OT:RR:CTF:TCM H066458 HvB H135641 PTM
Port Director
U.S. Customs and Border Protection
6601 NW 25th Street
Miami, FL 33122
Attn: Dina M. Amato
RE: Application for Further Review of Protest No. 5201-09-10037; Dairy Spread from Honduras and Costa Rica
Dear Port Director:
The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 5201-09-10037, timely filed by counsel on March 19, 2009, on behalf of AB International Brokers, Inc., (“ABI” or “Protestant”) concerning the classification of soft blend dairy spread under the Harmonized Tariff Schedule of the United States (“HTSUS”) and preferential duty treatment status under the Caribbean Basin Economic Recovery Act (“CBERA”). ABI, the customs broker for the entries, is identified as the importer of record. Counsel for the Protestant also asserts that liquidation of the protested entries was unlawfully extended.
FACTS:
This protest covers seven entries of Soft Blend Dairy Spread from Honduras and Costa Rica. The Honduran “Sula Soft Dairy Spread” (“Sula”) was manufactured by Lacteos de Honduras S.A and was entered between August 3, 2005 and June 9, 2006. The Costa Rican “La Cuscatle Ca” (“La Cuscatle”) dairy spread was entered between June 23, 2006 and August 17, 2006, and was produced by Cooperativa de Productores de Leche RL. The product is a semi-solid material composed of pasteurized partially skimmed milk, butter oil, vegetable oil, modified starch, gelatin and gum as stabilizers, salt, lecithin, lactic cultures, and sorbic acid as preservative.
CBP’s Automated Commercial System (ACS), shows that the notices of extension of liquidation were sent to both the importer of record and the surety. The following are the entries at issue:
Entry Number
Entry Date
Notice of Extension
Liquidation Date
Country of Origin
07XXXX18 (“18”)
09/14/2005
07/15/2006
10/17/2008
Honduras
02/10/2007
04/19/2008
07XXXX13 (“13)
08/03/2005
06/16/2006
10/17/2008
Honduras
04/14/2007
04/19/2008
07XXXX54 (“54”)
06/09/2006
03/17/2007
10/17/2008
Honduras
03/15/2008
07XXXX28 (“28”)
06/23/2006
03/17/2007
11/07/2008
Costa Rica
03/15/2008
07XXXX92 (“92”)
08/17/2006
06/16/2007
11/07/2008
Costa Rica
04/19/2008
07XXXX56 (“56”)
07/24/2006
04/14/2007
10/31/2008
Costa Rica
04/19/2008
07XXXX94 (“94”)
08/09/2006
04/14/2007
10/31/2008
Costa Rica
04/19/2008
The first three entries were imported from Honduras under subheading 2106.90.38, HTSUS, which provides for “”Food preparations not elsewhere specified or included, Other: Butter substitutes, whether in liquid or solid state, containing over 15 percent by weight of butter of other fats or oils derived from milk: Other: other”, claiming duty-free status “P” or “E” under the Dominican Republic-Central American-United States Free Trade Implementation Act (DR-CAFTA) or the Caribbean Basin Economic Recovery Act (“CBERA”). The merchandise was imported in a package labeled as “Sula Soft Blend Dairy Spread” (hereinafter “Sula”), with the following ingredients listed on the package: “pasteurized skim milk, milk fat, soybean oil, carrageenan (stabilizer), salt, lactic cultures and colored with annatto.”
