LIQ-9-01-RR:IT:EC 952029 SAJ
Port Director of Customs
700 Doug Davis Drive
Atlanta, GA 30354
RE: Timeliness of Certification under 19 C.F.R. 10.183; Mistake
of Fact or Inadvertence under 19 U.S.C. 1520(c)(1); Civil
Aircraft Agreement; Delta Airlines; Late Filing under 19 C.F.R.
10.112; Uniform and Established Practice; Protest No. 1704-92-100074, 1704-92-100080, and 1704-92-100295
Dear Sir:
The above-referenced protests were forwarded to our office
to issue a ruling. We have withheld issuing a ruling awaiting
the court's decision in Aviall of Texas, Inc. v United States, 70
F.3d 1248 (1995), aff'g in part, 861 F. Supp. 100 (CIT 1994),
regarding the applicability of 19 U.S.C. 1520(c)(1) to the
plaintiff's "inadvertent" late filing of the blanket
certification for preferential tariff treatment under the
Agreement on Trade in Civil Aircraft (Civil Aircraft Agreement).
Since the United States Court of Appeals for the Federal Circuit
(CAFC) has affirmed the lower court only on the applicability of
section 1520(c)(1), and the government has not appealed the
decision further, we will address the issues raised in the
protests. In light of Aviall (decided December 1, 1995), we have
examined the arguments and our decision follows.
FACTS:
Delta Air Lines, Inc. (protestant) regularly imports
aircraft engines and aircraft parts into the United States for
maintenance and enhancement of its fleet of aircraft. During
1990-91, protestant employed different brokerage companies to
enter imported civil aircraft parts into a total of eight ports.
For the Atlanta port, protestant filed a Civil Aircraft Agreement
(CAA) blanket certification through D.J. Powers Company, Inc.
(broker) on December 16, 1980. Broker filed approximately 700
entries of imported civil aircraft parts for protestant during
1990-91 in the Atlanta port. Protestant complied with the filing
of valid CAA certifications in other ports during 1990-91.
However, protestant/broker (protestant) did not file another
blanket CAA certification in the Atlanta port until September 9,
1991, almost ten years after the expiration of the initial CAA
blanket certification. Between June 1990 and May 1991,
protestant primarily entered the civil aircraft parts under
unconditionally "Free" Rate of Duty subheadings, such as
8803.30.00/Free and 8411.91.10/Free, in the Harmonized Tariff
Schedule of the United States (HTSUS).
The following three protests, containing the entries
involved, were timely filed:
(1) Protest No. 1704-92-100074, dated February 27, 1992,
contains four entries of Rolls Royce aero engine spares, which
were entered under subheading 8411.91.10/Free, HTSUS. This
classification is for cast iron parts of turbojets and turbo
propellers for use in civil aircraft. These parts are not cast
iron and were reclassified by Customs under subheading
8411.91.90/3.7%, HTSUS, as other parts of aircraft turbines of
turbojets and turbo propellers. Three entries were liquidated on
November 29, 1991, and one on January 24, 1992.
(2) Protest No. 1704-92-100080, dated March 5, 1992,
contains eight entries of Lucas Aerospace aero engine spares,
some which were entered under subheading 8411.91.10/Free, HTSUS,
as cast iron parts of turbojets and turbo propellers for use in
civil aircraft, and others were entered under subheading
8803.30.00/Free, HTSUS, as other parts of airplanes for use in
civil aircraft. These parts are not cast iron, nor are they
parts of aircraft. The subject parts are parts of aircraft
turbine of turbojets or turbo propellers, and were reclassified
by Customs under 8411.91.90/3.7%, HTSUS. The entries were
liquidated on December 6, 1991.
(3) Protest No. 1704-92-100295, dated August 2, 1992,
contains eight entries of Rolls Royce modification kits purchased
by protestant to enhance the performance of aircraft engine.
Protestant initially entered these kits under subheading
8411.91.10/Free, HTSUS, as sets of cast iron parts of aircraft
turbines for use in civil aircraft. However, Customs required
protestant to reclassify the kits according to the item actually
entered. Protestant reclassified some parts into various
7318/Free, HTSUS subheadings, such as 7318.23.00/Free and
7318.16.00/Free. Eleven parts, an insignificant portion of the
total imported parts, were reclassified by protestant under the
subheading C4016.93.00/Free, HTSUS. Customs, through Customs
Form (CF) 28, requested specific information from protestant on
October 24, 1990 and November 11, 1990 with respect to the kits.
A second CF 28 request dated January 25, 1991 was necessary, as
no information was received by protestant. Customs, through
another CF 28, requested further information on February 15,
1991. On May 6, 1991, Customs reclassified the kits under
8411.91.90/3.7%, HTSUS. The entries were liquidated on May 15,
1992.
