ENT-1-04
OT:RR:CTF:ER H112456 PTM
Area Port Director
Port of Minneapolis
U.S. Customs and Border Protection
330 2nd Avenue South, Suite 560
Minneapolis, MN 55401
Dear Port Director:
This is in response to your request for internal advice pursuant to 19 C.F.R. § 177.11(a), regarding a change of entry type from a consumption entry to a Temporary Importation Under Bond (“TIB”) for a shipment of natural bristle paint brushes subject to antidumping duties. We apologize for the delay in our response.
FACTS:
On June 17, 2009, Superior Brokerage Services, on behalf of Wagner Spray Tech Corp. (“Wagner”), filed consumption entry number XXX-XXXX051-8 (herein “entry 051-8”), for natural bristle paint brushes from China, classified under subheading 9603.40.4040, Harmonized Tariff Schedule of the United States (“HTSUS”). The merchandise was released from Customs and Border Protection (“CBP”) custody on the same day.
On July 1, 2009, the tenth working day following release of the shipment, the broker submitted a letter along with two entry summaries to CBP requesting that TIB entry number XXX-XXXX287-8 be substituted for the original consumption entry. The broker stated that “[s]ubstitution is needed because the articles were released under the entry procedures and then found that they were to be entered on a Temporary basis.” The broker also stated that the substitution request was pursuant to 19 C.F.R. § 10.31(g). Also submitted with the broker’s letter was a letter to the Minneapolis Port Director dated June 28, 2009, from Mr. Stephen Liedtke, Senior Vice President of Operations for Wagner. In his letter, Mr. Liedtke stated that the imported brushes would be “used for testing and review purposes in the USA to determine suitability of sales in foreign markets,” and that the brushes were “not for sale or sale on approval and [would] be re-exported or destroyed under Customs supervision within the bond period.”
The entered brushes were covered by three separate commercial invoices. None of the invoices nor any of other documents included in the original entry package indicated that the brushes were being imported temporarily for testing purposes. Further, no evidence was provided by Wagner that it had instructed the broker to file a TIB entry for the merchandise. The earliest documentation referencing a claim for a TIB entry was the letter from the broker dated June 28, 2009, 11 days after the shipment was released.
On July 1, 2009, CBP rejected entry 051-8 and instructed Wagner to resubmit the entry as a consumption entry subject to antidumping duties (“ADD”) pursuant to ADD order A-570-501-000, and to deposit the applicable duties. The required antidumping cash deposit rate at the time of entry was 351.92% of the entered value. The rejection stated that “[t]he request to substitute for consumption Entry 051-8 a temporary importation bond reflective of the articles on entry 051-8 has been denied. Please resubmit the above listed entry as a type 03 with applicable duties, taxes, and fees attached.” On July 6, 2009, Wagner resubmitted the entry as an ADD consumption entry (type 03) with payment for the applicable duties, taxes, and fees.
By letters dated July 23, 2009, and May 26, 2010, counsel for Wagner requested that the Port of Minneapolis seek internal advice from CBP Headquarters concerning the applicability of 19 C.F.R. § 10.31(g) to the entry at issue. Counsel for Wagner submits that it should be permitted to substitute a TIB entry under subheading 9813.00.30, HTSUS, for the consumption entry, on the basis that the brushes covered by the entry were being temporarily entered for examination and testing. The Port of Minneapolis requested internal advice from this office on the question of whether the importer in this case may substitute a TIB entry under subheading 9813.00.30, HTSUS, in lieu of the original consumption entry, pursuant to 19 C.F.R. § 10.31(g).
On May 17, 2010, the Department of Commerce issued AD/CVD message number 0137305 for entries of natural bristle paint brushes and brush heads from China for the period of February 1, 2009 and January 31, 2010. The message indicated that the lifting of suspension occurred on March 30, 2010. The entry was liquidated pursuant to the message on September 24, 2010. Wagner then filed protest number 3501-10-100076 on December 6, 2010, but did not request further review. Because the prior internal advice had not been issued prior to liquidation of the entry, you requested internal advice regarding the disposition of the protest.
