&F matters. We do emphasize that the tracking and timely reconciliation of flagged entry summaries is the responsibility of the importer and the filer/broker. In 63 FR 6257 (February 6, 1998) Revised National Customs Automation Program Test Regarding reconciliation it states: "Under the statutory mandate of 19 U.S.C. 1484, the importer is responsible for using reasonable care in declaring at entry, among other things, the proper value, classification and rate of duty applicable to imported merchandise. The public is reminded that the obligation to use reasonable care applies to all aspects of the [reconciliation] prototype including the filing and flagging of the underlying entries and the filing of the reconciliation".
HOLDING:
The protest is to be denied.
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 Customs Form 19 to the protestant no later than sixty (60) days from the date of this letter. Any reliquidation of the entry or entries in accordance with this decision must be
accomplished prior to mailing of the decision. Sixty (60) days from the date of the decision the Office of Regulations and Rulings will make this decision available to Customs personnel and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, the Freedom of Information Act and other public access channels.
Sincerely,
Myles Harmon, Director
Commercial Rulings Division
1 63 FR 6257 (February 6, 1998) Revised National Customs Automation Program Test Regarding Reconciliation.
2 The Automated Commercial System is programmed to calculate the due date for the filing of reconciliation entries (ACS Reconciliation Prototype),. The 15 months is based on the Julian calendar and is, generally, calculated on the payment due date plus 456 days
3 As opposed to NAFTA issues which are due within 12 months of the earliest import date of all entry summaries group within a reconciliation entry (64 FR 73121, (December 29, 1999), Modification of National Customs Automation Program Test Regarding Reconciliation)
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