Samples were pulled from both the Honduran and Costa Rican manufacturers and sent to U.S. Customs and Border Protection’s (“CBP”) Office of Laboratory and Scientific Services (LSS) for analysis on June 16, 2006. On September 15, 2006, LSS issued Laboratory Report Number SV 20061210 for the Sula sample produced by Lacteos de Honduras S.A., and Laboratory Report Number SV 20061285 for the Costa Rican La Cuscatle sample produced by Cooperativa de Productores de Leche RL. The CBP Field Officer requested additional information regarding the milk solid content for both samples on October 4, 2006. CBP Laboratory Report SV20061210 indicates that by weight, the Sula product consists of 73% moisture (83% non-fatty matters); 12% total fat (45% moisture free basis); 3% butter fat (10% moisture free basis). The November 1, 2006, Supplemental Laboratory Reports SV 20061210S and SV 20061285S were issued by LSS due to an additional request for the milk solid content of the samples. Tests were administered on the La Cuscatle product for the two samples provided (Sample A and B). Sample A analysis reveals that the product contains 3% lactose, 6% non-fat milk solid and 19% milk solids (non-fat milk solid and butter fat). Analysis on the second package, Sample B, indicates that the product contains 3% lactose, 6% non-fat milk solid, and 17% milk solid (non-fat milk solid and butter fat). Both laboratory reports further indicate that the product is a “water-in-oil” type emulsion. The laboratory’s investigation determined that vegetable oil was present in both samples, precluding classification under chapter 4 of the HSTUS.
The Costa Rican merchandise was described as “soft blend dairy spread” and consists of four entries, entered under subheading 0406.90.9900, HTSUS, which provides for “Cheese and curd: other cheeses and substitutes for cheese, including mixtures of the above (excluding goods containing mixtures of subheading 0406.90.61 or 0406.90.63: Other: Containing 0.5 percent or less by weight of butterfat: other: other” with a claim for duty-free status under CBERA.
On September 8, 2008, a CBP Field Officer sent a message regarding the entries via the Quality & Uniformity Control System (“QUICS”) to a National Import Specialist (“NIS”) stating that “[b]ased on the 2 lab reports (SV20061210 and SV2006110S) team would like to confirm classification.” On September 10, 2008, another QUICS message was sent from the CBP Field Officer to the NIS stating “[r]eview of lab findings and tariff # used to enter product indicates that product may have been misclassified.” On September 17, 2008, the CBP Field Officer sent a fax to ABI stating “[h]ere is the 7501 and copy of invoice. The NIS is requesting for each product a breakdown of ingredients by weight.” On September 24, 2008, ABI sent a fax to the CBP Field Officer with an attached technical report for the La Cuscatle soft blend spread produced by Cooperativa de Productores de Leche RL. That information was forwarded to the NIS via fax on the same day. On September 25, 2008, the NIS sent the CBP Field Officer an email stating that the fax was not helpful because it “lists the ingredients, but does not provide the ingredients breakdown…A complete ingredients breakdown, by weight, is needed.” The CBP Field Officer responded to the NIS via email on September 25, 2008, stating “[a]dvised the importer (who is also the custom house broker). They will be contacting their client again.” On September 29, 2008, the Field Officer sent a fax to the NIS stating “[t]his is the information the Customs house broker was able to obtain.” The fax contained a report of the breakdown of “granel crema exportacion modificada con grasa vegetal,” which translates to “bulk cream for exportation modified with vegetable fat.”
Subsequent to further review of the shipment and lab analysis, all Sula entries were reclassified and liquidated. A Notice of Action was issued to the importer on September 25, 2008, for the first entry, stating that a rate advance was required. The merchandise was reclassified and liquidated on October 17, 2008, under subheading 1901.90.47, which provides for food preparations of goods of headings 0401 to 0404 not specified elsewhere, not containing cocoa or less than 5 percent by weight of a cocoa calculated on a totally defatted basis, not elsewhere specified or included, and under subheading 9904.07.74, HTSUS. On September 29, 2009, the port issued Notices of Action for each of the remaining two entries, which were liquidated and reclassified under subheading 1901.90.47. The third entry was reclassified and liquidated under subheadings 1901.90.43. Both entries were liquidated on October 17, 2008, applying safeguard duty rates provided for in subheadings 9904.04.74 and 9904.04.53, HTSUS, respectively.