Because protestant filed entry summaries (CF 7501),
classifying all but eleven imported parts under an
unconditionally "Free" Rate of Duty subheading in the HTSUS, it
was unnecessary for protestant to file a valid CAA entry-by-entry
or blanket certification with Customs. However, protestant
erroneously classified these parts. The subheadings do not have
a "C" breakout (CAA-eligible special program indicator (spi)
provision).
Once the Customs Import Specialist ascertained that these
parts were erroneously classified, Customs filed the following
Notices of Action (CF 29): two dated November 14, 1991 (one of
which amended CF 29, dated November 7, 1991), November 15, 1991,
January 6, 1992, and April 28, 1992. Customs notified protestant
that the merchandise had been reclassified and denied free entry
because no valid CAA entry-by-entry or blanket certification was
on file.
Protestant does not dispute that the reclassification of the
imported civil aircraft parts by Customs is correct. However,
protestant argues that the request for reliquidation should have
been granted because the duty-free certificates were not obtained
until after the entries were liquidated. Protestant maintains
that this "delay" was caused by mistakes of fact as to the
respective roles of the protestant and protestant's broker, in
that both parties were under the belief that the other submitted
all the necessary documentation to Customs. Moreover, protestant
claims that this case is analogous to that of Aviall, supra.
ISSUE:
Whether protestant's entitlement to the duty preference for
civil aircraft parts under 19 C.F.R. 10.183(c)(1) and (2) may be
remedied through: 1) a late filing of the CAA certificate under
19 C.F.R. 10.112; and/or 2) relief under 19 U.S.C. 1520(c)(1),
where no valid CAA certification was filed, and where a uniform
and established practice exists for entry of the subject parts.
LAW AND ANALYSIS:
Title VI, "Civil Aircraft Agreement" of the Trade Agreements
Act of 1979 (Sec. 601, P.L. 96-39, 93 Stat. 144 96th Cong., 1st
Sess. 1979), implemented the Agreement on Trade in Civil
Aircraft. This Agreement became effective in the United States
on January 1, 1980. On June 7, 1984, 19 C.F.R. Part 10, was
amended to include section 10.183, 19 C.F.R. 10.183. This
section provides for duty-free admission of civil aircraft parts
for civil aircraft certified for use in accordance with the
provisions of General Note 6, HTSUS.
Protestant claims that 19 C.F.R. 10.183 was not duly
promulgated by Customs, thereby resulting in lack of notice.
However, it is evident from the record that protestant had notice
with respect to the requirements set forth under the CAA.
Protestant is in the business of importing civil aircraft parts
on a regular basis. During 1990-91, protestant entered civil
aircraft parts in eight different ports, Atlanta containing the
vast majority of the entries. In other ports, such as Memphis,
protestant complied with the requirements set forth under the CAA
during this period. This indicates that protestant had knowledge
and notice of the procedures required under the CAA to claim and
qualify for preferential tariff treatment.
Also, protestant specifically had notice in the Atlanta
port. Protestant's agent, William Conaway (Conaway), a licensed
customshouse broker, presently Executive Vice President of D. J.
Powers in Atlanta, filed the CAA blanket certification on
December 16, 1980, on behalf of protestant. Conaway acknowledges
having notice of section 10.183. In his affidavit, provided by
protestant, Conaway states that "[i]n the mid-1980's, [he] became
aware of changes to the Customs Regulations under which Customs
set forth various requirements for duty-free importations of
civil aircraft parts, including [the CAA] certification
requirements."
The issue regarding notice of section 10.183 was also raised
in Aviall, supra. However, it is important to note that in
Aviall, the CAFC only affirmed the lower court's decision on the
grounds of 19 U.S.C. 1520(c)(1), and did not address the validity
of 19 C.F.R. 10.183, nor the applicability of 19 C.F.R. 10.112
and 141.64. Consequently, a denial of a protest based on an
importer's failure to make its claim at the time of entry, in
accordance with 19 C.F.R. 10.183, would not be improper. See
Texaco Marine Services, Inc. v. United States, 44 F.3d 1539,
1546-1547 (Fed. Cir. 1994), Texas Refrigeration Supply, Inc. v.
FDIC, 953 F.2d 975, 980, 982-983 (5th Cir. 1992), and Levene v.
Pintail Enters., Inc., 943 F.2d 528, 534 (5th Cir. 1991).
It is Customs' position that the Notice of Proposed
Rulemaking on the CAA was published in the Federal Register on
January 8, 1980. Comments were received, and T.D. 84-109
responded to those comments. The Final Rule was published in the
Federal Register on May 8, 1984. Customs therefore maintains,
that section 10.183 was validly promulgated in compliance with
the "notice and comment" provision of the Administrative
Procedure Act, which is a valid interpretation of congressional
intent.
