LIQ-9-01 RR:CTF:ER
230694 RDC
Port Director
Customs and Border Protection
9777 Via De La Amistad
San Diego, CA 92154
Att: Deanna Boldt
RE: Protest number 2506-04-100056; Application for Further Review of Protest; 19 U.S.C. § 1520(c); 19 U.S.C. § 1514; garlic; antidumping duty.
Dear Sir or Madam:
On 9/15/2004, Protest number 2506-04-100056 was received in this office pursuant to a request 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, Guillermo Lizarraga (Lizarraga), a customs broker, is the importer of record for the protested entry. Lizarraga protests the denial of its petition for reliquidation per 19 U.S.C. § 1520(c)(1). This petition argued that CBP made a mistake of fact when it concluded that the garlic imported with entry number xxx-xxxxxx6-7 was of Chinese origin.
According to the entry summary, the relevant merchandise was garlic, entered under subheading MX0703.20.0090, Harmonized Tariff System of the United States, (HTSUS), on 3/6/1999, with a zero rate of duty. The country of origin stated is Mexico. The ultimate consignee is Jacobs Farms (Jacobs). The cargo manifest for the entry reflects that an amount of green garlic, among other produce, described as “grown in Mexico” and owned by Agroproductos Del Cabo SA de CV, was laden at Tijuana on 6/3/1999 and destined for San Diego. The invoice number 6028, dated 6/3/1999 reflects the same merchandise and information as the manifest and is issued by Agroproductos to Jacobs Farms in California.
By Notice of Action dated 8/21/2000, Jacobs was advised that a CBP laboratory analysis “using reference samples previously analyzed” evidenced that the country of origin for the entered garlic was [the People’s Republic of] China.” This lab is located in Virginia. The ACS copy of the lab analysis for this entry, report number 0-1999-40011, dated 12/23/1999, lists Agroproductos del Cabo as the “maker” and the importer as Jacobs Farms. Based on a sample of garlic received in the lab 3/12/1999, the lab report concluded that “the sample, whole garlic bulbs, ha[ve] a trace element profile which is consistent with our Chinese reference samples.” The Notice of Action to Jacobs further advised, among other things, that the protested entry number was assessed antidumping duty under case A-570-831.
On 11/21/2001, Jacobs, filed protest number 2501-01-100140 against the liquidation of entry numbers xxx-xxxxxx6-7 and xxx-xxxxxx9-9. However, entry xxx-xxxxxx6-7, the subject of the instant protest, had not yet liquidated. Therefore, per 19 U.S.C. § 1514(c)(3), which requires liquidation of an entry as a condition precedent to protest, this entry could not yet be protested. Consequently, this entry was not considered in that protest and protest number 2501-01-100140 was considered only as against the liquidation of only entry xxx-xxxxxx9-9. Pursuant to an application for further review, that protest was denied for lack of evidence (see HRL 562326 (4/24/2002)). Subsequently, Lizarraga filed summons (Docket number 02-00670) in the Court of International Trade (CIT). Among the allegations, Lizarraga contended that the garlic imported with entry at issue here, xxx-xxxxxx9-9, was planted, grown and harvested in Mexico and that the lab analysis conducted by CBP was defective and reached an erroneous conclusion. However, Lizarraga withdrew this complaint before the court took any action.
On 2/15/2002, CBP liquidated the protested entry per Message number 1346203, dated 12/12/2001, containing the Department of Commerce liquidation instructions. By letter received 11/1/2002 Lizarraga filed a petition per 19 U.S.C. § 1520(c)(1) for reliquidation of this entry, contending that CBP’s conclusion, that the garlic entered was of Chinese origin, was a mistake of fact. Lizarraga argued that the garlic entered was “planted, grown and harvested in Mexico” and that, consequently, the country of origin for the garlic is Mexico. Lizarraga stated that where the garlic is planted, grown and harvested is a question of fact and correctable by § 1520(c)(1). On 5/3/2004, the port denied Lizarraga’s § 1520(c)(1) petition for reliquidation because the lab’s conclusion was not a mistake of fact and therefore could not be remedied by § 1520(c)(1). On 7/27/2004 Lizarraga filed the instant protest against the denial of its § 1520(c)(1) petition and it was received in this office pursuant to an application for further review on 9/15/2004.