Accordingly, on September 30, 2008, Notices of Action were issued for each of the four La Cuscatle entries and the merchandise was reclassified and liquidated under subheadings 1901.90.4300. Liquidation occurred on October 31 and November 7, 2008, applying the safeguard duty rates in subheading 9904.07.72, HTSUS. The importer has not provided any documentation to support its averred preferential treatment under CBERA.
The protest was filed on March 19, 2009. The protestant challenges CBP’s classification of the products and states that CBP is barred from extending liquidation as the LSS report issued on September 15, 2006, removed all possible grounds for extension of liquidation.
ISSUES:
1. Whether the subject merchandise is classifiable under subheading 1901.90, HTSUS, or under subheading 2103.90.91, HTSUS.
2 Whether the subject merchandise is eligible for preferential treatment under CBERA, per General Note 7 of the HTSUS
3. Whether the liquidated entries were properly liquidated by operation of law pursuant to 19 U.S.C. § 1504(a)).
LAW AND ANALYSIS:
Initially, we note that the issues raised in the protest are protestable under 19 U.S.C. § 1514(a)(2) and (a)(5) as a decision on classification, the amount dutiable, and liquidation is protestable. Under 19 U.S.C. 1514(c)(3)(A) and 19 CFR 174.12(e)(1), a protest shall be filed within 180 days after the notice of liquidation. Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Counsel filed protest for a total of seven entries. Liquidation occurred on October 17, October 31, 2008, and November 7, 2008. The protest was timely filed on March 19, 2009, or within 180 days of liquidation.
Further Review of Protest No. 5201-09-10037 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24 because the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee. Specifically, Protestant alleges that the action of the Port is inconsistent with New York Ruling Letter(s) (“NY”) I89044, dated December 12, 2002, and NY K83948, dated March 10, 2004, in which CBP classified substantially similar products under heading 2103, HTSUS, the provision for sauces.
1. CLASSIFICATION
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The 2005 and 2006 HTSUS provisions under consideration are as follows:
1901 Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of heading 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included:
***
1901.90 Other:
Other:Dairy products described in additional U.S. note 1 to chapter 4:
Dairy preparations containing over 10 percent by weight of milk solids: ***
1901.90.42 Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions
Other 1/
1901.90.47 Other 2/
1/ See subheadings 9904.04.50-9904.05.01
2/ See subheadings 9904.04.50-9904.05.01
Additional U.S. Note 1 to Chapter 4, HTSUS, provides as follows:
For the purposes of this schedule, the term "dairy products described in additional U.S. note 1 to chapter 4" means any of the following goods: malted milk, and articles of milk or cream (except (a) white chocolate and (b) inedible dried milk powders certified to be used for calibrating infrared milk analyzers); articles containing over 5.5 percent by weight of butterfat which are suitable for use as ingredients in the commercial production of edible articles (except articles within the scope of other import quotas provided for in additional U.S. notes 2 and 3 to chapter 18); or, dried milk, whey or buttermilk (of the type provided for in subheadings 0402.10, 0402.21, 0403.90 or 0404.10) which contains not over 5.5 percent by weight of butterfat and which is mixed with other ingredients, including but not limited to sugar, if such mixtures contain over 16 percent milk solids by weight, are capable of being further processed or mixed with similar or other ingredients and are not prepared for marketing to the ultimate consumer in the identical form and package in which imported.
Additional U.S. Note 10 to Chapter 4, HTSUS, provides as follows:
The aggregate quantity of dairy products described in additional U.S. note 1 to chapter 4, entered under subheadings 0402.29.10, 0402.99.70, 0403.10.10, 0403.90.90, 0404.10.11, 0404.90.30, 0405.20.60, 1517.90.50, 1704.90.54,1806.20.81,1806.32.60, 1806.90.05, 1901.10.35, 1901.10.80, 1901.20.05, 1901.20.45, 1901.90.42, 1901.90.46, 2105.00.30, 2106.90.06, 2106.90.64, 2106.90.85 and 2202.90.24 in any calendar year shall not exceed 4,105,000 kilograms (articles the product of Mexico shall not be permitted or included under the aforementioned quantitative limitation and no such articles shall be classifiable therein).