Congressional intent to have Customs monitor and validate
section 601 entries is reflected in 19 C.F.R. 10.183(e), which
provides that the port director shall "monitor and periodically
audit entries made." Furthermore, Congress intended that Customs
verify the duty-free entries after entry to ensure that
merchandise remain in compliance with the statutorily mandated
certification. Thus, the implementing regulations require that
an approved CAA blanket certification is on file at the time of
entry, and that the failure to have one on file cannot be
remedied by late filing except under the curable exceptions set
out by 19 U.S.C. 1520(c)(1).
Certain requirements must therefore be met to obtain duty-free treatment for the imported aircraft parts. Specific written
certifications are required under General Note 6, HTSUS (19
U.S.C. 1202), which implement the CAA. Senate Report No. 96-249
provides, in relevant part, the following statutory language:
The term "certified for use in civil aircraft"
would be
defined under a new headnote 3 to schedule 6, part 6,
of
the TSUS. This definition, which would be applicable
to
the entire TSUS, would require the filing of a written
statement, at the time of entry, that (1) the article
has been
imported for use in civil aircraft, (2) that it will be
so used,
and (3) that the article has been approved for such use
by,
or application for approval for such use has been
accepted
by the Administrator of the Federal Aviation
Administration.
Approval by a foreign airworthiness authority for use
in civil
aircraft could be cited in lieu of F.A.A. approval if
that approval
is recognized by the Administrator of the F.A.A. as an
acceptable substitute for F.A.A. approval.
The certification requirement imposed under the
amendment in section 601(a)(2) is a certification of
use
provision rather than an end use provision. The
committee
expects the Customs Service to monitor closely entries
under
the amendments under section 601 and, where necessary
to
protect the revenues, take appropriate action to insure
the
continuing validity of statements supplied to Customs
under the certification requirements. (Emphasis
supplied.) Civil Aircraft
and Parts (Section 601 of the Bill), Senate Report No.
96-249 at
pp. 573-74, pertaining to the Trade Agreements Act of
1979.
The first emphasized text could not be a clearer expression
of Congressional intent. Congress intended that the
certification as to future use be filed at the time of entry.
The regulations do no more than follow that congressional
statement of intent. The certification of future use was critical
to the exemption from duty. Not all merchandise that could be
used as an aircraft part, is always so used. For example, jet
aircraft engines are used to power electrical generators. See HQ
952944, dated June 28, 1993.
As previously stated, Congress expected Customs to monitor
the validity of the certifications given by importers. Customs
determined that it could best achieve that stated Congressional
purpose by following the clear language set forth in the above
cited legislative history, which directs Customs to receive or
already have filed a valid CAA certification when the claim is
made at the time of entry. Customs Import Specialists, who
verify the importer's asserted CAA classifications in the entry
processing stage, are in the best position to determine whether
additional evidence to support a CAA certification should be
requested from an importer.
Trade statistics, which are important for setting national
policies, are based on the import documents. Since liquidation
under 19 U.S.C. 1504 may not occur for one year, the
classification data received at the time of entry is the data
used by the Bureau of Census. 15 C.F.R. 30.70. Under paragraph
(g) of 15 C.F.R. 30.70, the information on the Customs entry and
withdrawal forms are used to complete the foreign trade
statistics. Also, both the Department of Census regulation and
19 C.F.R. 10.183 are consistent with and implement the
Congressional direction contained in 19 U.S.C. 1484 (a)(2)(c) and
(f).
Section 10.183(c)(2) of the Customs Regulations, 19 C.F.R.
10.183(c)(2), simply follows the statute by providing that the
importer must submit at the time of filing the entry summary a
CAA certification for each entry or a blanket certification if
more than one entry of civil aircraft parts will be made during a
twelve month period. This requirements implements the statutory
direction set in General Note 6 and 19 U.S.C. 1484(a)(1). That
is, under 19 U.S.C. 1484(a)(1)(B) before its amendment by the Act
of December 8, 1993 (107 Stat 2200, Pub. L. 103-182 Sec. 637),
documentation needed by Customs to enable Customs to properly
classify the good did not have to be filed before release from
Customs custody, but had to be filed to complete the entry within
10 business days after release.
The CAA certification is valid for a period of one year from
the date of approval by the port director in the port where the
civil aircraft parts are entered. The CAA blanket certification
may be renewed for additional one year periods upon written
requests to each concerned port director. Failure to provide the
CAA certification at the time of filing the entry summary, or to
have an approved CAA blanket certification on file with the port
director in the port where the entry summary is filed shall
result in dutiable entry. (Emphasis added.) T.D. 84-109, 49 F.
