CLA-2 RR:TC:SM 559664 MLR
Area Port Director
U.S. Customs Service
1000 Second Avenue, Suite 2100
Seattle, Washington 98104-1020
RE: Application for Further Review of Protest No.
3001-93-100563 concerning wax candles; country of
origin; extensions of liquidation; transaction value;
antidumping duties; Macau; China
Dear Sir:
The above-referenced protest filed by Mr. Anthony L.
Piazza, on behalf of the protestant, Sunfresh DBA Intersave
USA, was forwarded to this office for further review,
concerning the proper country of origin, method of
valuation, and extension of liquidation of an entry of wax
candles allegedly from Macau. The entry of candles covered
by this protest was dated November 3, 1989, the entry was
liquidated on July 16, 1993, and the protest was timely
filed on August 19, 1993.
FACTS:
The merchandise at issue in this protest consists of
wax candles. Protestant contends that Customs improperly
liquidated the entry of wax candles as subject to an
antidumping order at the rate of duty of 54.21 percent based
upon the erroneous claim that the candles were manufactured
in the People's Republic of China (China), rather than
Macau. According to the information presented, the
protestant, Sunfresh Inc. DBA Intersave USA, imported
candles from Rodenia, Limited, a Hong Kong company.
Protestant claims that when the candles were entered on
November 3, 1989, the Certificate of Origin was carefully
scrutinized by Customs in Seattle, Washington, and found to
be genuine. The protestant states that the candles were
released without a deposit of antidumping duties because it
was outside the scope of the order which was limited to
candles imported from China. The protestant states that the
Certificate of Origin was not revoked by the issuing
authority, even after the investigation performed by
Customs. The protestant claims that nothing has been
presented by Customs to indicate that the Certificate of
Origin was counterfeit, false, or fraudulently issued.
Additionally, the protestant claims that by claiming
that the country of origin of the candles is China, Customs
is affirming that the transaction value resulting from the
sale from Macau to the U.S. is void. Therefore, the
protestant alleges that for Customs to claim that China is
the country of origin, but still hold the sale from Macau as
the sale which most directly causes the merchandise to be
exported to the U.S., is not only contradictory but is
predicating its antidumping duty on the wrong values.
Protestant also claims that since Customs accepted the
entry of wax candles as covering goods from Macau and not
from China, and also failed to take a deposit of 54.21
percent antidumping duty, it is bound by the application of
19 U.S.C. 1504(a) and the entry must be deemed liquidated
within one year. In addition, protestant claims that
Customs has failed to issue a notice of extension, thereby
invoking the one year limitation on liquidation set forth in
19 U.S.C. 1504(a).
Your office states that the protestant erroneously
claims that the Certificate of Origin was examined prior to
the merchandise's release since Customs requested the
Certificate of Origin on November 27, 1989. Your office
states that since there is no prohibition against the
importation of goods subject to dumping, there was no reason
to withhold entry of the goods to the importer pending a
decision as to the applicability of dumping duties.
An affidavit is submitted from the Vice President of
the protestant, dated August 9, 1993, attesting that he was
responsible for all importations of candles including those
covered by the subject entry number, and that protestant did
not receive a Notice of Extension (CF 4333-A) from Customs
to extend the time for liquidation of the entry. He also
attests that notices were also not received for the years
1990, 1991, 1992, or 1993.
The record contains an invoice from Rodenia Limited, in
Hong Kong, indicating the sale of candles to Intersave USA
on October 16, 1989, and that the candles were made in
Macau. The bill of lading indicates that candles were
shipped from Companhia de Artigos de Cera Man Fung Led. (Man
Fung Candles Co. Ltd.) from Macau/Hong Kong on October 16,
1989, to Intersave USA, in New York. The record also
contains a Request for Information (CF 28) dated November
27, 1989, to Sunfresh Inc. DBA Intersave USA, requesting a
Certificate of Origin and the name of the manufacturer. On
December 1, 1989, Expeditors International forwarded
Certificates of Origin #008896 dated October 10, 1989, and
#009071 dated October 13, 1989, indicating that candles made
in Macau were exported by Companhia de Artigos de Cera Man
Fung Limitada in Macau to Intersave USA. A Notice of Action
(CF 29) dated May 18, 1993, indicates that the candles were
found to be manufactured in China and not Macau, and that
they are subject to antidumping duty.
ISSUES:
I. Whether the existence of a Certificate of Origin for
the wax candles binds the U.S. to accept Macau as the
country of origin.
II. Whether the merchandise was properly appraised using
transaction value based on the price paid by the
importer.
III. Whether the entry was deemed liquidated by
operation or law.
LAW AND ANALYSIS:
I. Country of Origin of the Wax Candles
In the instant case, government certification of a
Certificate of Origin Form A is not recognized by the U.S.
