LIQ-9-01 RR:CR:DR
230031RDC
Port Director
Bureau of Customs and Border Protection
40 South Gay Street
Baltimore, MD. 21202
Att: Gail Douglas
RE: Application for Further Review of Protest number 1303-02-100214
Dear Port Director:
On June 27, 2003, Protest number 1303-02-100214 was received in this office for further review. We have considered the evidence provided and the points raised by your office and the Protestant. Our decision follows.
FACTS:
The Protestant is Lucchini, USA, Inc. (“Lucchini”). The actions underpinning this Protest were taken by staff from Lucchini’s customs broker, Samuel Shapiro & Company, Inc. (“Shapiro”). Lucchini, through its broker, Shapiro, states that it requests per 19 U.S.C. § 1520(c)(1) “relief of additional duties assessed on the liquidation of warehouse entry 655-xxxxx73-5 and withdrawal 655-xxxxx70-7.”
According to the CF 7501 for warehouse entry 655-xxxxx73-5, Lucchini was the importer of record for goods described as “steel wire rd,3/1-5/31/02,USN9,” among others, entered for warehouse subject to special statistical reporting number 9903.72.11, Harmonized Tariff System of the United States (HTSUS), (indicating merchandise subject to quota), free of duty, on May 13, 2002. The subject merchandise was classified under subheadings 7227.90.6053, and 7213.91.6090. We note here that in accordance with Presidential Proclamation 7273 of February 16, 2000, Imports of Certain Steel Wire Rod (65 Fed. Reg. 8621) (February 18, 2000), imported merchandise classifiable under subheadings 7213.91, and 7227.90, HTSUS (hot rolled bar and rod of non-alloy or alloy steel) was subject to a tariff-rate quota, meaning that additional duties will be assessed on amounts imported in excess of certain quantity limitations. The quantity limitations of this tariff rate quota were subdivided for the quota year into quarterly periods. This tariff-rate quota was effective with respect to goods withdrawn from warehouse for consumption, on or after March 1, 2000.
The CF 7501 for warehouse entry 655-xxxxx73-5 is marked by hand by the import specialist at the Baltimore Port. The “free” rate of duty is crossed out and replaced with “5%.” The duty at this rate has been calculated and written on the CF 7501 and subheading 9903.72.11 has been crossed out and replaced with 9903.72.15. The import specialist has written “accepted, 7/12/02” and her initials. According to Shapiro, the warehouse withdrawal for consumption number 655-xxxxx70-7 that is associated with this warehouse entry was filed electronically on June 3, 2002. This consumption warehouse withdrawal entered for consumption all the goods entered into warehouse with warehouse entry 655-xxxxx73-5. However, the hard copy CF 7501 for this consumption warehouse withdrawal was not presented for quota release validation by Customs on that date.
According to the Port of Baltimore the quota associated with special statistical reporting number 9903.72.11, HTSUS, was filled on July 2, 2002. On July 8, 2002, an Entry Specialist, Port of Baltimore sent a Resolution Request to Shapiro which referenced warehouse withdrawal for consumption 655-xxxxx70-7. This Request stated, “please submit a delivery authorized copy of this warehouse withdrawal within 5 calendar days of today’s date.” Shapiro responded on July 11, 2002, stating “please find the att’d copy of authorization for the warehouse entry and the withdrawal entry.” The attachment was the CF 7501 for the consumption warehouse withdrawal number 655-xxxxx70-7, which is stamped with the broker’s name and “ABI entry filed. I certify that I have received an error free transmission via ABI and payment has been scheduled via ACH.” The stamp is dated June 3, 2002. This CF 7501 was date stamped as received by Customs on July 11, 2002.
On July 25, 2002, an Import Specialist, Port of Baltimore, sent Lucchini a CF 29, Notice of Action, advising that the an additional 5 percent duty had been assessed against the protested warehouse entry. Specifically the CF 29 stated: “electronic filing of quota merchandise is not permissible. You failed to obtain quota approval at the time of withdrawal from warehouse. The higher rate of duty is required for this entry @ 5%. This merchandise was illegally removed from warehouse, the quota is closed, and the higher rate of duty is in effect.” The merchandise was described as “hot rolled wire rod in coils” from Italy.
By letter dated August 6, 2002, from Shapiro to the Port of Baltimore the broker requested that it be permitted “ to allow for the return of any remaining product released under 655-xxxxx70-7 but not yet shipped from the bonded warehouse facility, to be returned to Customs custody, and for the warehouse withdrawal entry to be modified accordingly.” The letter further states that it makes this request “in an effort to reduce the ‘over-quota duties’ that are being assessed.” On August 26, 2002, the port denied this request because, “there [was] not statute available to approve” such a request.