R. 19450 (1984) reprinted at 18 Cust. Bull. 271 (1984), as
amended by T.D. 85-123, 50 F. R. 29953 (1985), T.D. 89-1, 53 F.
R. 51252 (1988).
Because the filing of a CAA certification at the time of
entry is an absolute requirement as part of the entry summary (CF
7501), it may not be filed as a missing document. This should
not be confused with 19 C.F.R. 10.183(c)(1) which allows for the
posting of a bond for missing documents other than the civil
aircraft certification, such as written orders, contracts, or
other supporting documentation. Section 10.183(c)(2) provides
that "[t]he certification may not be treated as a missing
document for which a bond may be posted." Thus, CAA
certifications must either be filed with the entry or, in the
case of CAA blanket certifications, be on file at the port where
the parts are imported.
The implementing regulations require that an approved CAA
blanket certification to be on file at the time of entry, and
that the failure to have one on file cannot be remedied by late
filing except under the curable exceptions set out by 19 U.S.C.
1520(c)(1). See Headquarters Ruling Letter (HQ) 716812, dated
October 27, 1981 (ruling that the importer's certificate of use
required by the CAA be filed at the time of filing the entry
summary).
Protestant argues that section 10.112 of the Customs
Regulations, 19 C.F.R. 10.112, permits the late filing of the
civil aircraft certificate at any time before liquidation of the
entries becomes final. (As previously stated, the CAFC does not
affirm the lower court's decision on the applicability of section
10.112.) Section 10.112 provides that absent "willful negligence
or fraudulent intent," certain documents in connection with the
entry required for duty-free entry, may be filed at any time
prior to the liquidation becoming final. NEC Electronics U.S.A.,
Inc. v. United States, 709 F. Supp. 1171, 13 CIT 214 (1989).
The language "in connection with the entry" is expressly used
throughout the Customs regulations to specify certain documents
that must accompany an entry. See, e.g. 19 C.F.R. 10.24, 10.33,
and 10.34.
Judicial decisions have emphasized that section "10.112
relates solely to documents that must be filed 'in connection
with the entry'." Export Packers Co. Ltd. v. United States, 795
F. Supp. 422, 427, 16 CIT 394, 400 (1992) (emphasis in original)
(holding that section 10.112 does not apply to all documents).
The CAA certification in section 10.183 is not described as a
document to be file "in connection with the entry." Customs
interprets section 10.112 as inapplicable to the CAA
certification, and thus, the CAA certification must not be filed
after the filing of the entry summary. HQ Ruling 223194, dated
August 14, 1991 (ruling that section 10.183 is not satisfied by
the filing of a CAA certification subsequent to entry but prior
to liquidation).
The language of section 10.183 of the Customs Regulations
makes it clear that late filing of the CAA certification is not
allowed. A reading of sections 10.112 and 10.183, establishes
that the terms of section 10.112 are inapplicable to the
certification required by the legislation enacting the CAA, and
its implementing regulation, section 10.183. Customs cannot
waive a requirement imposed by Congress. A claim made for duty-free treatment must therefore take place at the time of entry and
not after the parts have been reclassified.
Protestant failed to fulfill the requirements proscribed in
General Note 6, HTSUS (19 U.S.C. 1202) and section 10.183(c)(2)
of the Customs Regulations, by not filing a CAA certification at
the time of filing the entry summary, or having a CAA blanket
certification on file. Customs therefore was precluded from
granting duty-free treatment at the time of liquidation, and at
the time the protests were filed. See HQ 951096, dated April 6,
1992, (holding that a certificate of use required under the CAA
cannot be filed subsequent to entry under section 10.183 of the
Customs Regulations, unless there exists a mistake of fact
correctable under 19 U.S.C. 1520(c)(1)), and HQ 716812, dated
October 27, 1981.
Furthermore, protestant did not show intent to claim
preferential tariff treatment under the CAA. Protestant
primarily entered the civil aircraft parts under unconditionally
"Free" Rate of Duty subheadings in the HTSUS, thereby rendering
it unnecessary to file a valid CAA entry-by-entry or blanket
certification with Customs. Additionally, the procedure for
claiming free entry for aircraft parts under the CAA was not
followed by protestant. A claim of a CAA-eligible spi requires
placing the spi "C" before the HTSUS classification number, which
is the official code provided in the HTSUS. The entry must be
eligible in the "Special" rate column of the HTSUS, for that
particular subheading, and the appropriate CAA entry-by-entry or
blanket certification must be valid at the time of entry. Thus,
where the CAA certification is not provided or is not on file, or
the importer fails to claim preferential tariff treatment under
the CAA ("C" claim) at the time of entry, duty should be
assessed.