ISSUE:
Whether the importer may substitute a TIB entry in lieu of the entry for consumption, pursuant to 19 C.F.R. § 10.31(g).
LAW AND ANALYSIS:
Goods imported for testing purposes may be temporarily imported into the United States free of duty under subheading 9813.00.30, HTSUS. Subheading 9813.00.30, HTSUS, provides for temporary duty-free entry, under bond of "articles intended solely for testing, experimental or review purposes . . . ." U.S. Note 3, Subchapter XIII, Chapter 98, HTSUS provides: "Upon satisfactory proof that any article admitted under heading 9813.00.30 has been destroyed because of its use for any purpose provided therein, the obligation under the bond to export such article shall be treated as satisfied." Thus, articles may be temporarily entered free of duty under subheading 9813.00.30, HTSUS, when such articles are intended solely for testing, experimental, or review purposes, not for sale or for sale on approval, as long as the articles are exported or destroyed within one year from the date of importation, unless an extension of the one-year period has been granted.
The CBP regulations implementing subheading 9813.00.30, HTSUS, are codified at 19 C.F.R. § 10.31. This regulation was amended on August 26, 2010. Since the entry at issue was submitted on June 17, 2009, we apply 19 C.F.R. § 10.31 as it stood at the time of entry. The relevant provision in the regulations in 2009 was 19 C.F.R. § 10.31(g) which provided that:
Claim for free entry under Chapter 98, Subchapter XIII, HTSUS, may be made for articles of any character described therein which have been previously entered under any other provision of law and the entry amended accordingly upon compliance with the requirements of this section, provided the articles have not been released from Customs custody, or even though released from Customs custody if it is established that the original entry was made on the basis of a clerical error, mistake of fact, or other inadvertence within the meaning of section 520(c)(1), Tariff Act of 1930, as amended, and was brought to the attention of the Customs Service within the time limits of that section. If an entry is so amended, the period of time during which the merchandise may remain in the Customs territory of the United States under bond shall be computed from the date of importation. (emphasis added)
Section 520(c) of the Tariff Act of 1930 (the “1930 Act”), codified at 19 U.S.C. § 1520(c), and referred to above was repealed by Congress in 2004. See Miscellaneous Trade and Technical Corrections Act of 2004 (“Trade Act of 2004”) Pub. L. 108-429, § 2103, 118 Stat. 2597. The Trade Act of 2004 also provided relief by protest for “clerical error, mistake of fact, or other inadvertence” in 19 U.S.C. § 1514(a). In 2010 CBP issued CBP Dec. 10-29; Technical Corrections to Customs and Border Protection Regulations, which amended 19 C.F.R § 10.31(g) to conform to changes made by the Trade Act of 2004, and thereby authorized substitution of entry types under 19 C.F.R. § 10.31(g) in the event of a mistake within the meaning of 19 U.S.C. § 1514(a). Therefore, the change in 19 C.F.R. §10.31(g) in 2010 was only to substitute the correct reference to the phrase “clerical error, mistake of fact, or other inadvertence.” Because 19 C.F.R. § 10.31(g) does not derive its authority from either of the aforementioned statutory provisions, and because the language of the regulation does not change other than to its proper cross-reference with the Trade Act of 1930, there is no legal consequence for the change. The regulation operates as it had before: it provides a basis to change an entry to a duty-free TIB entry if it is established that the original entry was made on the basis of a clerical error, mistake of fact, or other inadvertence.
A mistake of fact is "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." C.J. Tower & Sons of Buffalo, Inc. v United States, 68 Cust. Ct. 17, 22 (1972) (citations omitted), aff'd by 499 F.2d 1277 (C.C.P.A. 1974) (citations omitted). A clerical error is "mistake by a subordinate, who does not have any duty to exercise judgment with regard to classification." Xerox Corp. v. United States, 219 F. Supp. 2d 1345, 1348 (Ct. Int'l Trade 2002) (citations omitted). An "inadvertence" is even broader in scope, encompassing oversights or involuntary accidents, even mistakes resulting from inattention and carelessness. Hambro Automotive Corp. v. United States, 603 F.2d 850, 854 (C.C.P.A. 1979). In contrast, a mistake in the construction of law exists when "the facts are known, but their legal consequences are not known or believed to be different than they really are." Id. at 855.
