LIQ-4-01-LIQ-9-02-LIQ-15
RR:CR:DR 229935 IOR
Area Director
Customs and Border Protection
C/o Chief, Liquidation and Protest Branch
Building 77
JFK International Airport
Jamaica, NY 11430
RE: Protest AFR 1001-01-103071; 19 U.S.C. 1501; 19 U.S.C. 1505; interest; bill for interest; New Zealand Lamb Company, Inc. v. United States
Dear Madam:
This is in reference to Protest AFR 1001-01-103071 which concerns the reliquidation of an entry with a refund of interest and the subsequent reliquidation of that entry to recover the interest previously paid. Our decision follows a July 17, 2003 telephone conference between staff from this office and counsel for the protestant. Our decision follows.
FACTS:
The protest concerns entry no. 614-xxxx090-8, made on October 20, 1994, and liquidated on February 24, 1995. The February 24, 1995 liquidation was not protested. The entered merchandise consisted of a certain tomato sauce preparation. The subject entry was designated for reliquidation under section 1410 of the Tariff Suspension and Trade Act of 2000, Pub.L. No. 106-476 (hereinafter "the Trade Act of 2000"). In section 1410(a) of the Trade Act of 2000, the law stated that Customs "shall, not later than 180 days after the receipt of the request described in subsection (b), liquidate or reliquidate each entry…which at the time of the original liquidation was classified under subheading 2002.10.00...at the rate of duty that would have been applicable to such merchandise if the merchandise had been liquidated or reliquidated under subheading 2103.90.60 of the Harmonized tariff Schedule of the United States… on the date of entry.” In section 1410(b), the law stated that the entry can only be reliquidated if the importer files a request for reliquidation with Customs within 90 days after enactment of the Trade Act of 2000 and the request contains all the information necessary to enable Customs to locate and confirm that the entry fell within the scope of the Trade Act of 2000. Under section 1410(c) Customs was to pay “[a]ny amounts owed by the United States pursuant to the liquidation or reliquidation of an entry…not later than 180 days after the date of liquidation or reliquidation.” The Trade Act of 2000 was enacted on November 9, 2000.
The request for reliquidation, required under section 1410(b) of the Trade Act of 2000, was provided on November 21, 2000. On February 2, 2001, Customs reliquidated the entry with a refund of the excess duty and interest on that excess amount. A bulletin notice of the reliquidation was posted. Upon receipt of verbal guidance from Headquarters that the refund of duty should not have been made with interest, on May 18, 2001, the responsible Customs officer issued a Customs bill to recover the interest that had been paid to the protestant.
According to Customs Automated Commercial System (ACS) Liquidation information, the bill status, as of the date of this decision is “sent to revenue”, which indicates that the May 18, 2001 bill has not been paid. The entry screen in ACS states “fully paid”; however that statement refers to the payment of the estimated duties.
The subject protest was filed on July 24, 2001, protesting Customs action of May 18, 2001. The protestant asserts that the May 18, 2001 action was an untimely reliquidation under 19 U.S.C. §1501, and that the protestant was entitled to interest under 19 U.S.C. §1505. The protestant requests suspension of the subject protest and AFR pending a case in the Court of International Trade regarding the authorization of interest under the Trade Act of 2000.
ISSUES:
Whether the May 18, 2001 action of Customs was timely.
Whether the protestant was entitled to interest upon the reliquidation of the subject entry.
Whether the protestant has met the requirements for filing a protest pursuant to 19 U.S.C. §1514.
LAW AND ANALYSIS:
Customs decisions on charges and exactions, which include the assessment of interest, are independent of its decisions on liquidation or reliquidation. Castelazo & Associates, a/c Galaxy Tapes v. United States, 126 F.3d 1460, 1463 (Fed. Cir. 1997). With regard to the subject entry, Customs initially made the decision to refund the excess duty with interest at the time of the reliquidation, on February 2, 2001. Subsequently Customs determined that the refund of the excess duty with interest was incorrect, and issued a bill for the interest that was erroneously paid. In New Zealand Lamb Company, Inc. v. United States, 40 F.3d 377 (Fed. Cir. 1994), Customs had given notice to the importer of liquidations for Countervailing duties, and did not include interest in the liquidations. Subsequently, Customs billed the importer for interest, and the importer challenged that decision. In that case, the court concluded that “there was no decision regarding interest -- so as to trigger the running of the ninety-day limitations period – until Customs actually billed New Zealand Lamb for interest.” Id., at 381. The assessment of interest in that case occurred more than 90 days after the liquidations of the entries. Prior to the assessment of interest there had been no decision on interest to be final.
In Castelazo & Associates, entries were liquidated with antidumping duties on March 4, 1988, and on April 8, 1988 Customs billed the importer for interest. Plaintiff filed a protest contesting only the assessment of the antidumping duties on June 23, 1988. The interest was not protested at that time. Customs partially approved the protest on March 16, 1990, and the interest liability was recalculated. Within ninety days of the reliquidation, Plaintiff contested the interest assessment in the March 16, 1990 reliquidation. Customs denied the protest on August 17, 1990 holding that it was untimely because it was not filed within ninety days of the bills for interest issued on April 8, 1988. Plaintiff brought suit in the Court of International Trade to challenge the denial of its protest and recover the interest it had paid. The Court of International Trade granted summary judgment to the Plaintiff, which the Government appealed to the Court of Appeals.