For articles to be eligible for duty-free status as civil
aircraft parts, they must be (1) classifiable in a provision
which has an spi "C" breakout; (2) imported for use and used in
civil aircraft; and (3) covered by a written certification filed
by the importer with Customs. Civil Aircraft and Parts (Section
601 of the Bill), Senate Report No. 96-249 at p. 573, pertaining
to the Trade Agreements Act of 1979.
Protestant failed to enter the subject parts into their
appropriate classification by: (1) filing the subject entries
without regard to the nature or description of the part covered
on the invoice; (2) entering eo nomine parts provided for in
specific HTSUS classifications which are not eligible for free
entry under the provisions of the CAA, unless the requirements
set forth under section 10.183 are met; and (3) submitting vague
or incomplete invoice descriptions. For instance, protestant
entered parts under the description "mod kits", which is
meaningless. The parts should have been classified under a
specific subheading. That is, parts must be entered as the item
they actually are, and not as a part. Once Customs discovered
the error, the parts were reclassified into their appropriate
subheading in the HTSUS. To qualify for preferential tariff
treatment, certain HTSUS provisions require the CAA certification
under 19 C.F.R. 10.183(c).
Entries were primarily classified by protestant under
subheadings 8803.30.00/Free, HTSUS, which are for "other parts of
airplanes", and 8411.91.10/Free, HTSUS, which are for "cast iron
parts", for use in civil aircraft. Subheading 8803.30.00/Free,
HTSUS, falls under a General Column, which contains an
unconditionally "Free" Rate of Duty, and does not have an spi "C"
breakout. However, subheading 8411.91.10/Free, HTSUS, does not
fall under an unconditionally "Free" Rate of Duty; some parts are
unconditionally duty-free and others are subject to the spi "C"
breakout.
Parts classified in these subheadings selected by protestant
(8803.30.00/Free and 8411.91.10/Free, HTSUS), which are later
reclassified in a subheading under the spi "C", must be rate
advanced to a dutiable classification by Customs. An importer in
this instance cannot take advantage of the CAA Special Column for
a "Free" Rate of Duty if there is no CAA "certificate of
(intended) use" filed at the time of entry, and no valid CAA
blanket certification is on file.
In the case at hand, protestant entered parts for use in a
civil aircraft, which are classifiable in a provision which has
an spi "C" breakout. However, with the exception of eleven
imported parts, protestant did not make the "C" claim by placing
the spi "C" before the HTSUS subheading at the time of entry.
Additionally, protestant did not have a valid CAA entry-by-entry
or blanket certification on file. Consequently, there is no
evidence that protestant intended, at the time of entry, that the
entered parts would be used in the required qualifying manner.
If the proper intent is not held at the time of entry along with
a valid CAA certification, actions under 19 U.S.C. 1592 may be
available. See HQ 222236 (noting that "it is the importer's
intention at the time of entry which governs the assessment of a
penalty based on fraud under 19 U.S.C. 1592").
Therefore, where the importer files an entry summary (CF
7501), which has the spi "C" before the HTSUS subheading, and the
importer has a valid CAA entry-by-entry or blanket certification
of use on file with Customs, an importer would qualify for CAA
treatment if, after entry but before liquidation, Customs
reclassifies the parts under an alternate classification which
falls under the CAA-eligible spi Special Column. The rationale
is that Customs is provided with constructive notice by having
evidence of the importer's intention to file under the CAA by
virtue of writing the spi "C" in front of a subheading in the
HTSUS.
A claim made for duty-free treatment must take place at the
time of entry and not after the parts have been reclassified.
Nor can a CAA certification under section 10.183 be filed
subsequent to entry, unless there exists a mistake of fact
correctable under section 520(c)(1) of the Tariff Act of 1930, as
amended, 19 U.S.C. 1520(c)(1). See HQ 951096. Section 1520(c)
cannot be used as a basis for a protest. A petition must be
filed with the port and if that petition is denied, than
protestant may protest that denial.
Case law has established that where neither the importer nor
Customs is aware of the nature of the imported merchandise prior
to liquidation, a mistake of fact remediable under section
520(c)(1) is presented. However, when the true facts are known,
but their legal significance is not, or the importer is unaware
of a more favorable tariff provision, mistake of fact will not be
found. Furthermore, where the importer is knowledgeable of the
facts and the available alternatives, courts have held that the
importer makes a "decisional" error uncorrectable under section
1520(c)(1).
There are situations where a mistake of fact under 19 U.S.C.
1520(c)(1) would allow acceptance of a certificate subsequent to
the liquidation of a dutiable entry. The applicability of section
1520(c)(1) is interpreted on a case-by-case basis. Generally, an
error in classification is not correctable under 19 U.S.C.