Customs Service as an official act of a foreign government.
The Customs Service is not required to unconditionally
accept Certificates of Origin Form A's issued by a foreign
government as presumptive evidence that merchandise is from
a particular country named on the certificate if the port
director has reason to believe that the country of origin is
different. The evidence submitted in connection with this
protest indicates that beginning in 1989, the Office of the
Senior Customs Representative/Hong Kong (SCR/HK) conducted
an investigation into importations of wax candles made by
the several factories in Macau. During the course of the
investigation, it was determined by the SCR/HK that all
candles sold or exported by Rodenia were in fact products of
China and were merely transshipped from China through Macau
in order to evade antidumping duties and in violation of the
country of origin marking requirements. Based on
information collected by the SCR/HK, it was reported that
the majority of the wax candles exported from Macau were
products of China and that Man Fung in Macau did not have
the equipment or capability to produce the quantity of
candles claimed to be exported from Macau. Moreover, it was
reported that only a very small amount of votive candles
were being produced by factories in Macau and that the
machines at Man Fung were old, rusty, and not in operation.
The evidence indicated that the protestant ordered candles
from a buying agency connected with Rodenia, and that the
buying agency dictated how candles were to be shipped from
China to Hong Kong, how the country of origin label was to
be attached, and requested the candle factories in Macau to
apply for Macau Certificates of Origin to cover the Chinese
candles. Moreover, the evidence revealed that at the
request of Customs, the Macau Economics Commission conducted
its own investigation into the wax candle industry in Macau
and as a result revoked numerous Certificates of Origin
which had been issued by the Government of Macau.
The importer erroneously claims that Customs examined
the Certificate of Origin which was issued by the "Macau
Servicos de Economia" on these shipments prior to release of
the merchandise. In fact, the evidence indicates that
Customs issued a Request for Information (CF 28) requesting
the Certificate of Origin as well as the name of the
manufacturer from protestant days after release of the
merchandise. The importer has not submitted any
information, other than the Certificates of Origin, to show
that the goods were in fact produced in Macau. Based on
information submitted by the SCR/HK and the investigation
conducted by the Macau Economics Commission, there is
evidence that the wax candles which are subject to this
protest were manufactured in China and transshipped through
Macau. As no additional evidence has been submitted by
protestant to show that the subject wax candles were
produced in Macau, the protest should be denied with respect
to protestant's claim that the wax candles were produced in
Macau and are consequently not subject to the applicable
antidumping duties.
II. Valuation of the Merchandise
Merchandise imported into the U.S. is appraised in
accordance with section 402 of the Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 ("TAA"; 19
U.S.C. 1401a). The preferred method of appraisement is
transaction value, which is defined as the "price actually
paid or payable for merchandise when sold for exportation to
the United States", plus certain enumerated additions. 19
U.S.C. 1401a(b)(1).
Until recently, when there was more than one sale which
could be considered as being for exportation to the United
States, Customs appraised imported goods based on the sale
which "most directly caused the exportation." See, e.g.,
Brosterhous, Coleman & Co. v. United States, 737 F. Supp.
1197, 1199 (CIT 1990). In Nissho Iwai American Corp. v.
United States, 982 F.2d 505 (Fed. Cir. 1992), the Court of
Appeals for the Federal Circuit reviewed the standard and
stated that Customs policy of basing transaction value on
the sale which most directly caused the merchandise to be
exported to the United States proceeded from an invalid
premise. Nissho Iwai, 982 F.2d 505, 511.
Instead, the court in Nissho Iwai reaffirmed the
principle of E.C. McAffee Co. v. United States, 842 F.2d 314
(Fed. Cir. 1988), that a manufacturer's price, rather than
the middleman's price, is valid so long as the transaction
between the manufacturer and the middleman falls within the
statutory provision for valuation. In reaffirming the
McAffee standard the court stated that in a three-tiered
distribution system:
The manufacturer's price constitutes a viable
transaction value when the goods are clearly destined
for export to the United States and when the
manufacturer and the middleman deal with each other at
arm's length, in the absence of any non-market
influences that affect the legitimacy of the sales
price....[T]hat determination can only be made on a
case-by-case basis.
Id. at 509. See also, Synergy Sport International, Ltd. v.
United States, 17 C.I.T. 18 (1993).
Counsel for protestant states the following: "By its
claim that the goods are of China origin Customs is saying
that the sale which most directly causes the merchandise to
be exported to the United States is a sale from the PRC."
As explained above, the "most directly caused" standard was
rejected by the court and replaced with that set forth in
the Nissho Iwai decision; however, in view of the fact that
there is no evidence that more than one sale for exportation
occurred, the question of "which sale" should form the basis
of transaction value is not at issue.
