HQ 0221575 - Your letter of June 30, 1989, concerning the denial of requests for relief pursuant to 19 U.S.C. 1520(c) for 13 shipments of rail from Canada - United States International Trade Commision Rulings

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HQ 221575

August 23, 1989

LIQ-9-01-CO:R:C:E 221575 L

CATEGORY: ENTRY LIQUIDATION

Carrie A. Simons, Esq.
Dow, Lohnes & Albertson
1255 Twenty-Third Street
Washington, D.C. 20037-1194

RE: Your letter of June 30, 1989, concerning the denial of requests for relief pursuant to 19 U.S.C. 1520(c) for 13 shipments of rail from Canada

Dear Ms. Simons:

This responds to the above-referenced letter concerning the denial by the District Directors of Customs at Buffalo and Detroit of requests by A & K Railroad Materials, Inc. ("A & K") pursuant to 19 U.S.C. 1520(c) to accept certain A & K entries without the requirement of a surety bond for estimated countervailing duties and to proceed to liquidate the entries in accordance with Customs' normal procedures. The case concerns 19 U.S.C. 1520(c)(1) and whether the use of immediate delivery procedures rather than entry/entry summary procedures is a "mistake of fact" under 19 U.S.C. 1520(c)(1).

FACTS:

The factual situation is set out at length in your submission but can be summarized briefly as follows:

In December 1988 and January 1989 A & K orders were placed with a Canadian manufacturer for carbon steel rails to be entered at the ports of Detroit and Buffalo. The Canadian manufacturer informed A & K that the U.S. Department of Commerce was scheduled to make a preliminary countervailing duty determination on February 23, 1989, and would publish that determination shortly thereafter. On March 2, 1989, Commerce published its preliminary countervailing duty determination (54FR8784) and instructed Customs to suspend liquidation of all entries for consumption on or after March 2, 1989. In addition, Customs was directed to require a cash deposit or bond for all entries of the affected merchandise equal to 103.55 percent ad valorem. The merchandise
in issue is said to have crossed the border from Canada into the United States between February 20 and February 26, 1989 (footnote 2 to your June 30, 1989, letter) or on February 22 or 23, 1989 (page 5, third paragraph, of your June 30, 1989, letter).

In any event, instead of entering the merchandise by February 23, 1989, A & K's broker obtained release of the merchandise under Customs' "immediate delivery" procedures. From March 6 through March 9, 1989, the broker presented merchandise for entry. From March 8 through March 10, 1989, Customs rejected all 13 entries because A & K did not post a surety bond or bonds for the estimated countervailing duties in accordance with Commerces' preliminary determination. On March 17, 1989, the broker informed A & K that its entries had been rejected, that the shipments had physically crossed the border by February 23, 1989, but that the broker had not attempted to enter the merchandise until after March 2, 1989, the effective date of the preliminary determination.

On April 17, 1989, A & K filed with the District Directors of Customs in Buffalo and Detroit petitions for relief under 19 U.S.C. 1520(c) alleging mistake of fact by the broker in obtaining release of the merchandise under immediate delivery procedures instead of entering the merchandise for consumption immediately upon importation. The District Director, Buffalo, denied the 19 U.S.C. 1520(c) petition on April 25, 1989; the District Director, Detroit, denied the 19 U.S.C. 1520(c) petition on May 24, 1989.

ISSUE:

The issue is whether a mistake of fact correctable under 19 U.S.C. 1520(c)(1) occurred when A & K's broker arranged for immediate release of merchandise imported prior to the effective date of a preliminary affirmative countervailing duty determination under a special permit for immediate delivery rather than filing entries for consumption for the merchandise prior to the effective date of the countervailing duty determination.

LAW AND ANALYSIS:

The submission is characterized as a request for relief pursuant to 19 U.S.C. 1520(c). Requests for relief on the identical factual situation were previously submitted to and denied by the District Directors of Customs at Buffalo and Detroit. Accompanying this submission is a letter dated July 3, 1989, from International Business-Government Counsellors, Inc. referring to new facts concerning "discussions between the District Director and broker" and suggesting the new facts warrant a second review. The submission is directed to the Deputy Assistant Commissioner, Office of Commercial Operations, and not to the District Directors of Customs at Buffalo and Detroit, the "appropriate customs officers" under 19 U.S.C. 1520(c) and 19 CFR 173.4.

The new facts are not specified, but comparison of the requests for relief submitted to the District Directors at Buffalo and Detroit and the June 30, 1989, request submitted to Customs Headquarters, suggests additional arguments on facts identical to those in the original requests for relief rather than new facts. The additional or expanded arguments appear to begin at page 7 of the June 30, 1989, submission, and are, in essence, that A & K satisfies all requirements for relief under 19 U.S.C. 1520(c) because:

A. The broker's misunderstanding or disregard of A & K's instructions to enter the rail shipments prior to February 23, 1989, is a mistake of fact or inadvertence.