During a telephone conversation with the staff attorney in this office, the CBP lab representative who signed the initial lab report, number 0-1999-40011, stated the following. The lab representative explained the process used to determine where an agricultural good is grown. A sample, in this case garlic from the protested entry, was ground and analyzed. Specifically, the characteristics of certain trace elements, e.g., calcium, phosphorous, were compared to “reference samples” of garlic known to have been grown in the People’s Republic of China (PRC) and garlic known to have been grown in Mexico. According to the lab representative, the Virginia lab that performed the first analysis of the imported garlic had a very limited number of reference samples. This lab report, number 0-1999-40011, concluded that “the sample, whole garlic bulbs, has a trace element profile which is consistent with our Chinese reference samples.”
Subsequent to the Virginia lab’s analysis of the garlic at issue, it was decided that such analysis as described would be conducted only at the CBP lab in Georgia. The Virginia lab sent some “reference samples” of garlic previously analyzed for other cases to the Georgia lab which then conducted the same analysis. According to the lab representative in Virginia, the Georgia lab found the results of the Virginia lab’s analysis inconclusive on some samples, agreed with Virginia lab’s determination on one sample, and disagreed with the Virginia lab on others. The lab representative stated that the Georgia lab had a much larger number of garlic reference samples and thus, it was believed that the Georgia lab results were more accurate than those of the Virginia lab.
On 6/16/2005, three bulbs of garlic representative of that garlic imported with the disputed entry were sent from the Virginia CBP lab to the CBP lab in Georgia. That lab conducted additional testing and stated the results of this analysis on 6/17/2005: “Using multivariate discriminant statistical analysis, the trace metal profile of the sample was compared to our garlic databases from China and Mexico. The results indicate a greater than 93 % probability match with Mexican garlic. Canonical discriminant analysis also indicates a match with Mexican garlic.” On 8/03/2005, the CBP lab in Georgia issued report number SV20050923, which it characterized as “a supplemental report for report number 0-1999-40011.” This supplemental report number SP20050029 stated “Additional information in the form of a better populated library of reference standards of garlic specimens as the basis for the reanalysis of this sample. . . . .” The results of that analysis . . . indicate “a greater than 93% probability match with Mexican garlic.”
ISSUES:
Was CBP’s conclusion that the entered garlic was grown in the PRC a mistake of fact correctable per 19 U.S.C. § 1520(c)(1)?
LAW AND ANALYSIS:
The refusal to reliquidate an entry under 19 U.S.C. § 1520(c) is a decision subject to protest per 19 U.S.C. § 1514(a)(7) and 19 C.F.R. § 174.11. Section 1514(c) provides that a protest against the refusal to reliquidate an entry per § 1520(c)(1) must be filed within 90 days of that denial. (19 U.S.C. § 1514(c)(3)(B)). Lizarraga’s § 1520(c)(1) petition was denied on 5/3/2004. The instant protest was filed on 7/27/2004 and is timely.
In its petition for reliquidation of entry number xxx-xxxxxx9-9 per 1520(c)(1), Lizarraga contends CBP’s conclusion, that the garlic entered was of Chinese origin, was a mistake of fact. The protestant argues that the garlic entered was “planted, grown and harvested in Mexico” and that, consequently, the country of origin for the garlic is Mexico. Lizarraga states that the entered garlic is eligible for tariff preference under the North American Free Trade Agreement (NAFTA) and should not have been assessed antidumping duty at liquidation.
Section 520(c) of the Tariff Act of 1930, was codified at 19 U.S.C. § 1520(c), (this section 1520(c)(1) was repealed by the Miscellaneous Trade Act of 2005) as an exception to the finality of §1514. Section 1520(c) states,
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, . . . .
