CLA 2 RR:CR:GC 962510 PH
Port Director
U.S. Customs Service
Post Office Box 1490
St. Albans, VT 05478
RE: Protest 0201 98 100041; Universal Metal Corp.
Dear Port Director:
This is in response to protest 0201 98 100041, which pertains to the denial of a request for reliquidation under 19 U.S.C. 1520(c)(1) of an entry of titanium.
FACTS:
On December 3, 1996, the protestant entered the merchandise under consideration, as "titanium unwr[ou]ght waste/scrap", with classification in subheading 8108.10.10, Harmonized Tariff Schedule of the United States (HTSUS). According to the invoice for the merchandise it is "BT1-0 B/W SCRAP FOR RE-MELT", "95/5 B/W SCRAP FOR RE-MELT", "4/2 SCRAP FOR RE-MELT", "8-1-1 SCRAP BARS FOR RE-MELT", "C.P. TITANIUM GD II SCRAP PLATE FOR RE-MELT", "BT6 B/W SCRAP FOR RE-MELT". The protestant states that the merchandise consists of titanium bars, sheets, and articles of titanium in the form of castings, all imported for remelt purposes only. After issuing a Notice of Action, Customs liquidated the merchandise with classification in subheading 8108.90.60, HTSUS, on June 6, 1997.
The importer protested Customs liquidation (protest 0201-97-100264) under 19 U.S.C. 1514 and the protest was denied on December 4, 1997. On June 5, 1998, counsel for the importer filed a letter requesting reliquidation of the entry. With this letter, counsel enclosed a statement of intent from the importer "... to satisfy the declaration requirements of 19 CFR §10.134 and ... §54.6 [as well as] certain remelt certificates and other pertinent documentation[.]" Counsel contended, on the basis of 19 CFR 54.6 and 113.43(c), that it had timely complied with the requirements for duty-free treatment of the merchandise under 19 CFR 54.5 and 54.6 because the requirement in section 54.6(a) that the importer file a statement of intent "in connection with the entry" permits the filing of such a statement any time before liquidation of the entry or within the period during which a reliquidation may be concluded. Counsel also contended that Customs liquidation was the result of a mistake of fact, in that although the invoices described the merchandise as "scrap titanium", Customs liquidation of the entry was based "upon the Customs officer’s examination of one pallet of plate". According to counsel, the "Cargo Hold Slip" bears the legends "front pallet appears to be new titanium" and "verify if all scrap[.]" Thus, counsel argued that "Customs made an assumption that the entire shipment was not waste or scrap" although, according to counsel, importation of the merchandise in 55-gallon drums indicates otherwise (because, according to counsel, "[i]n order for the merchandise to be new and usable within the titanium industry without remelt, it would require merchandise more significant than merchandise which would fit in 6 drums on 3 pallets"). Counsel also argued that although the CF 29 indicates that the entire shipment was bars and plates, this was true of only the "8-1-1 scrap bars" and the "GD II scrap plate" and the remainder of the shipment "consisted of mixed pieces of various sizes and shapes, the majority packed in 55 gallon drums" so that "[t]he belief that the entire shipment was bars and plates is clearly a mistake of fact."
On June 18, 1998, counsel for the protestant filed a supplementary letter on this matter. In this letter, counsel cited Headquarters Ruling (HQ) 958806 dated July 26, 1996, in which Customs ruled that certain bulk weldable titanium, unwrought titanium, titanium ingots or scrap titanium ingots were classified in subheading 9817.00.90, HTSUS, as unwrought metal including remelt scrap ingot in the form of pigs, ingots or billets which are defective or damaged and which cannot be commercially used without remanufacture or articles of metal to be used in remanufacture by melting or to be similarly processed to be fit only for recovery of the metal content. In addition, in this letter counsel referred to oral discussions in which counsel stated that a Customs officer "indicted that ... the merchandise did not consist totally of bars and plates but also contained articles of titanium."
On July 7, 1998, Customs denied the request for reliquidation. In regard to the contention that only one pallet was inspected, notwithstanding the statement on the Cargo Hold Slip (see above), the denial states "the decision ... is based not on this hold slip, but on photographs of the shipment submitted by [the importer] show[ing] round bars in a bundle, as well as pieces of plate and other items that appear to be castings in asymmetrical shapes."
