OT:RR:CTF:VS H300260 CMR
U.S. Customs & Border Protection
Apparel, Footwear and Textiles Center
Attn: Ann Lamora
237 West Service Rd
Champlain, NY 12919
RE: Application for Further Review of Protest 4701-17-100763; First Sale; Clerical Errors; Over valuation
Dear Center Director:
This is in response to the Application for Further Review (AFR) of Protest 4701-17-100763, filed by Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, on behalf of their client, Carven, S.A., against the liquidation of 12 entries. The protest was filed claiming that due to a clerical error in the preparation of the pro forma invoices, the value of the merchandise was overstated and the importer is entitled to a refund of duties paid.
FACTS:
The importer entered 12 entries during 2014 which were liquidated on April 14, 2017 and September 1, 2017. This protest was timely filed on October 11, 2017. The entries consist of various articles of apparel for which the importer intended to utilize “first sale” appraisement. It is stated that the importer erred in calculating the values for the merchandise.
Carven purchased the merchandise from various manufacturers on a cut and make (CM) basis or cut, make, and trim (CMT) basis. Counsel explains that the importer created the pro forma invoices by cutting and pasting information from an Excel database. However, Carven mistakenly copied information from the wrong database, rather than the database with the CM/CMT prices. The value which was mistakenly used included multiple cost elements beyond the CM/CMT price.
In addition, counsel states that the raw material costs noted on the pro forma invoices were incorrect because they were based upon price quotes provided by suppliers prior to entry, but were not the prices actually paid as some of the suppliers amended the prices they actually charged. Carven has entered the Reconciliation Program in order to avoid these issues in the future.
Finally, counsel states that there was an error in calculating the “other costs”, which consist of other dutiable assists, such as design work and packing costs. Carven arrived at a standard cost calculation to account for these assists, but erred in constructing an Excel formula, resulting in an over-calculation of the reported “other costs.”
Counsel has submitted voluminous documentation to support the protestant’s claim. In the protest submission, counsel included several exhibits. Exhibit A list the entries involved. Exhibits B(1) through B(12) are copies of the original incorrect pro forma invoices, as well as the amended pro forma invoices reflecting the correct, lower values. Each of the “B” exhibits also includes a copy of the original and corrected CBP Form 7501. The port requested more information and received additional submissions from counsel dated April 14, 2015; July 23, 2015; and, January 11, 2018. The April 14, 2015 included documentation for separate orders (four representative examples) placed by Carven for merchandise in the entries subject to the protest. The submitted documentation included: Carven’s purchase order to the factory; the factory invoice to Carven; Carven’s payment to the factory; a bill of materials identifying the value of each raw material assist; and a corrected pro forma invoice. The July 23, 2015 submission included the U.S. customer purchase order, and Carven’s invoice to the customer relating to 10 units of wool pants. At that point in time, the invoices had not yet been paid, but counsel submitted a portion of the customer’s general ledger indicating that the invoices had been posted as due. The January 11, 2018 submission was in response to a request from CBP for additional documentation. The submission included the bills of materials and fabric invoices for four styles each from 11 of the entries subject to the protest, and one style from the 12th entry. In addition, in response to requests by this office, counsel submitted via emails dated November 15, 2018, and December 5, 2018, a limited sampling of proof of payment for raw material invoices to suppliers and proof of payment to garment assemblers by Carven through its factor.
ISSUE:
Whether the importer has provided sufficient documentation to support its claim that the pro forma invoices were incorrect with regard to the value of the imported merchandise and the importer is entitled to a refund of duties due to the errors.
LAW AND ANALYSIS:
Before the passage of the Miscellaneous Trade and Technical Corrections Act of 2004, an importer could not remedy a clerical error, mistake of fact, or other inadvertence by filing a protest under 19 U.S.C. § 1514. Instead, an importer was required to request a refund under 19 U.S.C. 1520(c), which authorized the reliquidation of an entry to correct a clerical error, mistake of fact, or other inadvertence. The implementing regulations authorized reliquidation if the clerical error, mistake of fact, other inadvertence “(1) [did] not amount to an error in the construction of a law; (2) [was] adverse to the importer; and (3) [was] manifest from the record or established by documentary evidence.” See 19 C.F.R. § 173.4(a).
The Miscellaneous Trade and Technical Corrections Act of 2004 repealed 19 U.S.C. § 1520(c) and amended 19 U.S.C. § 1514(a) to include “any clerical error, mistake of fact, or other inadvertence” that occurs in an “entry, liquidation, or reliquidation” as protestable events. See Pub. L. 108-429, Title II, § 2015, Dec. 3, 2004, 118 Stat. 2598. In this case, counsel submits that Carven made various errors in calculating the value of the merchandise, as set forth above.
In this case, the claimed errors occurred in the calculation of the value of the imported merchandise, and such error, was adverse to the importer. We have reviewed the submitted documentation and agree that it supports the claim made by the protestant. While documentation has not been submitted for every item imported, a sufficiently large sampling has been presented to lead us to believe that the protestant would be able to present supporting documentation for the remaining items.
HOLDING:
The protest should be approved. In accordance with the Protest/Petition Processing Handbook (CIS 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 this decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division