According to ACS, the protested warehouse entry 655-xxxxx73-5 was liquidated on August 16, 2002, with the additional over-quota duty of 5 percent assessed. Lucchini argues that “because of misunderstandings regarding [the Port of Baltimore’s procedure that allows for the broker-validated releases for the withdrawal of merchandise from bonded warehouse facilities] the goods were released without prior presentation of documents to Customs. As a result Customs rate advanced the entries to collect ‘over quota duties.’” The Protestant further states: “because of a pattern of practice under the Baltimore pilot warehouse program (for many previous withdrawals [from warehouse] type 31, the fact that the ABI message did not indicate that the withdrawal required ‘document review’ and a misunderstanding by our staff that the paper withdrawal for entry type 32 was required to be submitted with the ACH payment report only, the hard copy CF 7501 was not presented for quota release validation by Customs [until the broker responded on July 11, 2002, to the Port’s resolution request].” (Consumption warehouse withdrawals for quota / visa are entry types 32.)
The instant Protest, dated September 4, 2002, was filed on September 6, 2002, and forwarded to this office on June 24,2003. The Protestant requests reliquidation per 19 U.S.C. § 1520(c)(1) because “the goods that were the subject of [the protested warehouse withdrawal for consumption] would have been eligible for quota status and the associated lower duties, but for a clerical error or other inadvertence regarding the proper local procedures for the processing of warehouse withdrawals.”
ISSUE:
Whether the additional quota duties assessed upon the merchandise entered for consumption pursuant to the withdrawal from warehouse are refundable?
LAW AND ANALYSIS:
It is the opinion of your office that the Protestant’s Request for Further Review meets the requirements of 19 C.F.R. § 174.24 and is therefore entitled to review by this office. However, the Protestant does not contend that the protest is entitled to further review as required by Customs Regulations. The criteria for granting a request for further review are set forth in 19 C.F.R. § 174.24 which states:
Further review of a protest which would otherwise be denied by the port director shall be accorded a party filing an application for further review which meets the requirements of § 174.25 when the decision against which the protest was filed:
(a) Is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise;
(b) Is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts;
(c) Involves matters previously ruled upon by the Commissioner of Customs or his designee or by the Customs courts but facts are alleged or legal arguments presented which were not considered at the time of the original ruling; or
(d) Is alleged to involve questions which the Headquarters Office, United States Customs Service, refused to consider in the form of a request for internal advice pursuant to § 177.11(b)(5) of this chapter.
Therefore, further review will be accorded to the party filing an application for further review which meets the requirements of §174.25 and at least one of the criterion in §174.24. In the subject protest, the Protestant neither files an application for further review nor alleges any of the conditions required in § 174.24 of the decision protested. Consequently, we note at the outset that the criteria for further review as set out in 19 C.F.R. § 174.24 have not been met by the subject Protest and we will treat this application as a request for internal advice per 19 C.F.R. § 177.11.
We also note that though the Protestant requests relief per 19 U.S.C. § 1520(c)(1), the instant Protest was also timely filed, i.e., within 90 days of the liquidation of the protested warehouse withdrawal entry per 19 U.S.C. § 1514(a)(5) and thus this Protest may be considered under the broader 19 U.S.C. §1514. The instant Protest was filed on September 6, 2002, and the protested warehouse entry 655-xxxxx73-5 was liquidated on August 16, 2002. Under 19 U.S.C. § 1514(a) “decisions of the Customs Service, including the legality of all orders and findings entering into the same, as to . . . the liquidation or reliquidation of an entry, . . . shall be final and conclusive upon all persons (including the United States and any officer thereof) unless a protest is filed in accordance with this section (19 U.S.C. §1514(a)(7)). Hence, the matter protested, the liquidation of warehouse entry 655-xxxxx73-5 is subject to protest.
However, the instant Protest is so seriously deficient of legal justification for its arguments and positions that it does not meet the requirements of 19 U.S.C. § 1514(c)(1) which requires that the justification for the protest “be set forth distinctly and specifically” (see also 19 C.F.R. § 174.13). The Protestant has submitted merely a recitation of the facts and its conclusion that a “clerical error or other inadvertence” occurred and is correctable per 19 U.S.C. § 1520(c)(1). Nor does the Protestant provide the legal framework which supports the facts and events. Therefore, we have supplied the legal underpinnings of the events and conclusions as necessary.
Lucchini protests the liquidation of warehouse entry 655-xxxxx73-5 with additional over-quota duties assessed. Section 19 U.S.C. § 1557(a)(1), states, that
any merchandise subject to duty, . . . may be entered for warehousing and be deposited in a bonded warehouse . . . . Such merchandise may be withdrawn, . . . for consumption upon payment of the duties and charges accruing thereon at the rate of duty imposed by law upon such merchandise at the date of withdrawal; . . . .