In this case, invoices establish that the seller is
Rodenia Limited, located in Hong Kong, and that the buyer is
protestant, located in the United States. Whether the goods
originate from Hong Kong, China, Macau, or another country
does not affect the applicability of transaction value, nor
does the fact that the imported merchandise is subject to an
antidumping order preclude the use of transaction value as
the means of appraisement.
In the context of filing an entry, Customs Form 7501
("CF 7501"), an importer is required to make a value
declaration. As indicated by the language of CF 7501 and
the language of the valuation statute, there is a
presumption that such transaction value is based on the
price paid by the importer. In the instant case, the
invoice presented at the time of entry is from a Hong Kong
company to the importer and reflects FOB Hong Kong prices.
In accordance with the amounts reflected on the invoice and
the above-noted presumption, the merchandise was appraised
based on the price paid by the importer. We note, moreover,
that protestant has not presented Customs with an
alternative invoice or proposed any other transaction value
than that at which the merchandise was appraised.
Accordingly, we find that the merchandise was properly
appraised using transaction value based on the price paid by
the importer.
III. Extension of Liquidations
As for the contention that Customs extended the
liquidation of the protested entry without authority of law
and that Customs failed to issue notices of extension, the
pertinent facts (based on "ACS entry archive" records) are
described below:
Ent. # Ent. Times Ext. Last Ext. Liq.
Date Ext'd Code Notice Date Date
231 ** 9-9 11/03/89 3 01 08/15/92 07/16/93
Code 1, as a reason for extension of liquidation, at
the time under consideration, meant that "information needed
for the proper appraisement or classification of the
merchandise is not available to the appropriate customs
officer" (see 19 U.S.C. 1504(b)(3); 19 C.F.R.
159.12(a)(1)(i); St. Paul Fire & Marine Ins. Co. [Carreon]
v. United States, 799 F. Supp. 120 (CIT 1992), reversed, 6
F.3d 763 (Fed. Cir. 1993)).
As indicated in the table above, the merchandise under
consideration was entered November 3, 1989. According to
documents in the file, the origin of the merchandise was
claimed to be Macau. On November 27, 1989, following
release of the merchandise, Customs sent a Request for
Information (CF 28) to the protestant, asking for the
Certificate of Origin and the name of the manufacturer. By
letter of December 1, 1989, Certificates of Origin for the
merchandise were received, stating that the merchandise was
"Made in Macau."
After a lengthy overseas investigation, Customs
determined that the country of origin for the merchandise
was China. As such, the merchandise was subject to
antidumping duties, under Antidumping Order A-570-504 (51
Fed. Reg. 30686; 55 Fed. Reg. 32279). The protestant was
informed of this determination by a Notice of Action (CF 29)
dated May 18, 1993.
As indicated above, after liquidation of the entry was
extended three times, the entry was liquidated on July 16,
1993, less than four years after the date of entry. The
entry was liquidated with antidumping duties of 54.21
percent, as provided in the Antidumping Order (see
Headquarters Ruling Letter (HRL) 225239 dated September 20,
1994, for analysis of antidumping issues and of the
applicability of Nunn Bush Shoe Co. v. United States, 784 F.
Supp. 892 (CIT 1992)). The protest under
consideration was filed on August 19, 1993. Further review
was requested and granted.
An affidavit, dated August 9, 1993, was filed with the
protest. The affiant stated that he is the import manager
of the protestant and is responsible for all importations of
candles, including the entry covered by the protest. The
affiant stated:
That at no time did [the protestant] receive from the
U.S. Customs Service a Notice of Extension, CF 4333-A,
extending the time for liquidation on this entry.
There were no Notices received for the years 1990,
1991, 1992 or 1993.
Under 19 U.S.C. 1504, at the time under consideration,
"[e]xcept as provided in subsection (b) of [section 1504],
an entry of merchandise not liquidated within 1 year from
... the date of entry of such merchandise ... shall be
deemed liquidated at the rate of duty, value, quantity, and
amount of duties asserted at the time of entry by the
importer of record." Under subsection (b), the period in
which to liquidate an entry may be extended by giving notice
of such extension to the importer of record in such form and
manner as prescribed by regulations if, among other things,
"information needed for the proper appraisement or
classification of the merchandise is not available to the
appropriate customs officer." Under subsection (d) of
section 1504, "[a]ny entry of merchandise not liquidated at
the expiration of four years from the applicable date
specified in subsection (a) [of section 1504], shall be
deemed liquidated at the rate of duty, value, quantity, and
amount of duty asserted at the time of entry by the importer
of record ...." The Customs Regulations issued under this
statute are found in 19 C.F.R. 159.12.
In this case, the reason given for the extension of
liquidation was that information needed for the proper
appraisement or classification of the merchandise was not
available to the appropriate Customs officer. That
information, according to the file, was the origin of the
merchandise. Knowledge of the origin of the merchandise was
necessary for the appraisement of the merchandise (i.e.,
because if the origin of the merchandise was Macau, no
antidumping duties were due; if the origin of the
merchandise was China, antidumping duties were due).
