CLA-2 RR:CR:GC 965049ptl
Port Director
U.S. Customs Service
111 West Huron Street
Buffalo, NY 14202
RE: Protest 0901-00-100477; Peanut Butter; Quota.
Dear Port Director:
The following is our decision on Protest 0901-00-100477, filed by a broker on behalf of Best Foods Canada, Inc., against your classification of peanut butter under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The merchandise under protest ("Aldi" brand peanut butter) was entered on entry number 551-XXXX5994-2, dated December 3, 1999, and the merchandise was classified in subheading 2008.11.1500, HTSUS, which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included, nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together, peanuts (ground-nuts), peanut butter and paste, other. The 1999 duty rate for this subheading was 135.7 percent ad valorem. That entry was presented as a type "01" consumption entry, not a "02" entry for quota merchandise. The peanut butter quota was filled on December 23, 1999, at 2:37 p.m. On December 28, 1999, protestant presented a second, "corrected," entry summary, on which the merchandise was entered at the low tariff rate subheading 2008.11.0500, HTSUS, which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included, nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together, peanuts (ground-nuts), peanut butter and paste, described in additional U.S. note 5 to chapter 20 and entered pursuant to its provisions. The 1999 rate of duty for this subheading was free.
Customs liquidated the entry on October 6, 2000, as originally entered, at the over quota rate. On December 4, 2000, a timely protest was filed in which protestant contends that there is no indication that the "corrected" entry was accepted by Customs and that the entry should be reliquidated at low tariff rate.
ISSUE:
Whether an entry classification correction filed after a quota has been filled can operate to reopen the quota.
LAW AND ANALYSIS:
Customs Regulations, § 132.11 (19 CFR 132.11) provides that "Quota priority and status are determined as of the time and presentation of the entry summary for the consumption, or withdrawal for consumption, in proper form in accordance with § 132.1(d)." [Emphasis added]
Section 132.1 (d), Customs Regulations (19 CFR 132.1(d)) provides as follows:
(d) Presentation. "Presentation" is the delivery in proper form to the appropriate customs officer of:
(1) An entry summary for consumption, which shall serve as both the entry and sentry summary. With estimated duties attached (see § 141.0a(b)); or
(2) An entry summary for consumption, which shall serve as both the entry and the entry summary, without estimated duties attached, if the entry/entry summary information and a valid scheduled statement date (pursuant § 24.25 of this chapter) have been successfully received by Customs via the Automated Broker Interface; or
(3) A withdrawal for consumption with estimated duties attached. [Emphasis added]
Section 132.11 (b), Customs Regulations (19 CFR 132.11(b)), provides as follows:
"(b) Documentation and deposit of duties in proper form required. Merchandise covered by an entry summary for consumption, which serves as both the entry and entry summary, or by a withdrawal for consumption, shall be regarded as entered for purposes of quota priority and shall acquire quota status if:
(1) The entry summary of withdrawal for consumption is in proper form, and duties have been attached to the entry summary or withdrawal for consumption in proper form; or
(2) The entry summary for consumption is in proper form, and the entry/entry summary information and a valid scheduled statement date (pursuant to §24.25 of this chapter) have been successfully received by Customs via the Automated Broker Interface." [Emphasis added]
Customs Regulations consistently emphasize that quota priority is dependent on the filer's adherence to the "proper form" in submitting all required documentation.
When the initial entry summary was filed on December 3, 1999, presentation was not "in proper form" for the importer to claim quota preference. The entry was made as a type "01" consumption entry, not as a type "02" entry for quota merchandise. Further, the merchandise was classified in an over quota subheading, and the high tier tariff rate duty was reported and paid although the quota was not yet filled. Therefor, it cannot be said that this initial entry summary was compliant and filed "in proper form" with the relevant Customs Regulations if the purpose of that entry summary was to take advantage of the low quota tariff rate priority. Protestant inasmuch admits this fact when he states that the error contained in the initial filing was discovered and a corrected entry summary was submitted on December 28, 1999. However, between the time of the initial filing, and the second, "corrected" filing, the quota was filled. There is no evidence that Customs Automated Commercial System (ACS) accepted the second entry summary. Protestant is asking Customs to reopen the quota.
Quota priorities are determined by the time and date of presentation of an entry summary to Customs. Customs Directive 3230-025A, entitled "Quota-Class Merchandise: Time of Presentation," dated May 5, 1999, provides guidance on this issue. The purpose of the Directive is stated to be as follows:
1. Purpose:
To provide guidance on the time of presentation to be used when quota-class merchandise is subsequently reclassified after release; nonquota merchandise is reclassified to quota-class status; merchandise subject to an absolute quota is inadvertently released and not charged to quota; NAFTA Tariff Rate Quotas (TRQ)/Tariff Preference Levels (TPL) – not claimed, merchandise released and not charged to quota; and corrections to quota-class merchandise are made after the quota was charged. Although the Customs Regulations are specific as to the time of presentation to achieve quota priority and status, there are instances in which the time of presentation needs further clarification.
Section 5 of the Customs Directive provides, in relevant part, as follows:
5. Procedures.
The following procedures will be adhered to when quota-class merchandise is subsequently reclassified after release; nonquota merchandise is reclassified to quota-class status; … and corrections to quota-class merchandise are made after the quota was charged.
Paragraph 5.5 provides as follows:
Corrections to Quota-Class Merchandise after Quota Charged. If an error is detected while the review is still within the time frame set by Customs Reject Policy, the quota lines should be deleted and the summary should be systemically rejected back to the filer for the correction of the appropriate quota line(s). The resubmitted summary would require a new time of presentation. If an error is detected when the review is beyond the rejection time frame, the incorrect quota line(s) should be deleted from the quota system data base by the Customs field officer and the corrected quota line(s) re-input with the new time of presentation as the time of discovery at 0830 hours. Any appropriate Census corrections for ABI transactions can be accomplished through the CNCU function code and in accordance with the latest Census Interface Directive.
According to the Customs Directive, the discovery date, the date protestant filed the "corrected" entry summary, became the presentation date for quota purposes. Thus, the presentation time and date of 0830 on December 28, 1999, occurred after the quota was filled on December 23, 1999, at 2:37 p.m.
A situation comparable to the instant matter was addressed in DMV USA, Inc., v. United States, (USCIT Slip Op. 2001-99, No 99-06-00370, August 10, 2001). In that situation, which also involved an issue regarding the classification of merchandise, an importer's entry summaries were presented before the lower quota tariff rates closed. However, the importer was not entitled to quota-class treatment because the entries were not in proper form. The court stated: "In fact, by presenting documents that indicated, in effect, that its merchandise was not entitled to quota-class treatment, Plaintiff tacitly declared that it was not seeking quota-class treatment." The court held that "since Plaintiff's documents were not filed in proper form, quota priority and status did not attach to the subject merchandise before the closing of the tariff rate quota."
In the matter before us, the quota was filled before the petitioner presented its documents in proper form to claim the lower quota rate.
HOLDING:
Petitioner's entry summary for quota-class merchandise was not filed in proper form until after the quota had been filled. Therefore, the merchandise was properly classified in subheading 2008.11.1500, HTSUS, which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included, nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together, peanuts (ground-nuts), peanut butter and paste, other. The 1999 duty rate for this subheading was 135.7 percent ad valorem.
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 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 at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Acting Director
Commercial Rulings Division