1520(c)(1). The same applies to undocumented claims for
preferential tariff treatment (e.g., GSP, "American Goods
Returned" provisions). However, where the importer can show that
a mistake of fact correctable under the statute caused the
erroneous classification, relief under section 520(c)(1) will be
available.
The cases and decisions included in this ruling are
representative of the judicial interpretation of 19 U.S.C.
1520(c)(1) and Customs' interpretation of the law. It is also
important to note that court decisions and Customs rulings have
indicated that the relief provided for in 19 U.S.C. 1520(c)(1) is
not an alternative to the relief provided for in the form of
protests under 19 U.S.C. 1514, but rather affords a limited
relief where an unnoticed or unintentional error has been
committed.
Under 19 U.S.C. 1520(c)(1) a mistake of fact is any mistake
except a mistake of law. See Jordan v. Brady Transfer & Storage
Co., 225 Iowa 137, 284 N.W. 73, 77 (1939). It has been defined
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. See Savings Bank of Rockville v. Wilcox, 117 Conn.
196, 197, 167 A. 713, 714 (1933). In Hambro Automotive Corp. v.
United States, 81 Cust. Ct. 29, 458 F. Supp. 1120 (1978), aff'd,
66 CCPA 113, 603 F.2d 850 (1979), the Court held that where the
exporter knew the facts regarding its cost of production but
erred in the assessment of those costs under the applicable law,
the mistake was one law, not of fact.
In the seminal case on mistake of fact is C.J. Tower &
Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, C.D.
4327, 336 F. Supp. 1395 (1972), aff'd, 61 CCPA 90, C.A.D. 1129,
499 F.2d 1277 (1974), the following test was articulated:
[M]istakes of fact occur in instances where either (1) the
facts exist,
but are unknown, or (2) the facts do not exist as they are
believed to.
Mistakes of law, on the other hand, occur where the facts
are known,
but their legal consequences are not known or are believed
to be
different than they really are. C.J. Tower 603 F.2d at 855.
Section 1520(c)(1), allows for the reliquidation of an entry
to correct a clerical error, mistake of fact, or other
inadvertence not amounting to an error in the construction of the
law. Since this provision mandates that the claimed inadvertence
be manifest from the record, or established by documentary
evidence, we now focus on the question of whether a mistake of
fact occurred based on the evidence in the record. Errors
"manifest from the record" are those brought to the attention of
an appropriate Customs officer within one year form the date of
liquidation, and are apparent to Customs from a facial
examination of the entry and entry papers alone. "Documentary
evidence" is all other evidence supporting the claimed
inadvertence.
The Court in PPG Industries, Inc. v. United States, 4 CIT
143 at 147-48 (1982), quoting, in part from the lower court in
Hambro Automotive Corp. v. United States, 81 Cust. Ct. 29, 31,
C.D. 4761, 458 F. Supp. 1220 (1978) stated that the "burden and
the duty is on the plaintiff to inform the appropriate Customs
official of the alleged mistake of fact with sufficient
particularity to allow remedial action." See also United States
v. Lineiro, 37 CCPA 5, 10, C.A.D. 410 (1949) (holding that
"[d]etermination of issues in customs litigation may not be based
on supposition.") The alleged inadvertence must be described in
detail to prove that factual error rather than legal error
resulted. An error correctable under section 1520(c)(1),
therefore, must be established by evidence, and cannot be
inferred by the circumstances.
Protestant submitted an attachment to Protest No. 1704-92-100074, dated February 27, 1992, whereby an argument to
reliquidate under 19 U.S.C. 1520(c)(1) was formulated.
Protestant claimed that "Delta was unaware that the customs
broker had not filed renewals [of the blanket
certifications]...[while] the customs broker assumed that Delta
had filed subsequent blanket certifications." Protestant
concludes that this is inadvertence as set forth under section
1520(c)(1). Customs denied the protests based on protestant's
failure to provide proper evidence of any mistake of fact, and
the fact that such failure to comply with 19 C.F.R. 10.183
constituted negligent inaction, which is not a valid basis for
relief under section 1520(c)(1).
As evidence, protestant submitted two affidavits. The first
affidavit is from Larry L. Collier (Collier), protestant's
employee, dated March 2, 1993. Collier states that he "formed
the belief that customshouse brokers retained by Delta were
filing entries and entry summaries consistently with all
requirements and regulations regarding importations of civil
aircraft parts." The second affidavit is from Conaway, a
licensed customshouse broker, who signed the CAA blanket
certification on December 16, 1980, on behalf of protestant.
Conaway states that beginning in the mid-1980's he "assumed that
Delta was aware of ... changes to the Customs Regulations and ...
took any actions necessary to continue duty-free importations
..." Protestant's basis for the mistake of fact claim is that
both parties (protestant and broker) were under the belief that
the other had filed renewals of the subsequent CAA blanket
certifications.