* * *
2103 Sauces and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard:
Mixed condiments and mixed seasonings:
Mixed condiments and mixed seasonings described in additional U.S. note 3 to this chapter:
2103.90 Other
2103.90.90 Other
Additional U.S. Note 3 to Chapter 21, HTSUS, provides as follows:
For the purposes of this chapter, the term "mixed condiments and mixed seasonings described in additional U.S. note 3 to this chapter" means articles containing over 10 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, except (a) articles not principally of crystalline structure or not in dry amorphous form that are prepared for marketing to the ultimate consumer in the identical form and package in which imported; or (b) cake decorations and similar products to be used in the same condition as imported without any further processing other than the direct application to individual pastries or confections, finely ground or masticated coconut meat or juice thereof mixed with those sugars, and sauces and preparations therefor.
The Harmonized Commodity Description and Coding System Explanatory Notes ("ENs") constitute the official interpretation of the Harmonized System at the international level. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The General 2002 EN for heading 1901explains that the “preparations of this heading may be distinguished from the products of headings 04.01 to 04.04 in that they contain, in addition to natural milk constituents, other ingredients not permitted in the products of those earlier headings.”
The 2002 ENs for heading 2103, state in relevant part:
This heading covers preparations, generally of a highly spiced character, used to flavour certain dishes (meat, fish, salads, etc.), and made from various ingredients (eggs, vegetables, meat, fruit, flours, starches, oil, vinegar, sugar, spices, mustard, flavourings, etc.). Sauces are generally in liquid form and preparations for sauces are usually in the form of powders to which only milk, water, etc. need to be added to obtain a sauce.
Sauces are normally added to a food as it cooks or as it is served. Sauces provide flavour, moisture, and a contrast in texture and colour. They may also serve as a medium in which food is contained, for example, the velouté sauce of creamed chicken. Seasoning liquids (soy sauce, hot pepper sauce, fish sauce) are used both as ingredients in cooking and at table as condiments.
The heading also includes certain preparations, based on vegetables or fruit, which are mainly liquids, emulsions or suspensions, and sometimes contain visible pieces of vegetables or fruit.
* * *
As noted above, the “Sula” products were entered under heading 0406, HTSUS, the provision for cheese, and the ”La Cuscatle” products were entered under subheading 2106, HTSUS, for other butter substitutes. Protestant now asserts that the subject merchandise is classifiable under heading 2103, HTSUS, as a sauce.
The U.S. Supreme Court has opined on the meaning of the word “sauce.” It wrote that “[t]he word "sauce," as commonly used, designates a condiment, generally but not always of liquid form, eaten as an addition to and together with a dish of food, to give it flavor and make it more palatable; and is not applied to anything which is eaten, alone or with a bit of bread, either for its own sake only, or to stimulate the appetite for other food to be eaten afterwards.” Bogle v. Malone, 152 U.S. 623, 625 (1894). See also Nestle Refrigerated Food Co. v. United States, 18 CIT 661, 668 (Ct. Int’l Trade 1994)). The instant spreadable product is indeed eaten with a bit of bread, for its own sake only. It is neither a liquid nor a condiment, but is instead a spreadable paste.
While the CBP Laboratory Report describes the product as a “water-in-oil emulsion,” this does not make the product a “liquid.” Rather, the Supplemental Laboratory Report, undertaken to analyze the milk solid content of the sample, furthermore described the merchandise as a “yellow paste like material,” which confirmed to information later provided by the La Cuscatle manufacturer. As such, the terms of heading 2103, HTSUS do not describe the merchandise.
EN 21.03 supports our conclusion, by stating that sauces “are generally in liquid form,” which is not the case here. Furthermore, the EN reference to emulsions is for “certain preparations, based on vegetables or fruit.” CBP lab analysis confirmed that the instant products do not contain vegetables or fruit. Thus, protestant’s reliance on the ENs is of little help in classifying the product in this instance, because this emulsion is of oils and dairy products. In fact, Protestant likens the instant merchandise to a “spread that is used on breads, potatoes, macaroni, beans and other similar products,” thus admitting that the instant merchandise is not in liquid form.