(Emphasis added.) The warehouse withdrawal for consumption associated with protested warehouse entry 655-xxxxx73-5 was filed electronically on June 3, 2002. The effective date of rates of duty for merchandise imported into the United States is provided by 19 U.S.C. § 1315, which states, in pertinent part,
Articles . . . withdrawn from warehouse for consumption. Except as otherwise specially provided for, the rate or rates of duty imposed . . .on any article . . . withdrawn from warehouse for consumption shall be the rate or rates in effect when the documents comprising the . . . withdrawal from warehouse for consumption and any estimated or liquidated duties then required to be paid have been deposited with the Customs Service by written, electronic or such other means as the Secretary by regulation shall prescribe . . . .
(19 U.S.C. § 1315(a)). 19 C.F.R. § 141.69, applicable rates of duty, states:
The rates of duty applicable to merchandise shall be the rates in effect at time of entry, as specified in § 141.68, except as otherwise specifically provided for by Executive Order, and in the following cases:
(a) Warehouse entries. Merchandise entered for warehouse is dutiable at the rates in effect at the time withdrawal from warehouse for consumption is made in accordance with § 141.68(g).
19 C.F.R. § 141.69(a)). 19 C.F.R. § 141.68(g), time of entry, states:
(g) Withdrawal from warehouse for consumption. The time of entry of merchandise withdrawn from warehouse for consumption (the process preparatory to the issuance of a permit for the release of the merchandise to or upon the order of the warehouse proprietor) is when:
(1) Customs Form 7501 is executed in proper form and filed together with any related documentation required by these regulations to be filed at the time of withdrawal, and
(2) Estimated duties, if any, required to be paid at the time of withdrawal have been deposited.
Therefore, the subject merchandise entered for warehouse is dutiable at the rates in effect at the time the goods were withdrawn from warehouse for consumption in accordance with the special rules for goods subject to quota.
19 C.F.R. § 132.1(e) defines quota-class merchandise as "any imported merchandise subject to limitations under an absolute or a tariff-rate quota." Customs Regulations, 19 C.F.R. § 132.11 provides for quota priority and status:
(a) Determination of quota priority and status. Quota priority and status are determined as of the time of presentation of the . . . withdrawal for consumption, in proper form in accordance with § 132.1(d).
(19 C.F.R. § 132.11(a)). Customs Regulation 132.1(d)(3) defines presentation as
the delivery in proper form to the appropriate Customs officer of: . . . [A] withdrawal for consumption with estimated duties attached.
19 C.F.R. § 132.11(b)(1) states
(b) Documentation and deposit of duties in proper form required. Merchandise covered by . . . a withdrawal for consumption, shall be regarded as entered for purposes of quota priority and shall acquire quota status if:
(1) The . . . withdrawal for consumption is in proper form, and duties have been attached to the . . . withdrawal for consumption in proper form; . . . .
Thus, 19 C.F.R. § 132.1(d) defines presentation as the delivery in proper form to the appropriate Customs officer of essentially the required information and documentation listed in 19 C.F.R. § 141.68(d), which states, “quota-class merchandise, the time of entry for quota-class merchandise shall be the time of presentation of the . . . withdrawal for consumption in proper form, with estimated duties attached . . . .”
Presentation of the withdrawal for consumption in proper form, when the class of merchandise is subject to quota as it is here is dictated by 19 C.F.R. § 142.13, when entry summary must be filed at time of entry, which provides:
(b) Special classes of merchandise -- (1) Quota-class merchandise. Quota-class merchandise shall not be released upon delivery of entry documentation before presentation of: . . . (ii) A withdrawal for consumption with estimated duties attached; . . . .
Consequently, the time of entry for the subject quota-class merchandise withdrawn for consumption was when the entry summary was filed in proper form. The warehouse withdrawal for consumption was filed electronically on June 3, 2002. However, the hard copy CF 7501 for this consumption warehouse withdrawal was not presented for quota release validation by Customs on that date. The hard copy CF 7501 was not presented for quota release validation by Customs until the broker responded on July 11, 2002, to the Port’s resolution request. Therefore the time of entry was July 11, 2002. Since the quota associated with special statistical reporting number 9903.72.11, HTSUS, was filled on July 2, 2002, merchandise was assessed the over-quota rate of duty under subheading 9903.72.15, HTSUS, i.e., 5 percent per 19 C.F.R. 132.5(b).