On October 5, 1998, counsel for the importer filed this protest (although Customs automated records show that the protest was filed on October 6, 1998 (which would have been untimely; see 19 U.S.C. 1514(c)(3)(B)), there is a "FAX COVER SHEET" showing a time of transmission of 3:26 PM, October 5, 1998). The protestant asserts that the merchandise is classifiable under subheading 9817.00.80, HTSUS (we assume that the protestant means subheading 9817.00.90, as subheading 9817.00.80 is for articles of copper within the heading). Counsel notes that in protest 0201-97-100264, it is stated that the importer "deals in only waste and scrap products" and that "a portion of the shipment ... indicates that the plates, although having a clean finish, are not flat [therefore] [rendering] the material fit only for the recover of metal." Although, in the June 5, 1998, letter Counsel stated "[w]hile the protest [i.e., the initial September 5, 1997, protest] provided evidence that the merchandise was in fact waste or scrap and should be regarded as such, the protest did not raise the issue of duty-free treatment under 19 C.F.R. Part 54", Counsel now argues that this statement in the initial protest serves as the "statement of intent" required by 19 CFR 54.6 for duty-free entries under subheading 9817.00.90, HTSUS, so that the statement was timely filed pursuant to 19 CFR 54.6(d). Counsel also refers to the oral communications referred to in the June 18, 1998, letter (see above) and the July 7, 1998, denial of the request for reliquidation. Citing Taban Company v. United States, 960 F. Supp. 326 (CIT 1997), counsel contends that these communications establish that the merchandise consisted of bars and plates and articles of titanium, so that the liquidated classification (in subheading 8108.90.60, HTSUS) is clearly established to be erroneous, in that the portion of the merchandise consisting of articles of titanium should have been classified in subheading 8108.90.30, HTSUS.
ISSUE:
Whether the entry of titanium merchandise may be reliquidated under 19 CFR Part 54 or 19 U.S.C. 1520(c)(1) to classify the merchandise in subheading 9817.00.90, HTSUS, as unwrought metal including remelt scrap ingot in the form of pigs, ingots or billets which are defective or damaged and which cannot be used commercially without remanufacture or articles of metal to be used in remanufacture by melting or to be similarly processed to be fit only for recovery of the metal content.
LAW AND ANALYSIS:
Initially, we note that both the request for reliquidation under 19 U.S.C. §1520(c)(1) and the protest of the denial of that request, under 19 U.S.C. §1514, were timely filed (in regard to filing by "FAX", see Customs Directive 3550-65, August 4, 1993, page 3). The refusal to reliquidate an entry under section 1520(c) is a protestable decision under section 1514 (19 U.S.C. §1514(a)(7)).
The 1996 HTSUS headings and subheadings under consideration, are as follows:
8108 Titanium and articles thereof, including waste and scrap:
8108.10 Unwrought titanium; waste and scrap; powders:
8108.10.10 Waste and scrap
8108.10.50 Other
8108.90 Other:
8108.90.30 Articles of titanium
8108.90.60: Other
9817.00.90: Unwrought metal including remelt scrap ingot (except copper, lead, zinc and tungsten) in the form of pigs, ingots or billets (a) which are defective or damaged, or have been produced from melted down metal waste and scrap for convenience in handling and transportation without sweetening, alloying, fluxing or deliberate purifying, and (b) which cannot be commercially used without re manufacture; relaying or rerolling rails; and articles of metal (except articles of lead, of zinc or of tungsten, and not including metal bearing materials provided for in section VI, chapter 26 or subheading 8548.10 and not including unwrought metal provided for in chapters 72 81) to be used in remanufacture by melting or to be processed by shredding, shearing, compacting or similar processing which renders them fit only for the recovery of the metal content: [o]ther [than articles of copper].
Note 8(a), Section XV (including heading 8108), HTSUS, defines "waste and scrap" for purposes of that section as "[m]etal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons."
The protest is stated to be against the denial by Customs of the request for reliquidation under 19 CFR Part 54, as well as the denial of the request for reliquidation under 19 U.S.C. 1520(c)(1). There is no authority for reliquidation in 19 CFR Part 54 (see 19 U.S.C. 1514(a)). Section 54.6(b), Customs Regulations (19 CFR 54.6(b)), provides that the liquidation of entries of merchandise under subheading 9817.00.90, HTSUS, "... shall be suspended pending proof of use or other disposition of the articles within [3 years from the date of entry]." Under 19 CFR 54.6 the statement of intended use required to be filed "in connection with the entry" for entries under subheading 9817.00.90, HTSUS, may be filed at "any time before liquidation of the entry or within the period during which a reliquidation may be completed ...." See also, 19 CFR 10.112; Aviall of Texas, Inc. v. United States, 18 CIT 727, 861 F. Supp. 100 (1994), affirmed, 70 F.3d 1248 (Fed. Cir. 1995); Gulfstream Aerospace Corp. v. United States, 981 F. Supp. 654 (CIT 1997).
Accordingly, assuming that all other requirements had been met, if the statement of intent filed by the protestant with its June 5, 1998, letter had been submitted before denial of the initial protest (protest # 0201-97-100264 denied December 4, 1997; according to Customs records, no summons filed), administrative relief could have been granted for those articles qualifying for classification in subheading 9817.00.90, HTSUS (see HQ 960800 dated November 17,1998, for an example of a ruling giving such relief). Because the requirements of 19 CFR Part 54 were not complied with before denial of protest # 0201-97-100264, the only remaining administrative avenue for relief is that provided in 19 U.S.C. 1520(c)(1).