Courts have allowed affidavits to establish evidence in some
instances. The court in Andy Mohan, Inc. v. United States, 74
Cust. Ct. 105, C.D. 4593, 396 F. Supp. 1280 (1975), aff'd 63 CCPA
104, C.A.D. 1173, 537, F.2d 516 (1976), noted that affidavits
provided as evidence are only " ... entitled to little weight,
being incomplete and based on unproduced records, and having been
executed years after the transaction to which they attest".
Mohan 63 CCPA at 107. In the case at hand, the affidavits are
"incomplete" and "based on unproduced records". The affiants
(Collier and Conaway) do not provide evidence of an intent to
file a CAA certification.
At most, protestant's assertions and affidavits merely
explain that there was an overlooking of filing a valid CAA
blanket certification with Customs. Protestant failed to qualify
its entries as "C" claims for all but eleven imported parts.
Thus, protestant provided no evidence that there was any intent
to enter civil aircraft parts pursuant to the CAA. Protestant
consistently demonstrated intent to enter most of the imported
parts under the unconditionally "Free" Rate of Duty subheading in
the HTSUS.
The affidavits were also "executed years after the
transaction to which they attest" (in this case, almost three
years for Collier, and approximately ten years for Conaway, after
the initial belief was formed. See, United States v. Baar &
Beards, Inc., 46 CCPA 92, C.A.D. 705 (1959) (holding that an
affidavit more than two years after the event to which it
related, not supported by any records, is insufficient to support
the basis for the claim).
Protestant's brief, dated March 4, 1993, states that the
underlying mistaken belief that a valid CAA blanket certification
was on file, was formed due to Customs' continuing to accept and
liquidate entries duty-free. This argument carries little weight
due to the fact that protestant regularly classified its entries
under unconditionally "Free" subheadings in the HTSUS, which
makes it difficult for Customs to make the proper determination
from the face of the entry summaries. It is the importer who has
an affirmative duty to determine and select the proper
information upon filing the entry summary in the first place.
With regard to this case, for instance, Customs properly
requested specific information on the entries from protestant
through CF 28, dated October 24, 1990 and November 11, 1990.
Customs sent a second CF 28 request, dated January 25, 1991,
because protestant did not respond to the initial request.
Further pertinent information was requested from protestant
through CF 28, dated February 15, 1991. Once Customs received
the necessary information from protestant, Customs determined
that the entries had been erroneously classified, a
classification decision which the protestant does not dispute.
Protestant also argues that intent to use its importations
as civil aircraft parts was made known by the initial
certification filed in 1980, and the designation on its entries
of statistical reporting numbers corresponding with duty-free
classifications for use in civil aircraft. However, HTSUS
additional U.S. Note of Interpretation 1(b), states that "a
tariff classification controlled by the actual use to which
imported goods are put is satisfied only if such use is intended
at the time of entry. See HQ 088178, dated January 14, 1991,
(holding that duty should be assessed and any subsequent claim
for relief denied where the CAA certificate is not provided or is
not on file, or the importer neglects to make the "C" claim at
the time of entry). Because protestant failed to claim for
special treatment at the time of entry (for all except eleven
imported parts), as required by the CAA, special tariff treatment
cannot be granted upon liquidation, in a subsequent protest, or
relief under 19 U.S.C. 1520(c)(1). Relief under 19 U.S.C.
1520(c)(1), therefore, is available only for these eleven
imported parts that demonstrated intent to claim CAA. However,
for the eleven imported parts where the spi "C" was claimed for
special tariff treatment, protestant does not qualify for relief
under 19 U.S.C. 1520(c)(1), because protestant failed to provide
proper evidence of any mistake of fact, and demonstrated
negligent inaction with regard to failure to comply with 19
C.F.R. 10.183.
Negligent inaction is concluded because protestant should
have been aware that no valid CAA blanket certification was filed
with Customs for almost ten years. Protestant, as a regular
importer of civil aircraft parts, is knowledgeable of the
requirements set forth under the CAA. It is a well established
procedure for Customs to notify the importer directly when
Customs receives a CAA blanket certification. Even if a CAA
certification is submitted through a broker, Customs notifies the
importer directly, since the importer has the duty to keep
records that the subject merchandise will be used as civil
aircraft for five years. Protestant should have been aware of
this procedure, since protestant is in the business of importing
civil aircraft parts. See HQ 223871, dated July 24, 1992.
Protestant consistently intended to file under unconditionally
"Free" Rate of Duty subheadings in the HTSUS, thereby negating
the need for protestant to have a valid CAA certification on file
with Customs. Protestant clearly engaged in a "decisional"
error, uncorrectable under section 1520(c)(1).