In support of its position the product is classifiable in heading 2103, HTSUS, Protestant relies on New York Ruling Letter (NY) I89044, dated December 12, 2002, and NY K83948, dated March 10, 2004. NY I89044 addressed the classification of a base ingredient for a cheese based sauce from Jamaica; one sample is further described as containing 65% granular cheese, 13% anhydrous milk and/or hydrogenated soy oil, 9% water, 6% milk protein concentrate, 3% whey protein concentrate, in addition to preservatives and stabilizers. A second sample was found to be composed of 62% Swiss Cheese. We classified this product under subheading 2103.90.9091, HTSUS. The instant merchandise is dissimilar to the products classified in NY I89044, does not contain cheese, and otherwise bears no resemblance, by composition or use, to the dairy spreads at issue. Instead, as the sample label indicates, it is more like a butter spread.
The instant dairy spread is also distinguishable from the product in NY K83948. In that ruling, we classified a sandwich spread similar in form and appearance to mayonnaise that also contained “small pieces of chopped vegetables scattered throughout” under subheading 2103.90.9091, HTSUS. Although both the instant product and the sandwich spread could be used as a spread on bread, the similarities end there. The ingredient composition is dissimilar, since the product in NY K83948 primarily contains approximately 35% relish (cucumbers, corn syrup, sugar, spices, peppers, turmeric, stabilizers, flavors and preservatives), 34% soybean oil, 19% water, 3% whole eggs, and 2% each of egg yolks. Although it might resemble the instant product in form and appearance, they do not share any similarity in ingredients. The instant product, while being an emulsion, does not resemble the emulsion described in NY K83948. Therefore, we do not find the product classifiable under heading 2103, HTSUS.
The character of the instant product is imparted by the milk ingredient, as confirmed by both CBP laboratory reports. Protestant’s submission contains evidence to support this conclusion. A technical report provided by the La Cuscatle manufacturer states that “[t]his soft blen [sic] has a homogenized and pasteurized milk cream base manufacturer.” Protestant argues that heading 2103, HTSUS should apply because it is more specific than heading 1901, under GRI 3(a). However, as discussed above, in this instance GRI 3(a) does not apply because heading 2103, HTSUS is not a competing provision, at all. The instant product is a dairy spread of Chapter 4, to which vegetable oil has been added. Accordingly, the instant product is a food preparation of goods of heading 0401 to 0404 and is described by 1901, HTSUS, and Additional U.S. Note to Chapter 4, HTSUS.
Moreover, we have consistently classified products of a similar nature to the instant merchandise under subheading 1901.90, HTSUS. In Headquarters Ruling Letter (“HQ”) W968432, dated July 31, 2008, we classified Sula “imitation butter” under subheading 1901.90, HTSUS, by application of GRI 1. The “imitation butter” in that case was described as a spreadable emulsion containing 81.2%, 10.8% soybean oil, 4.8% butter, 1.3% powder skim milk, and other preservatives and stabilizers. Substantially similar to the instant product, this product had the following composition by weight of 74% moisture, 14% lactose, 11% total fat, and 3% butterfat. Comparably, the instant product contains by weight, 73% moisture, 12% total fat, and 3% butter fat. In NY K82926, dated February 11, 2004, we classified a similar product, Butter Blend Sula, under subheadings 1901.90.4200 and 4300. The Butter Blend from Honduras was described as a “creamy, white-colored liquid composed of 64 percent water, 13 percent fluid cream, 13 percent vegetable oil, 8 percent skim milk solids” in addition to stabilizers. Like the merchandise at issue, the Butter Blend Sula product contained a similar ratio of ingredients and was chiefly composed of milk. In NY 885020, dated August 9, 1993, we classified a Sula Mantiquilla Crema product that consisted of 75.95 % moisture, 17.16 % fat (of which 9% was found to be butterfat) in subheading 1901.90. We described the product as a cream colored liquid used for dressings on vegetables, meats, and for similar applications.