In regard to this issue, see Detroit Zoological Society
v. United States, 630 F. Supp. 1350 (CIT 1980), and St. Paul
Fire & Marine Insurance Co. [Carreon] v. United States, 6
F.3d 763 (Fed. Cir. 1993). In the former case, the Court
noted that it had
"... limited authority to review Customs' decision to extend
the period in which to liquidate entries" (Detroit
Zoological, at 137). In the Carreon case, the Court noted,
as did the Court in Detroit Zoological, that deference must
be given to Customs determination that it needs additional
information in order to liquidate an entry. The Court
concluded that "Customs may ... employ up to four years to
effect liquidation so long as the extensions it grants are
not abusive of its discretionary authority [and] [s]uch an
abuse of discretionary authority may arise only when an
extension is granted even following elimination of all
possible grounds for such an extension" (Carreon, at 768).
The protestant has failed to meet its burden under these
court cases and the protest is denied in regard to this
issue.
In regard to the contention by the protestant that it
did not receive the notices of extension for the protested
entries, see HRL 224792 dated October 28, 1994 and HRL
224397 dated March 8, 1994, and the Court decisions
discussed therein. In this protest, Customs has evidence
that notices of extension were properly issued to the
protestant (i.e., the ACS record for each entry (see
International Cargo & Surety Insurance Co. [Data Memory
Corp.] v. United States, 779 F. Supp. 174 (CIT 1991)) and a
computer record of the extension/suspension history file
(see Enron Oil Trading and Transportation Co. v. United
States, 15 CIT 511 (1991), vacated 988 F.2d 130 (Fed. Cir.
1993)). Under these cases and the court decisions cited and
analyzed in rulings HRL 224792 and 224397, the Customs
evidence in this case establishes a presumption that proper
notice was given.
The protestant attempts to rebut this presumption with
the affidavit of a person stating that he is the import
manager of the protestant and that at no time did the
protestant receive from Customs a notice of extension for
the protested entries. The sufficiency of evidence
attempting to rebut the Government evidence in a case such
as this is thoroughly analyzed in A.N Deringer, Inc. v.
United States, Slip. Op. 96-131 (CIT Aug. 13, 1996), where
the Court found that Customs properly generated and mailed
notices of extension and suspension of liquidation (i.e., CF
4333-A), and these notices were presumed to have been
received unless the plaintiff established nonreceipt. The
evidence in this case does not meet the standard established
in A.N Deringer. There is no description of the
protestant's regular course of processing Customs-generated
documents, including notices of extension. The affiant may
or may not have been the responsible individual during the
time under consideration; the affidavit makes no affirmative
statement in this regard. There is no statement by any
other employee of the protestant who may have handled the
notices of extension. There is no description of the
protestant's filing system for Customs documents (in this
regard, a description of such a system and evidence showing
receipt of other notices in the time period under
consideration could be pertinent). There is no statement of
whether the protestant even has files for extension notices
and whether, if so, a search of those files was made.
Basically, the affidavit in this case consists of a
statement of recollection of events which would have
occurred years before the affidavit; a statement unsupported
by any documents or records (see Andy Mohan, Inc. v. United
States, 74 Cust. Ct. 105, C.D. 4593, 396 F. Supp. 1280
(1975), affirmed, 63 CCPA 104, C.A.D. 1173, 537 F. 2d 516
(1976), in the CCPA decision of which the Court noted that
the affidavits there in question "... [were] entitled to
little weight, being incomplete and based on unproduced
records, and having been executed years after the
transaction to which they attest" (at 63 CCPA 107)). (See
also Arnold, Schwinn & Co. v. United States, 45 Cust. Ct.
156, C.D. 2217 (1960), in which the Court noted the
improbability of non-delivery of 17 notices mailed on 4
different days over a 9-day period; in the protested case
the protestant alleges non-delivery of 3 notices mailed on 3
different dates in 3 different years (in 1990, 1991, and
1992).)
HOLDING:
Based on the information presented, it is our opinion
that the country of origin of the wax candles is China, and
therefore, the candles are properly subject to antidumping
duties. Moreover, we find that the merchandise was properly
appraised using transaction value based on the price paid by
the importer. Finally, we find no merit in protestant's
arguments that the extensions of liquidation for the
protested entry was contrary to 19 U.S.C. 1504 and that
Customs never issued notices of extensions to the importer,
so that the entries should have been "deemed" liquidated
after one year. Accordingly, 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, 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 the public via the
Diskette Subscription Service, Freedom of Information Act
and other public access channels.
Sincerely,
John Durant, Director,
Tariff Classification Appeals
Division