Furthermore, we disagree with protestant that the case at
hand is analogous to that of Aviall, supra. The CAFC held that
an importer who claimed the exemption without having a valid
certificate filed was entitled to show that its failure to file
the required certification was correctable under 19 U.S.C.
1520(c)(1). In Aviall, the plaintiff regularly renewed its
blanket certifications with the port director. The lapse between
the expiration and the renewal of the CAA blanket certification
was insignificant (approximately 33 days). In Aviall, the CIT
emphasizes the fact that the lapse of time between the expiration
of the blanket certification and the renewal was "insignificant".
In contrast, in the case before us, the lapse was for almost ten
years.
The plaintiff, in Aviall, also demonstrated intent to claim
preferential tariff treatment under the CAA, by submitting entry
summaries at the time of entry, correctly classifying the
aircraft parts under the HTSUS subheadings, which were preceded
by the spi "C", as required by General Headnote 3(c)(iv), HTSUS.
The "C" claim gave Customs "notice" of the intent to qualify for
CAA preferential tariff treatment. Arguably, in Aviall, Customs
had the requisite "notice" to reject the classification, once an
Import Specialist verified that the CAA blanket certification on
file had expired. Consequently, the CAFC found that the importer
was entitled to have the entry reliquidated duty-free because its
failure to file a valid blanket certification was due to an
inadvertence not amounting to an error in the construction of the
law.
Protestant claims that Customs' acceptance and liquidation
of entries duty-free over a period of more than ten years without
a civil aircraft certification constitutes an established and
uniform practice. We maintain that a uniform and established
practice cannot exist for entries which require certain
documentation to claim duty-free status. We recognize that the
courts have found that an "established and uniform practice",
under 19 U.S.C. 1315(d), can be predicated on uniform
classifications and liquidations at various ports over a period
of time. Heraeus-Amersil, Inc. v. United States, 617 F. Supp.
89, 9 CIT 412 (1985) (finding that a uniform and established
practice had been established with regard to the classification
of quartz/fused silica under items 540.11 and 540.41, Tariff
Schedules of the United States).
The facts at issue in the case at hand, however, do not
focus on the question of whether a certain tariff classification
applies, but rather whether the subject parts entered satisfy the
necessary requirements for duty-free eligibility under Chapters
88 and 84 in the HTSUS provisions. Entries under subheadings
8803.30.00/Free and 8411.91.10/Free, HTSUS, are fact specific;
each entry must stand on its own particular fact situation.
Hence, liquidations covering the same type of parts at a free
rate of duty are not enough to establish a uniform and
established practice under the subject subheadings in the HTSUS.
Unlike the facts in Aviall, there is no evidence that
Customs discovered an error in the entry papers at the time of
protestant's filing, and such an error was not discoverable.
Customs did not have "notice" of protestant's alleged mistake of
fact, since the vast majority of the entries classified in the
case at hand did not bear the spi "C", which is recognized as
intent to claim for duty-free treatment under the CAA.
Therefore, section 141.64 of the Customs Regulations, 19 C.F.R.
141.64, did not require Customs to reject protestant's entries.
Consequently, Customs Atlanta correctly assessed the amount of
duties once the error was discovered. Even for the eleven
imported parts that bore the spi "C" before the subheading,
protestant failed to provide Customs with a valid CAA
certification for almost ten years, and failed to prove that
relief under section 1520(c)(1) is warranted.
HOLDING:
The protests should be denied in full. Protestant
erroneously entered the imported civil aircraft parts in the
entry summaries (CF 7501) by classifying the parts under
unconditionally "Free" Rate of Duty" subheadings in the HTSUS.
Unlike Aviall, protestant did not provide Customs with either a
CAA entry-by-entry or blanket certification for almost ten years.
Furthermore, for the vast majority of the entries filed,
protestant failed to demonstrate intent to claim the CAA-eligible
tariff provision by placing the spi "C" before the HTSUS
subheading at the time of entry. Consequently, duty with the
entry must be assessed and the subsequent claim for relief should
be denied. For the eleven imported parts that were designated
the spi "C", protestant showed intent to claim the CAA-eligible
spi provision. However relief for these eleven imported parts
should also be denied because a civil aircraft certification
cannot be filed subsequent to entry, unless there exists a
mistake of fact correctable under 19 U.S.C. 1520(c)(1).
Protestant did not show that the failure to file a CAA
certification for almost ten years was due to an inadvertence not
amounting to an error in the construction of the law.
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, 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 this decision must be accomplished prior to the
mailing of this decision. Sixty days from the date of the
decision of 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,
Director,
International Trade Compliance
Division