By operation of GRI 1, the instant product is classified in heading 1901, HTSUS, specifically under subheadings 1901.90.4300 and 9904.04.73, HTSUS for the La Cuscatle product from Costa Rica, and 1901.90.4700 and 9904.04.74, HTSUS for the Sula product from Honduras.
DUTY PREFERENCE UNDER THE CARIBBEAN BASIN ECONOMIC RECOVERY ACT (CBERA)
Protestant contends that the merchandise is entitled to duty-free status under the Caribbean Basin Economic Recovery Act (CBERA) because the items are classified under subheading 2103.90.9091, HTSUS. General Note 7 (b) (i), HTSUS, states that any article, which is the growth, product, or manufacture of a beneficiary country shall be eligible for duty-free treatment if that article is provided for in a subheading for which a rate of duty of "Free" appears in the "Special" subcolumn followed by the symbol "E" or "E*" in parentheses. However, we have determined that the Costa Rica merchandise is classifiable under subheading 1901.90.4300 and that the Honduran merchandise is classifiable under subheading 1901.90.4700. There is no E or E* shown for these provisions. Thus, these products are not eligible under CBERA.
LIQUIDATION
Pursuant to 19 U.S.C. § 1504(a)(1), an entry for consumption of merchandise that is not liquidated within one year from the date of entry shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry, unless liquidation is extended or suspended. CBP may extend the liquidation of entries, if warranted, for one year increments up to a period not exceeding four years if proper notice is given. See 19 U.S.C. § 1504(b). CBP is permitted to extend liquidation if:
the information needed for the proper appraisement or classification of the imported or withdrawn merchandise,…or for insuring compliance with applicable law, is not available to the Customs Service.
Id. The CBP regulations promulgated under 19 U.S.C. § 1504 governing the extension of liquidation are codified in 19 C.F.R. § 159.12. In particular, 19 C.F.R. § 159.12(a)(1)(i) and (ii) permit the port director to extend the one-year statutory period for liquidation if more information is needed by CBP for proper appraisement or classification or if the importer makes a request for an extension in writing before the statutory period expires. When an extension is made, the port director must send notice of the extension to the importer, consignee or agent, as well as the surety. See 19 U.S.C. § 1504(b); 19 C.F.R. § 159.12(b). Absent the issuance of proper extension or suspension notices, entries not liquidated within one year are deemed liquidated by operation of law. See Pagoda Trading Corp. v. United States, 804 F.2d 665, 669 (Fed. Cir. 1986) (holding that the entries were deemed liquidated because no evidence was presented to show that an authorized legacy Customs official granted an extension, as the government conceded it did not know why the notices were sent).
The ACS data shows that liquidation of each entry was properly extended, in one year increments, within one year from the date of entry either two or three separate times. The ACS data also shows that the extension notices were mailed to the importer of record, ABI, and the surety. The first set of entries was entered between June 6 and September 14, 2006. The second set of entries between June 23, 2006 and August 16, 2006. The entries were all liquidated in October 2008, prior to the end of the extension periods.
The protestant cites Detroit Zoological Society v. United States, 630 F. Supp. 1350, 1356 (Ct. Int'l Trade 1986) for the proposition that CBP may not extend liquidation if it has actual knowledge that no basis exists for doing so. However, the Court of Appeals for the Federal Circuit, in St. Paul Fire & Marine Ins. Co. v. United States, 6 F.3d 763 (Fed. Cir. 1993), discussing the issue of the permissibility of extension of liquidation, concluded that:
…Customs may, for statutory purposes and with the requisite notice, employ up to four years to effect liquidation so long as the extensions it grants are not abusive of its discretionary authority. Such an abuse of discretionary authority may arise only when an extension is granted even following elimination of all possible grounds for such an extension. There is, in sum, a narrow limitation on Customs' discretion to extend the period of liquidation.