Under 19 U.S.C. 1520(c)(1), Customs may reliquidate an entry to correct a clerical error, mistake of fact, or other inadvertence, not amounting to an error in the construction of a law, when certain conditions are met. Section 1520(c)(1) has frequently been interpreted by the Courts. It has been stated that "[a] clerical error is a mistake made by a clerk or other subordinate, upon whom devolves no duty to exercise judgement, in writing or copying the figures or in exercising his intention" (see PPG Industries, Inc., v. United States, 7 CIT 118, 124 (1984), and cases cited therein). It has been stated that: "[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 [and] [m]istakes 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" (Executone Information Systems v. United States, 96 F. 3d 1383, 1386 (Fed. Cir. 1996) (emphasis in original), quoting Hambro Automotive Corporation v. United States, 66 CCPA 113, 118, C.A.D. 1231, 603 F. 2d 850 (1979); see also, Degussa Canada Ltd. v. United States, 87 F. 3d 1301 (Fed. Cir. 1996)). Inadvertence has been defined as "an oversight or involuntary accident, or the result of inattention or carelessness, and even as a type of mistake" (Aviall of Texas, Inc. v. United States, 70 F. 3d 1248, 1250 (Fed. Cir. 1995), citing Hambro, supra).
The conditions required to be met under 19 U.S.C. 1520(c)(1) are that the clerical error, mistake of fact, or other inadvertence must be adverse to the importer, manifest from the record or established by documentary evidence, and brought to the attention of Customs within one year after the date of liquidation of the entry. 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; section 1520(c)(1) only affords "limited relief in the situations defined therein" (Phillips Petroleum Company v. United States, 54 CCPA 7, 11, C.A.D. 893 (1966), quoted in Godchaux Henderson Sugar Co., Inc., v. United States, 85 Cust. Ct. 68, 69, C.D. 4874 (1980); see also, Computime, Inc. v. United States, 9 CIT 553, 555, 622 F. Supp. 1083 (1985), and Concentric Pumps, Ltd. v. United States, 10 CIT 505, 508, 643 F. Supp. 623 (1986)). In regard to the requirement that the clerical error, mistake of fact, or other inadvertence must be “manifest from the record or established by documentary evidence” see ITT Corp. v. United States, 812 F. Supp. 213 (CIT 1993)), rev’d, 24 F. 3d 1384 (Fed. Cir. 1994). The Court of Appeals for the Federal Circuit stated that “. . . manifest from the record [means] apparent to Customs from a facial examination of the entry and the entry papers alone, and thus requir[ing] no further substantiation.” ITT, 24 F.3d at 1387. The Court also stated that “[m]istakes of fact that are not manifest from [the] record . . . must be established by documentary evidence.” Id.
Basically, the mistake alleged in this case is the classification of the merchandise in subheading 8108.90.60, HTSUS, as titanium, other (i.e., other than unwrought, waste and scrap, powders, and articles of titanium), instead of in subheading 9817.00.90, HTSUS, as unwrought metal including remelt scrap ingot in the form of pigs, ingots or billets which are defective or damaged and which cannot be commercially used without remanufacture or articles of metal to be used in remanufacture by melting or to be similarly processed to be fit only for recovery of the metal content. Without more, this is an error in the construction of law not remediable under section 1520(c)(1), whether the importer’s failure to claim classification in the latter provision prior to liquidation, within 90 days thereof, or prior to denial of the protest under 19 U.S.C. 1514 was the result of ignorance of the latter provision (Concentric Pumps, Ltd. v. United States, supra), or simple delay (NEC Electronics U.S.A., Inc. v. United States, 13 CIT 214, 709 F. Supp. 1171 (1989)). We note that this is not a case such as that in Aviall of Texas, Inc. v. United States, supra, in which the claim for duty-free treatment was made at the time of entry and the importer alleged and the Courts found an inadvertence (in that the broker "forgot" to renew the blanket certification required for such entry). Nor was there any mistake by Customs in regard to classification in subheading 9817.00.90, HTSUS (i.e., the statute (U.S. Note 1., Chapter 98, HTSUS) requires compliance with the conditions and requirements of the provision and any applicable regulations; the applicable regulations were not complied with prior to liquidation, within 90 days thereof, or prior to denial of the protest under 19 U.S.C. 1514 and, therefore, Customs was not mistaken in not classifying the merchandise in subheading 9817.00.90, HTSUS).