The Protestant essentially argues that because its broker misunderstood that a paper CF 7501 was required to be presented to Customs for quota release validation when withdrawing goods subject to quota from warehouse for consumption, Customs should reliquidate per 19 U.S.C. § 1520(c)(1) warehouse entry 655-xxxxx73-5 without the 5 percent over-quota duties assessed against it. Section 520(c) of the Tariff Act of 1930, as codified at 19 U.S.C. § 1520(c), is an exception to the finality of §1514. Per 19 U.S.C. § 1520(c):
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; . . . .
Therefore, per § 1520(c)(1) Customs may reliquidate the protested entry to correct “a clerical error, mistake of fact, or other inadvertence.”
Lucchini argues that there was “a misunderstanding” by a member of its broker’s staff as to the requirement that a hard copy CF 7501 warehouse withdrawal for consumption must be filed with Customs when the goods withdrawn are subject to quota. However, the Protestant offers no evidence of this misunderstanding. There are no affidavits or documentary evidence nor is the individual identified nor the nature of the misunderstanding corroborated. Only the Protestant’s statements as prepared by its broker. The Court of International Trade (CIT) has ruled that mere assertions by a complainant, such as those described here, without supporting evidence are not sufficient, nor are statements by counsel considered evidence. See Bar Bea Truck Leasing Co., Inc. v. United States, 5 CIT 124, 126 (1983). Section § 1520(c)(1) requires that the error be manifest from the record or established by documentary evidence. Thus no documentary evidence as been provided nor can it be said that any error is manifest from the record because of the conflicting descriptions of the facts. Consequently no relief § 1520(c)(1) can be granted.
Furthermore, even if Lucchini had provided any evidence § 1520(c)(1) does not afford reliquidation for an inadvertence which amounts to “an error in the construction of a law,” such as is the case here. The Protestant states that there was a “misunderstanding regarding [the Port of Baltimore’s procedure that allows for the broker-validated releases for the withdrawal of merchandise from bonded warehouse facilities].” Even if there were evidence to support the staff’s misunderstanding, i.e., that his or her actions constituted a valid warehouse withdrawal for consumption while the quota was still open, such a mistake is clearly a mistake as to the legal consequences of deliberate actions. See Chrysler Corporation v. United States (87 F. Supp. 2d 1339; Ct. Intl. 2000) holding “mistakes of law, . . . , occur where the facts are known, but their legal consequences are not known or are believed to be different than they really are."
In Hambro Automotive Corp. v United States, (458 F Supp 1220 (Cust. Ct. 1978)), affd 603 F2d 850 (CCPA 1979) Hambro petitioned for reliquidation per § 1520(c)(1) in order to correct errors in the appraised values of automobiles. The errors sought to be corrected consisted of the use by the manufacturer of general expenses and profits in the home market rather than those of the export market in the cost of production figures it supplied to customs. The Customs Court held that such mistakes “must be considered as being, in essence, misunderstandings of the law, namely, the law governing cost of production, section 402a(f) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1402(f). The mistakes were interpretational and decisional. They were not the careless mistakes in routine office tasks, the consequences of which section 520(c)(1) was intended to alleviate. Even if the staff person’s belief that transmitting the warehouse withdrawal for consumption via ABI was sufficient to enter goods under quota for consumption were supported by evidence, this belief is a misunderstanding of the law, namely the law regarding withdrawing quota class merchandise from warehouse for withdrawal. Such a misunderstanding of the law is not correctable under § 1520(c)(1).
Finally, the error here supported by evidence is the Protestant’s failure to comply with 19 C.F.R. § 142.13(b)(1), which states that “quota-class merchandise shall not be released upon delivery of entry documentation before presentation of . . . a withdrawal for consumption” and 19 C.F.R. § 132.11(b)(1) which provides, “merchandise covered by . . . a withdrawal for consumption, shall be regarded as entered for purposes of quota priority and shall acquire quota status if the . . . withdrawal for consumption is in proper form . . . ” which are errors of law. In Prosegur, Inc. v. United States (140 F. Supp. 2d 1370 (Ct. Intl. Trade 2001) Prosegur contended that imported jewelry should have entered free of duty because it was American Goods Returned. Before classifying plaintiff's goods, Customs sought additional information from plaintiff. Plaintiff failed to provide that information to Customs. The court held that it was the failure of documentation that was the basis for the decision and that Prosegur's error was a failure to comply with CFR § 10.1, a mistake of law, not fact. Here, Lucchini failed to supply the hardcopy CF 7501 when required. Based on the foregoing the Protestant is not entitled to relief per 19 U.S.C. § 1520(c)(1).
HOLDING:
The additional 5 percent duty imposed on the protested warehouse withdrawal for consumption cannot be refunded. Therefore the Protest should be DENIED IN FULL.
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 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 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.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles Harmon, Director
Commercial Rulings Division