CLA-2 RR:TC:SM 559609 KKV
Port Director
U.S. Customs Service
San Diego, CA 92173
RE: Application for Further Review of Protest No.
2501-95-100010; 9808.00.3000; Purchases of
emergency war materials by U.S. military
department; untimely certification; 19 CFR 10.112
Dear Sir:
The above-referenced protest, filed on behalf of
Offshore Factories, Inc. concerns the eligibility of certain
electronic conductors, harnesses, etc., for duty-free
treatment under subheading 9808.00.30, Harmonized Tariff
Schedule of the United States (HTSUS). Protestant contends
that excessive duties were assessed, asserting that the
articles at issue are eligible for a complete duty exemption
under this provision as purchases of emergency war materials
by a U.S. military department.
FACTS:
Customs records indicate that, from February 2, 1993
through January 21, 1994, Offshore Factories filed 25
entries consisting of conductors, harnesses, etc., for which
duty-free treatment was sought pursuant to 9808.00.3000,
Harmonized Tariff Schedule of the United States, (HTSUS),
which provides for duty free entry of articles for military
departments, materials certified to the Commissioner of
Customs by the authorized procuring agencies to be emergency
war material purchased abroad. Upon entry, the required
certifications from the Department of Defense (DOD) were not
submitted.
When the certificates were not submitted within six
months of the date of entry, Customs issued a Notice of
Action (Advance) (CF 29) on September 14, 1994, which
indicated that the failure to provide the required
certificates was the reason for the rate advance. When the
protestant failed to respond to the Notices of Action
(Advance) and the certifications were not provided, the
entries were liquidated without benefit of the duty-free
provisions of subheading 9808.00.30, HTSUS. On December 2,
1994, eighteen of the subject entries were liquidated under
subheading 8544.51.80, HTSUS, dutiable at a rate of 5.3
percent. On December 9, 1994, the remaining seven entries
were also liquidated under this same subheading.
On March 1, 1995, the subject protest was timely filed,
requesting an additional 90 days in which to submit the
required certifications. Subsequent to the filing of the
protest, certifications for the 25 entries were submitted to
Customs.
ISSUE:
Whether certifications necessary for the support of a
claim for duty-free treatment under subheading 9808.00.30,
HTSUS, may be submitted by an importer subsequent to the
filing of a timely protest.
LAW AND ANALYSIS:
Title 19, United States Code, section 1514, provides,
in pertinent part, that decisions concerning "classification
and rate and amount of duties chargeable" shall become final
and conclusive upon all persons (including the United States
and any officer thereof) unless a protest is filed in
accordance with this section, or unless a civil action
contesting the denial of a protest, in whole or in part, is
commenced in the United States Court of International Trade
in accordance with chapter 169 of Title 28 of the United
States Code (28 U.S.C. 2631 et seq.) within the time
prescribed by section 2636 (28 U.S.C. 2636) of that title.
The subject protest concerns a dispute involving the
classification and rate and amount of duties chargeable;
accordingly, this protest involves a protestable matter.
Subheading 9808.00.30, HTSUS, provides for the
duty-free treatment of materials certified to the
Commissioner of Customs by the authorized procuring agencies
to be emergency war materials purchased abroad. This
provision is applicable only when a certificate executed by
a duly authorized officer or official of the applicable
military department is presented in accordance with section
10.102, Customs Regulations (19 CFR 10.102).
Customs San Diego District Notice 93-062, dated July 7,
1993, in addressing the procedure to be followed in
connection with importations for Defense Contract
Management Command International (DCMCI) provides, in
pertinent part, that "[t]he original duty free certificate,
furnished by DCMCI, to an importer or authorized agent,
should be submitted to Customs within 6 months from the date
of entry or release under the immediate delivery procedure."
Cognizant of the constraints placed upon an importer
required to submit a document whose production is within the
control of a third party, Customs provides procedures to be
followed by an importer seeking an extension of the time
period for filing such certificates. District Notice 93-062
states:
If an importer or authorized agent does
not receive a duty free entry certificate
within the 6 month period for submission
to Customs, he may, according to
113.43(a) C.R., request an extension of 2
months. As an alternative procedure, an
importer or authorized agent may request
an extension of liquidation in order to
have sufficient time to resolve
certification problems
Section 10.112 of the Customs Regulations (19 CFR
10.112), provides, in pertinent part:
Whenever a free entry or a reduced duty
document, form, or statement required to
be filed in connection with the entry is
not filed at the time of the entry or
within the period for which a bond was
filed for its production, but failure to
file it was not due to willful negligence
or fraudulent intent, such document,
form, or statement may be filed at any
time prior to liquidation of the entry
or, if the entry was liquidated, before
the liquidation becomes final.
Willful negligence implies that there was a deliberate
determination not to perform a known duty, or a reckless
disregard of the safety or the rights of others, as
manifested by the conscious and intentional omission of the
care proper under the circumstances. In Mattel, Inc. v.
United States, 67 CCPA 74, C.A.D. 1248 (1980), it was held
that the intentional failure to file documents required by
the Customs Regulations is not the legal equivalent of
"willful negligence," as these words are used in 19 CFR
10.112. The court stated that one of the elements included
in the term "willful negligence" is "the reckless disregard
of the consequences of the act done or failure to act by the
party."
Based upon the information before us, we find no
evidence which demonstrates that the delay in filing was a
result of willful negligence or fraudulent intent. Absent
specific proof showing that the failure to file the
documents at the time of entry was deliberate, Customs may
not conclude that the protestant's failure was due to
willful negligence.
Because there is no evidence that either fraudulent
intent or willful negligence caused the filing delay, the
protestant had the option under 19 CFR 10.112 of submitting
the documents required to substantiate eligibility under
subheading 9808.00.30, HTSUS, at any time before the
liquidations of the entries became final. Generally, a
liquidation becomes final 90 days after the date of
liquidation unless a timely protest is filed. See 19 U.S.C.
1514; 19 CFR 159.9(c)(2)(iii); Occidental Oil & Gas Co. v.
United States, 13 CIT 244 (1989). However, a liquidation
cannot become final during the pendency of a timely and
properly filed protest of the liquidation (See United States
v. New Drinks, 14 Ct. Cust. App.16, T.D. 41530 (1926); see
also, C.S.D. 86-21, dated May 16, 1986), for a discussion of
the finality of liquidation). In Headquarters Ruling Letter
(HRL) 555269, dated December 20, 1990, Customs recognized
that if liquidation was timely protested, the protestant
should be afforded an opportunity to submit documentation
establishing free or reduced duty entry where there is no
evidence of willful negligence or fraudulent intent.
Because the subject protest was timely filed and the
required certifications were submitted before the
liquidation of the entries became final, it is our
determination that the subject merchandise is entitled to
the complete duty exemption provided by subheading
9808.00.30, HTSUS. Accordingly, the subject protest should
be granted in full.
HOLDING:
In the absence of a specific showing of willful
negligence or fraudulent intent, certifications necessary to
support a claim for duty-free treatment may be submitted
where a timely protest was filed and the submission of the
certificates under subheading 9808.00.30, HTSUS, occurs
before the liquidation of the underlying entries becomes
final. This protest should be granted in full.
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 take
steps to make the decision available to Customs
personnel via the Customs Rulings Module in ACS, and to the
public via the Diskette Subscription Service, the Freedom of
Information Act and other public access channels.
Sincerely,
John Durant, Director
Tariff Classification
Appeals Division