Therefore, per § 1520(c)(1), CBP may reliquidate an entry to correct “a clerical error, mistake of fact, or other inadvertence,” but this section does not provide relief when the error or mistake amounts to “an error in the construction of a law.” The error or mistake also must be adverse to the importer and manifest from the record or established by documentary evidence (19 U.S.C. § 1520(c)(1)).
Country of origin for purposes of the North American Free Trade Agreement (NAFTA), tariff preference is determined pursuant to the rules of origin in General Note 12(b), HTSUS, codified in U.S. law as 19 U.S.C. § 1202:
For purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as ‘goods originating in the territory of a NAFTA party’ only if --
(i) they are goods wholly obtained or produced entirely in the territory of Mexico, . . . .
(General Note 12(b)(i), HTSUS). General Note 12(n)(ii), HTSUS, provides that: “goods wholly obtained or produced entirely in the territory of Mexico, . . .” include:
(ii) vegetable goods, as such goods are defined in this schedule, harvested in the territory of one or more of the NAFTA parties . . . .
Fresh garlic is properly classified in subheading 0703.20.00, HTSUS, and as such, falls within the scope of Section II, Vegetable Products, HTSUS. Additionally, Part II, § 4(1)(b) of the NAFTA Rules of Origin Regulations (19 C.F.R. Part 181 Appendix), provides that, “a vegetable or other good harvested in the territory of one or more of the NAFTA countries” qualifies as a NAFTA originating good.”
Thus, applying the NAFTA Rules of Origin, garlic grown and harvested in Mexico would be “wholly obtained or produced” entirely in the territory of the Mexico and therefore, Mexico would be the country of origin for such garlic. Conversely, garlic grown and harvested in the PRC is of Chinese origin and ineligible for preferential tariff treatment under the NAFTA and subject to antidumping duty. Lizarraga argues that CBP’s conclusion, that the garlic entered was grown and harvested in the PRC, and thus of Chinese origin, was a mistake of fact. The protestant contends that the garlic entered was “planted, grown and harvested in Mexico” and that, consequently, the country of origin for the garlic is Mexico.
The courts have held that 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” (Hambro Automotive Corporation v. United States, 603 F. 2d 850 (1979), quoted in Concentric Pumps, Ltd., v. United States, 643 F. Supp. 623 (1986); see also, C.J. Tower & Sons of Buffalo, Inc. v. United States, 336 F. Supp 1395 (1972), aff’d, 499 F. 2d 1277 (1974), and Universal Cooperatives, Inc. v. United States, 715 F. Supp. 1113 (1989)). A mistake of fact has also been described 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.” C.J. Tower & Sons of Buffalo, Inc. v. United States, 336 F. Supp. 1395, 1399 (1972), aff’d 499 F. 2d 1277 (1974).
The determination of country of origin of a good is necessarily a legal conclusion because it is determined by applying the laws governing country of origin to facts (see also HRL 562353, 7/30/2002). However, the CBP laboratory staff is comprised of individuals who have training, education and expertise in science. They are charged with performing scientific analysis and making scientific determinations when requested by other CBP personnel who lack the expertise to perform such functions. The CBP laboratories do not make legal decision or offer legal opinions. Accordingly, CBP laboratory conclusions are generally conclusions of fact.
In Lizarraga’s case, the country of origin conclusion was based on a mistake of fact. CBP’s first lab report’s conclusion, that “the sample, whole garlic bulbs, ha[ve] a trace element profile which is consistent with our Chinese reference samples” was taken to mean that the garlic was grown and harvested in the PRC, which clearly is a determination of fact. It seems that the lab’s conclusion was also intended to mean that the garlic’s trace element profile was more consistent with Chinese reference samples than Mexican reference samples. The fact unknown about the garlic at liquidation was that, as compared to a larger number of reference samples, the garlic was so consistent with the samples grown and harvested in Mexico that there was “a greater than 93% probability match with Mexican garlic,” meaning that there was a greater than 93% probability that the garlic at issue was grown and harvested in Mexico.
In Taban Company v. United States, the Court of International Trade (CIT) addressed the difference between a mistake of fact and mistake of law (960 F. Supp.