The Court of Appeals reversed the lower court stating “Customs’ decisions on charges or exactions, such as assessed interest, are independent of its decisions on liquidation or reliquidation. Customs has made a decision as to interest when it ‘(i) informs the importer that interest is due and (ii) sets forth either the amount of interest due or the method for calculating that amount in terms of the rate.’ New Zealand Lamb (internal citations omitted)” Id. at 1463. The Court held that the interest assessment on April 8, 1988 was ripe for protest and Plaintiff had ninety days to protest that assessment of interest.
In both Castelazo & Associates, and New Zealand Lamb Company it was held that a bill for interest is a “charge or exaction” and is protestable under 19 U.S.C. §1514(a)(3), and that Customs billing for interest commences the running of the 90-day protest period. In those cases, unlike in the instant case, the interest was billed. In the instant case, at the time of the reliquidation Customs had determined that interest on the refunded duties would be paid, and determined the amount of that interest. In accordance with Castelazo & Associates, no protestable decision on interest had yet been made, because the importer had not been informed that interest is due. Because there had been no charge, no 90-day limitation period had begun. Further, nothing in the statutes or regulations precludes Customs from collecting an overpayment of an amount not involved in the liquidation, or limits the time in which Customs may collect such overpayment. Therefore nothing precluded Customs subsequent bill of May 18, 2001 for the collection of the overpaid interest.
As stated above, the subsequent billing for the overpayment of interest is a charge or exaction for purposes of filing a protest under 19 U.S.C. §1514(a)(3), and therefore the instant protest was timely filed as it was filed within 90 days of Customs May 18, 2001 bill for interest.
Congress has limited challenges to charges by section 1514(c)(2)(B), to “any person paying any charge or exaction.” In order to give effect to the language in subparagraph (c)(2)(B), the payment of the charge by the protestant is a necessary element of entitlement to protest. This position has previously been taken in HQ 227420, dated February 25, 1997, and HQ 228300, dated August 22, 2000. In HQ 228300, we stated as follows:
[I]n order to protest a “charge or exaction” pursuant to section 1514(a)(3), the party so protesting must have paid that “charge or exaction.” The paying of a “charge or exaction” is a protestable event pursuant to section 1514(c)(2). The simple billing, without actual payment, of a “charge or exaction” does not satisfy section 1514(c)(2), which allows a party paying the “charge or exaction” to protest.
Therefore, because the bill which is the subject of the protest has not been paid, the protestant has failed to meet the requirements for filing a protest under section 1514 against a “charge or exaction.” Even if the bill had been paid prior to the issuance of this decision, at the time the protest was filed, and within the 90-day filing period, the bill had not been paid and the requirements to file a protest against a charge or exaction were not met.
The May 18, 2001 bill for interest was not a reliquidation, but was a specific decision regarding interest. Therefore, the decision was also not made under the provision for voluntary reliquidation, 19 U.S.C. §1501, which is silent as to the assessment of interest. Had no decision regarding interest been made in the February 2, 2001 reliquidation, section 1501 would also not present any time limit for the subsequent assessment of interest, for the same reason; that is, it is silent as to the assessment of interest.
With respect to interest owing upon the refund of the duties deposited, the issue was the subject of HQ 229222, dated March 8, 2002. In HQ 229222, we determined that because the Trade Act of 2000’s instructions exclude any provision for interest payment for section 1408, and other sections, Customs is impeded by law to issue any interest payment for any entry liquidated under this section. Chapter One of Subtitle B of the Trade Act of 2000 provided explicit instructions for Customs to liquidate and reliquidate several categories of goods. It included instructions concerning the time frames and terms for repayment of duties to the affected importers. In some sections, such as 1402, 1403, 1412 and 1425, it specifically provided for the calculation and payment of interest on the refunds. However, no such language regarding the payment of interest was included in sections 1408 or 1410. The language in section 1410(c) is identical to that in section 1408(c). Contrary to the arguments raised by protestant, we do not find that 19 U.S.C. §1505 is applicable to the reliquidations mandated by the Act, and that the payment of interest on the refunded duties in the February 2, 2001 reliquidation was in error.
In conclusion, nothing precludes Customs from issuing a bill for an overpayment of interest, and as Customs was not authorized to refund the duties with interest under the Trade Act of 2000, Customs is entitled to recover the interest erroneously paid. Moreover, the bill for interest has not been paid and the protestant has not met the requirements for protesting a charge or exaction. Therefore the protest of the interest bill should be denied.
With regard to the request for suspension of the protest, Customs is not authorized to take such action under the provisions of 19 U.S.C. §1515(a).
HOLDING:
Nothing limits Customs time in which to collect an overpayment of interest.
The protestant was not entitled to interest upon the reliquidation of the subject entry under the Trade Act of 2000.
The protestant did not pay the bill for interest, and therefore failed to comply with the statutory requirements for a protest in section 1514, which under subsection 1514(c)(2)(B) allows a person paying such a charge or exaction to protest. Therefore the protest should be denied for failure to comply with all the requirements of filing a protest pursuant to section 1514.
The protest should be DENIED. 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 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 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
Acting Director
Commercial Rulings Division