6 F. 3d at 768. The court went on to state that “Customs decisions to extend are entitled to a presumption of legality unless [the plaintiff] can prove that these decisions were unreasonable.” Id. at 769. Therefore, the burden is on the protestant to show there was no reasonable basis for extension.
Here, CBP extended liquidation because further information was needed for proper classification of the merchandise pursuant to 19 U.S.C. §1504(b) and 19 C.F.R. §159(a)(1). The extension was necessary because the September 15, 2006, LSS report did not provide all of the information necessary for proper classification. CBP requested an additional lab report because it required information concerning the milk solid content of the samples. Furthermore, on September 17, 2008, the CBP Field Officer sent a fax to ABI stating “[h]ere is the 7501 and copy of invoice. The NIS is requesting for each product a breakdown of ingredients by weight.” On September 24, 2008, ABI sent a fax to the CBP Field Officer with an attached technical report for soft blend spread produced by COOPERATIVA DE PRODUCTORES DE LECHE. Thus, the lab report of September 15, 2006, did not eliminate all possible grounds for further extension. CBP’s decision to extend liquidation was made because further information was necessary for classification. Consequently, the protestant has not proven that the decision to extend liquidation was unreasonable.
The protestant argues that CBP abused its discretion when it sent the second and third extension notices because the submission of the LSS report on September 15, 2006 was the “last laboratory report,” and eliminated all possible grounds for further extension. The protestant does not provide a basis for its conclusion that the September 15, 2006 LSS report eliminated all possible grounds for further extension and was therefore an abuse of discretion. Neither the statute nor regulations limit the bases for extension to seeking input from LSS. Moreover, there were supplemental reports issued after the September 15, 2006 report.
The protestant asserts that CBP did not provide a legitimate reason for extension on the notice of liquidation. The notice of extension of liquidation are generated electronically and mailed to the importer of record and surety on file. ACS data shows that the extension code is 01, which indicates that the reason for the extension was that further information was necessary to process the entry. The communication between ABI and CBP regarding the information necessary for classification also undermines the protestant’s argument that it was unaware of the reason for extension. The protestant did not overcome the “presumption of legality” and has not demonstrated that the notices were deficient. Therefore, we find that CBP permissibly extended liquidation within the statutorily prescribed timeframe and provided proper notice of each extension and the subject entries did not deem liquidate by operation of law.
HOLDINGS:
(1) By application of GRI 1, Additional U.S. Note 1 to Chapter 4, HTSUS, GN 7(b) the subject merchandise is classified under subheading 1901.90. It is specifically provided for in subheading 1901.90.43 or in 1901.90.47, HTSUS, which both provide for: “Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of heading 04301 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions: Other.” Subheadings 1901.90.43 and 1901.90.4700 are subject to safeguards pursuant to subheadings 9904.04.05 through 9904.05.01, HTSUS. For the Sula entries, the 2005 HTSUS applies. The 2005 column one, general rate of duty is $1.035/kg and 13.6% compound ad valorem. For the La Cuscatle entries, the 2006 HTSUS applies. The 2006 column one, general rate of duty is $1.035/kgand 13.6% compound ad valorem. For purposes of Chapter 99, HTSUS, indicated by the footnote (1/) to subheading 1901.90.43, HTSUS, the La Cuscatle product falls under subheadings 9904.04.73 and 9904.04.72, HTSUS. The Sula products are also classified under heading 9904.04.74, HTSUS.
(2) The subject merchandise is not eligible for preferential treatment under CBERA, per General Note 7 of the HTSUS.
(3) CBP properly extended the liquidation of the entries to acquire information necessary for classification. Therefore, the entries did not liquidate by operation of law.
You are instructed to deny the protest in full, except to the extent reclassification of the merchandise as indicated above results in net duty reduction and partial allowance. In accordance with the Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, 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.
No later than 60 days from the date of this letter, the Office of International Trade, Regulations and Rulings, will make the 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