The protestant also contends that Customs made a mistake of fact in determining (or "assuming", according to the protestant) that the entire shipment consisted of bars and plates and that there was no waste and scrap in the shipment. Insofar as the contention that only one pallet was examined although the Cargo Hold Slip indicated "verify if all scrap", the July 7, 1998, letter from Customs explains that classification was based on more than the examination of the one pallet. In any case, there is no mistake of fact or inadvertence within 19 U.S.C. 1520(c)(1) manifest from the record or established by documentary evidence in this regard (see 19 U.S.C. 1499, as amended by Public Law 103-182, § 613, providing great discretion to Customs in designating the packages or quantities of merchandise to be examined; according to the legislative history of Public Law 103-182, § 613 "remov[ed] obsolete examination requirements" in section 1499 (H. Report 103-361, Part I, 103d Cong., 1st Sess., 108 (1993))). Regarding the contention that at least some of the merchandise was waste and scrap of subheading 8108.10.10, HTSUS, we disagree. See Note 8(a), Section XV, HTSUS, specially defining waste and scrap, and see HQ 961659 dated January 20, 1999, HQ 961291 dated September 10, 1998, and HQ 951568 dated July 27, 1992, each holding metal not to be established to be waste and scrap within that definition or finding insufficient evidence to establish the material to be waste or scrap.
The protestant contends that certain communications with Customs establish that the merchandise consisted of bars, plates, and articles of titanium, so that classification of the articles of titanium in subheading 8108.90.60, HTSUS, was erroneous and relief may be granted pursuant to Taban, supra. In Taban, the Court found "plaintiff’s broker made a mistake of fact when she entered the merchandise believing it to be radiobroadcast receivers instead of combination articles ... [so that] [the Court found] plaintiff’s broker understood the facts to be other than what they were and made a mistake of fact based on her erroneous belief." 960 F. Supp. at 335.
Initially, we note that the instant case is distinguished from Taban in that there was no examination by Customs of the merchandise in Taban (960 F. Supp. At 330, 331) whereas in this case there was not only a physical examination of the merchandise but there was also an examination of photographs of the merchandise supplied by the protestant. This is a significant distinction. See Zaki Corp. v. United States, 960 F. Supp. 350, 359 (CIT 1997), in which the Court stated:
This case does not present a typical challenge to a Customs classification where Customs evaluated the merchandise and, based on its construction of the tariff schedule, determined into which of two categories the merchandise must be placed .... In such a case, there is no dispute that the only proper course of action would have been to file a timely protest under section 1514.
This case is a so-called "typical challenge to a Customs classification", as described in Zaki, and, accordingly, "the only proper course of action would have been to file a timely protest under section 1514."
There is another reason why no relief is available under section 1520(c)(1) in this regard. The written evidence cited by the protestant in this regard (the July 7, 1998, denial of the request for reliquidation) does not describe the merchandise other than bars and plates as "articles of titanium", it describes them as "other items that appear to be castings in asymmetrical shapes" (we note that the instant protest itself describes the other merchandise as "articles of titanium in the form of castings" (emphasis added)). Castings which have been not been machined or processed otherwise than by simple trimming, scalping or descaling are unwrought metal (see Additional U.S. Note 1., Section XV, HTSUS; see also HQ 088998 dated July 26, 1991, HQ 955629 dated April 21, 1994, and HQ 557046 dated May 17, 1993, in the last of which it is stated: "... articles ... produced by casting but which have not been processed otherwise than by the described surface treatments ... are ... unwrought articles for tariff purposes"). Therefore, if the additional merchandise consists of "other items that appear to be castings in asymmetrical shapes" it would not be classifiable in subheading 8108.90.30, HTSUS, as other articles of titanium, but would be classifiable as unwrought titanium, other, in subheading 8108.10.50, HTSUS.
A basic condition of section 1520(c)(1) is that the clerical error, mistake of fact, or other inadvertence must be adverse to the importer (see, e.g., Taban, supra, 960 F. Supp. at 335-336; Zaki, supra, 960 F. Supp. at 360). The rate of duty for the subheading under which the entry was liquidated, subheading 8108.90.60, HTSUS, is the same as that for subheading 8108.10.50, HTSUS (the rate of duty for each is 15%). Accordingly, even if the classification in the former subheading was erroneous, it could not have been adverse to the importer.
HOLDINGS:
(1) There is no authority in 19 CFR Part 54 to reliquidate the entry of titanium merchandise under consideration.
(2) The entry of titanium merchandise under consideration may not be reliquidated under 19 U.S.C. 1520(c)(1) for the reasons stated in the LAW AND ANALYSIS portion of this ruling.
The protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550 065, dated August 4, 1993, Subject: Revised Protest Directive, you are directed 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 or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web, by means of the Freedom of Information Act, and other public methods of distribution.
Sincerely,
John Durant, Director,
Commercial Rulings Division