CBP has addressed the issue of whether a TIB entry may be substituted for an entry for consumption under 19 C.F.R. § 10.31(g). In Headquarters ruling HQ 229200, dated July 6, 2001, the importer protested CBP’s decision to deny the substitution of a TIB entry for a consumption entry filed on imported non-corrugated cardboard cartons that had been imported for the testing of a packaging machine. The cartons were determined to be subject to duty after the shipment had already been released from CBP custody. CBP determined that the protestant knew the intended use of the imported merchandise, but erred in properly communicating that information to the broker. In determining that the importer failed to justify a change from consumption entry to TIB entry, HQ 229200 states that “an importer’s failure to provide a customs broker with complete information pertaining to the use and purpose of merchandise being imported does not constitute a mistake in fact under Section 520(c)(1), Tariff Act of 1930.” Even assuming arguendo that Wagner intended that all of the brushes would be used for testing, Wagner failed to relay that information to its customs broker. Thus, its failure to communicate with its broker does not qualify.
In the present case, there is no indication in the facts presented that the importer had informed the broker that the brushes were being imported for testing. In HQ 229200, CBP examined the documents submitted with the subject entry to determine whether there were any notations or information relating to the character or the intended use of the imported merchandise. In that case, CBP determined that the documents submitted contained no information that would lead to the conclusion that the merchandise was simply entered for experimentation. Similarly, an examination of the entry documents filed here by the broker fails to provide any indication that Wagner intended to test the brushes after importation. There were no notations or other information on the invoices or entry documents to indicate that the merchandise was being imported for testing or experimental purposes. The importer did not explain why it needed to test thousands of brushes. Also, the consumption entry in this case specifically classified the imported articles under subheading 9603.40.4040, HTSUS, which at the time of entry, was subject to an antidumping duty order and cash deposit rate of 351.92%. See Message Number 3160209 (June 9, 2003). Neither the importer nor the broker asserted at the time of entry that the brushes should be classified as free of duty under 9813.00.30, HTSUS. Based on the documents and the claimed classification on the entry, there was no indication that the merchandise was intended to be imported temporarily for testing purposes at the time of entry. Thus, just as in HQ 229200, no information was provided by the importer to the broker that the subject merchandise was intended to be imported under a TIB entry. It was only after the merchandise had been entered and released that the importer sought to enter the goods temporarily free of duty under subheading 9813.00.30, HTSUS. This is not sufficient to establish a mistake of fact.
In this case, counsel for the importer states that the broker was unaware that the brushes were to be tested in the United States and then exported. The fact that the broker was unaware that the importer intended to import the brushes temporarily free of duty for testing is insufficient to substantiate that a mistake of fact occurred. Wagner presented no evidence to show that the decision to file a TIB entry was made prior to the June 28, 2009, letter prepared by the importer and that the consumption entry was filed as a mistake of fact pursuant to 19 C.F.R. §10.31(g). Consequently, Wagner has not demonstrated that its failure to file a TIB entry on the brushes was the result of "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." Even if Wager were to argue that it did not know these brushes were subject to an antidumping duty order, it would still be insufficient. In HQ 231702 (September 30, 2005), CBP held that ignorance of the existence of an antidumping duty order is not a mistake of fact. Rather, it is a mistake of law, which is not remediable under 19 C.F.R. §10.31(g). Therefore, to the extent that the importer was unaware of the ADD order applicable to the brushes, its ignorance of the ADD order is not a mistake of fact eligible for relief under 19 C.F.R. §10.31(g).
HOLDING:
Based on the facts of this case, the importer’s failure to inform its broker that the merchandise was to be imported temporarily under a TIB for testing in the United States
and then exported from the United States does not constitute a mistake of fact under 19 C.F.R. § 10.31(g), and therefore is not eligible for a change of entry from consumption to TIB.
No later than 60 days from the date of this letter, the Office of International Trade, Regulations and Rulings, will make this decision available to CBP personnel, and to the public on the CBP homepage on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director Commercial and Trade Facilitation Division