326 (Ct. Intl. Trade 1997). In Taban, the CIT granted relief under § 1520(c)(1) to the plaintiff who contended that its broker was mistaken as to the physical nature of the merchandise at issue, and as a result, entered the merchandise under an incorrect subheading. The goods at issue in Taban were described by the CIT as “dual tape cassette combination stereos, each of which incorporates a tape player incapable of recording.” (Id. at 327-8). According to the plaintiff, the broker thought that “the imported merchandise consisted of battery-operated, portable, radiobroadcast receivers not combined with sound recording or reproducing apparatus.” (Id. at 330). The entered goods were actually not battery operated nor non-portable and were equipped with sound reproducing cassette tape decks.
In Taban, the CIT explained the difference between a mistake of fact and mistake of law:
Decisions of this Court have established a distinction between cases involving a mistake of law and those involving a mistake of fact based on whether the importer had actual knowledge of the nature and use of the good at issue. In cases where the Court has concluded an importer did not know the facts as they really were, and therefore lacked true knowledge of the ultimate character of the merchandise, the Court has found a mistake of fact existed.
(Id. at 334). The Taban Court held that the:
broker made a mistake of fact when she entered the merchandise believing it to be radiobroadcast receivers instead of combination articles. This Court finds the “exact physical properties” of the merchandise were not known to the broker or to Customs in this case.
(Id. at 335). In the Protestant’s case at issue here the “exact physical properties” of the garlic were not known to CBP, i.e., CBP did not know that when compared with a larger reference sample, the entered garlic would be found to be more consistent with garlic grown and harvested in Mexico that with garlic grown and harvested in the PRC.
When the first CBP lab report ,number 0-1999-40011, after analysis of a sample of garlic from the protested entry, concluded that “the sample, whole garlic bulbs, ha[ve] a trace element profile which is consistent with our Chinese reference samples,” this was a factual determination because it was an opinion regarding an immutable characteristic of the garlic. This immutable characteristic being where the garlic was grown and harvested. The supplemental lab report, number SP20050029, also contained a factual opinion, i.e., there is “a greater than 93% probability match” with garlic grown and harvested in Mexico. Like the broker in Taban, the CBP lab in Virginia “lacked true knowledge of the ultimate character of the merchandise.” That is, based on the limited reference sample library, the Virginia lab was unaware that the trace metal profile of the entered garlic was “a greater than 93 % probability match” garlic grown and harvested in Mexico. Further, this lab “did not know the facts as they really were,” i.e., that when compared with a larger reference sample of garlic from the PRC and Mexico, the garlic was most probably grown and harvested in Mexico. Therefore, the Virginia lab’s conclusion evidences that it “lacked true knowledge of the ultimate character of the merchandise,” which the Taban Court held was a mistake of fact correctable per § 1520(c)(1).
A mistake as to the nature of the goods entered which constituted a mistake of fact remedied by § 1520(c) was the subject of G & R Produce Co. et. al. v. United States, 381 F. 3d 1328 (Fed. Cir. 2004)) aff’g Black & White Vegetable Co. v United States, (125 F Supp 2d 531 (Ct. Int’l Trade 2000)). In G & R Produce, the plaintiffs were importers that had entered Persian limes under one subheading of the HTSUS based on previous practice. The institution of a new breakout of the subheading for statistical purposes alerted the importers and CBP that Persian limes were properly classified under a subheading other than that under which it had been their practice to enter the limes. The new breakout advised that the correct botanical designation for Persian limes is Citrus latifolia. Previously, Persian limes were liquidated under subheading for limes of the Citrus aurantifolia variety.
