OT:RR:CTF:EPDR H305155 HvB
Center Director, Electronics Center of Excellence and Expertise
U.S. Customs & Border Protection
1 World Trade Center
Suite 741
Long Beach, CA 90831
Attn: Tuyen Pham, Supervisory Entry Officer
Re: Application for Further Review of Protest No. 2304-19-100407; Continental Automotive Systems, Inc; Reconciliation
Dear Center Director:
The purpose of this correspondence is to address the Application for Further Review ("AFR") of Protest Number 2304-19-100407, dated June 21, 2019. The protest and AFR were filed by Sandler & Travis Trade Advisory Services, Inc. ("STTAS") on behalf of Continental Automotive Systems, Inc., ("CAS" or "protestant") to challenge U.S. Customs and Border Protection's ("CBP's") decision to liquidate reconciliation entry number XXX-XXXX312-2 and issue a bill.
CAS alleges that CBP erred in liquidating the reconciliation entry by failing to consider the revised Harbor Maintenance Fee ("HMF") on the underlying consumption entry number XXX-XXXX233-1. CAS requests cancellation of the bill that resulted from the liquidation of reconciliation entry XXX-XXXX312-2.
FACTS:
On June 23, 2018, CAS filed a reconciliation entry, to reconcile the estimated value of imported merchandise and associated duties and fees. The entries were flagged at importation and were entered from November 2, 2016 through December 30, 2016. Among those underlying entries was entry number XXX-XXXX233-1.
In its reconciliation of the underlying consumption entry number XXX-XXXX233-1, CAS calculated that it owed an increase in duties, fees, and interest, declaring that it owed an increased liability for HMF. On January 25, 2019, CBP liquidated the reconciliation entry as entered and issued a bill for $167.26, under CBP bill number 478417891.
On June 21, 2019, CAS filed a protest, asserting that "the original value reconciliation did not consider the revised HMF on entry XXX-XXXX233-1." CAS stated that "[u]pon receipt of the bill, we forced back through a value reconciliation entry with the updated duties and fees from the [Free Trade Agreement ("FTA")] reconciliation." CAS asserted that "[t]he protest was filed so the latest version of the subject value reconciliation entry would be used." CAS also asserted that "[t]he FTA reconciliations had not posted liquidation information and [the Automated Commercial Environment (ACE)] did not reflect a changed status from the original underlying entry summary." CAS stated that the "protest is indicating the final Value file, taking in to account the original FTA file, has netted everything appropriately and the bill should no longer exist. The protest is requesting CBP treat the last value reconciliation entry as the correct version and the result will be the cancellation of the bill."
In support of its argument that the "latest version of the subject value reconciliation entry should be used," protestant cites to Headquarters Ruling Letter ("HQ") H081300, dated May 11, 2010. Although CAS references another reconciliation entry wherein the underlying entries were flagged for FTA reconciliation, CAS did not further identify the FTA reconciliation entry or provide additional documentation.
In denying the protest, CBP stated that a protest may only pertain to the issues flagged for reconciliation and may not revisit issues previously liquidated on the underlying entry summaries. CBP noted that HMF is ad valorem and the protest did not provide any corrected values. Rather, the information submitted upon protest was attempting to reconcile duties, taxes, and fees that were previously liquidated on the underlying entry summary. CBP also noted that CAS did not provide sufficient information to establish the basis for its protest. On August 27, 2019, the protest was submitted to Headquarters upon Application for Further Review.
ISSUE:
Did CBP properly liquidate the reconciliation entry?
LAW AND ANALYSIS:
As an initial matter, we note that the liquidation of the reconciliation entry entered by CAS is a protestable matter under 19 U.S.C. 1514(a)(5) and 19 C.F.R. 174.11(b)(5). In this case, CBP liquidated the reconciliation entry on January 25, 2019. CAS timely filed the protest with respect to its entries on June 21, 2019, within the 180-day filing deadline set forth by 19 U.S.C. 1514(c)(3)(A) and 19 C.F.R. 174.12(e)(1). The protest was subsequently forwarded to this office for further review. The criterion for further review has been satisfied because this matter involves questions of fact which have not been ruled upon by CBP or the courts. See 19 C.F.R. 174.24(b).
With regard to reconciliation, Title VI of the North American Free Trade Agreement Implementation Act (the Act), Pub. L. 103-182, 107 Stat. 2057 (December 8, 1993), contains the provisions pertaining to the Customs Modernization Act (107 Stat. 2170). Subtitle B of Title VI established the National Customs Automation Program ("NCAP") - an automated and electronic system for the processing of commercial importations. Title 19 U.S.C. 1411 through 1414 describe the implementation of the components of the NCAP. Section 637 of the North American Free Trade Agreement Implementation Act amended Section 484 of the Tariff Act of 1930 to establish a new subsection (b), entitled "Reconciliation," a planned component of the NCAP. Section 101.9(b) of the CBP Regulations (19 C.F.R. 101.9(b)) provides for the testing of NCAP components. The test procedures serve as the regulations to implement the statutes by virtue of 19 U.S.C. 1411-1414 and 19 C.F.R. 101.9. The Automated Commercial System (ACS) Reconciliation Prototype was established pursuant to these regulations. The two-year prototype testing period commenced on October 1, 1998, and was extended indefinitely on October 1, 2000. Extension of the ACS Reconciliation Prototype, 65 Fed. Reg. 55,326 (Sept. 13, 2000). See also HQ 229670 (Feb. 10, 2003) (discussing the Reconciliation Program).
The entry at issue is a reconciliation entry which CAS filed under CBP's ACE Reconciliation Prototype Test. CAS seems to be arguing that the underlying consumption entry at issue was flagged for both FTA eligibility and value. CAS asserts that they assumed the "FTA recon entry would be processed first, and the changes ultimately reflected in the Value entry." In short, CAS assumed that the HMF owed would be zero because they would get the benefit of an accepted FTA designation once the underlying consumption entry that was flagged for FTA was processed through the liquidation of its FTA reconciliation entry.
In its protest of the reconciliation entry at issue, however, CAS did not identify the FTA reconciliation entry. Upon review of the records, only four of the ninety underlying consumption entries that comprised reconciliation entry XXX-XXXX312-2 were flagged for both FTA reconciliation and value reconciliation. The underlying consumption entry that CAS identifies to be at issue, XXX-XXXX233-1, however, was not one of them and was not flagged for FTA reconciliation. The underlying entry at issue was filed as an entry type 06 (Foreign Trade Zone), which might explain CAS' confusion vis--vis the payment of HMFs.
In support of its reason for AFR, CAS cites to HQ H081300, dated May 11, 2010, to argue that the "last transmission" of its reconciliation entry should govern, meaning the reconciliation entry provided at the time of protest. HQ H081300 does not hold that a revised reconciliation entry presented upon protest should govern without further support for the basis of the revisions. Rather, in HQ H081300, a series of errors occurred in the transmission of the data related to the reconciliation entry. The protestant in that case was able to document and explain that the transmission errors were due to software error. Id.
Such circumstances are not present in this case. In this case, CAS failed to provide additional information, documentation, evidence, or compelling arguments that suggest the underlying entry was subject to an FTA reconciliation prior to the liquidation of the reconciliation entry for those entries flagged for value reconciliation. Accordingly, we find this AFR to be without merit. We find that the port properly liquidated reconciliation entry XXX-XXXX312-2 and properly issued CBP bill number 478417891.
HOLDING:
Continental Automotive Systems, Inc.'s protest should be DENIED in full.
You are instructed to notify the protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System ("CROSS") at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial & Trade Facilitation Division