CBP however, denied the importers’ § 1520(c)(1) petitions for reliquidation of the Persian limes liquidated under the wrong subheading as limes of the Citrus aurantifolia variety. It was CBP’s position that the importers had taken the word “limes” in the incorrect subheading to mean “all limes, both of the Citrus latifolia aurantifolia variety.” Such a misapprehension of the HTSUS which resulted in misclassification of the limes was a mistake of law not correctable by § 1520(c)(1), according to Customs. In G & R Produce, the Court of Appeals for the Federal Circuit (CAFC) stated:
A mistake of fact occurs when either: "(1) the facts exist, but are unknown, or (2) the facts do not exist as they are believed to." Hambro Auto. Corp. v. United States, 66 C.C.P.A. 113, 603 F. 2d 850, 855 (CCPA 1979). For example, we found that a mistake of fact meriting reliquidation occurred in ITT Corp., 24 F. 3d at 1385, where both Customs and the importer believed that the imported automobile parts were other than they actually were.
(Id. at 1332). The CAFC in G & R Produce held
We agree that a mistake of fact not amounting to an error in the construction of the law caused the erroneous liquidation of G&R's limes. A fact--that the botanical designation of Persian limes is "Citrus latifolia"--existed, but was unknown; and a fact--that "Citrus aurantifolia" applies to all limes--was believed, but was not correct.
(Id. at 1333). In addition, the CAFC found that the mistake of fact as to the proper botanical description of Persian limes,
does not amount to an error in the construction of a law because it resulted in the misapprehension of subheading 0805.30.40, HTSUS, and the erroneous classification of Persian limes. If that were the case, section 1520(c)(1) would be meaningless because all mistakes of fact covered by section 1520(c)(1) result in an erroneous liquidation. See id. at 1388 ("Accepting the government's argument that this case involved a mistake of law would lead to the absurd result that section 1520(c)(1) could never be used to correct a liquidation because then all liquidations would involve a question of law.").
(Id.) Thus, the G & R Produce Court found that a mistake of fact, a fact that existed but, was unknown, and an unknown fact that did exist, though the result of these misapprehensions was the misclassification of the limes, was still a mistake of fact able to be remedied by § 1520(c)(1).
In the same way, the mistake of fact that occurred in Lizarraga’s case, the conclusion that the garlic was grown and harvested in the PRC, though it resulted in an error in the country of origin of the garlic, is still a mistake of fact able to be remedied by § 1520(c)(1). In the protestant’s case, the fact that the entered garlic was consistent with garlic grown and harvested in Mexico, when compared to a larger reference sample than that on hand at the Virginia CBP lab, was a fact that existed but was unknown when the entry was liquidated. Further, as is evidenced by the second lab report, the fact that the trace elements of the imported garlic were more consistent with Chinese samples than with Mexican samples was a fact that did not exist, but was believed to exist at liquidation. This mistake of fact as to where the entered garlic was grown and harvested does not amount to an error in the construction of law because it resulted in an incorrect country of origin determination. The erroneous origin determination was not a result of the “a mistaken belief as to the legal consequences of those facts” (see Taban, supra). The mistaken country of origin determination in this case was not the product of the misapplication of the country of origin laws. Therefore, this error was a mistake of fact correctable by § 1520(c)(1).
Finally, we note that HRL 562751 (5/10/2004) also provides support for this conclusion. In that case, CBP explained that, per Libas, Ltd. v. United States, (118 F. Supp 2d (Ct. Int’l Trade 2000) CBP’s laboratory testing methods are presumed reliable, but that presumption may be rebutted. In HRL 562751 fresh garlic was first tested by the CBP lab in Los Angeles which concluded that the garlic was grown and harvested in the PRC. Subsequently, samples of this garlic were tested again at the CBP lab in Savannah, which concluded that the garlic was grown and harvested in Mexico. HRL 562751 concluded that the results of the second testing of the garlic in Savannah successfully rebutted the presumption of correctness of the Los Angeles testing. Thus, CBP found that the garlic at issue originated in Mexico.
HOLDING:
CBP’s conclusion that the entered garlic was grown in the PRC was a mistake of fact correctable per 19 U.S.C. § 1520(c)(1). The entry should be reliquidated reflecting that the garlic was of Mexican origin.
The protest should be Granted IN FULL.
In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), 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 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 CBP personnel, and to the public on the CBP 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 & Trade Facilitation Division