B. The broker's mistake is clearly established by documentary evidence.

C. The broker's mistake occurred during the entry process.

D. A & K is not prohibited from obtaining relief under 19 U.S.C. 1520(c) because the broker's mistake occurred prior to a liquidation.

Section 1520(c)(1) provides in part that the appropriate customs officer may reliquidate an entry to correct a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law.

The entries in issue have not been liquidated and the Customs Service has been directed by the Department of Commerce to suspend liquidation of the entries until further notice, 54FR8784, 8791, March 2, 1989.

Addressing argument D first, A & K argues that it is not prohibited from obtaining relief under 19 U.S.C. 1520(c) because the merchandise has not been liquidated, stating that it would be a senseless and time consuming exercise for Customs to make A & K go through an erroneous liquidation after the annual review of any countervailing duty order that might be issued and then reliquidate the merchandise on the basis that the broker made a mistake in entering the merchandise approximately two years earlier. It is further asserted that Customs possesses the authority, and has exercised that authority, to correct mistakes of fact or inadvertence prior to liquidation, citing C.S.D. 79-377.

C.S.D. 79-377 concerned the issue of whether temporary importation under bond (TIB) entries are subject to review under 19 U.S.C. 1520. As stated in the A & K submission, under "Law and Analysis", it is said that ". . .we have permitted clerical errors or mistake of fact to be corrected prior to liquidation, in a consumption entry, even though the statute only authorizes reliquidation. We feel that to go through an erroneous liquidation and then reliquidate is needlessly time consuming to all concerned."

The next paragraph in C.S.D. 79-377 goes on to say:

However, we do not feel it is necessary to decide the question of 1520(c)(1) review of a temporary importation under bond entry since authority to grant appropriate relief is provided for under the provisions of part 172 of the Customs Regulations.

The "Holding" in C.S.D. 79-377 does not involve or refer to 19 U.S.C. 1520 and the statement referred to in C.S.D. 79-377 must be characterized as in the nature of dicta. Further, in Diversified Products Corporation v. United States, 7 CIT 49 (1984), a case involving the recomputation of an antidumping margin resulting in the lowering of the margin, the plaintiff sought a refund of the difference between the estimated antidumping duties deposited and the recomputed antidumping duties. The Court, noting that the government conceded that plaintiff would be entitled to a refund, agreed with the government position that plaintiff must wait until the entries for which estimated antidumping duties were deposited are liquidated.

The argument also presupposes that the Customs Service agrees that there was a mistake of fact in the filing of an immediate delivery permit by the broker rather than a consumption entry as asserted in arguments A and B despite the fact that two district directors of Customs have denied A & K's requests for relief under 19 U.S.C. 1520(c) in which mistake of fact was alleged.

We are aware of no administrative procedure for the review of a district director's refusal to reliquidate an entry under 19 U.S.C. 1520(c) other than a protest under 19 U.S.C. 1514(a)(7). However, a denial, prior to liquidation, of a request for correction of a clerical error, mistake of fact, or inadvertence is not subject to protest. Section 1520(c)(1) supports a claim for reliquidation as distinguished from liquidation. J.S. Sareussen Marine Supplies, Inc. v. United States, 62 Cust. Ct. 449, C.D. 3799 (1969), and cases cited therein.

Nevertheless, with respect to the mistake of fact issue, we are not persuaded that the factual situation as described supports a finding of mistake of fact as opposed to mistake of law. The situation is similar to that in C.S.D. 81-56. In that case, certain merchandise arrived in the United States and was released under the immediate delivery procedure on December 29, 1978. The entry summary and duty payment were made to Customs on January 8, 1979. Entry was attempted at the duty rate of 9.5 percent ad valorem. However, Customs required the merchandise to be entered at 15 percent ad valorem as the result of a Presidential Proclamation effective as to the merchandise on or after January 6, 1979.

The broker contended that the entries should be reliquidated at the lower rate because, among other things, due to a clerical error the broker failed to note "entry" on the releasing documents and, therefore, Customs should have treated the immediate delivery release on December 29, 1978, as an "entry."

The discussion under "Law and Analysis" goes on to point out that "[s]ince merchandise arriving from contiguous countries by land shipments are generally released under the immediate delivery procedure . . .it must be presumed that without the submission of documentary evidence to the contrary, the importer or his agent (the broker) intended at the time of release for the merchandise to be released under the immediate delivery procedure. Evidently, the broker at the time of release was either unaware of the Presidential proclamation or did not fully appreciate the legal ramifications resulting from obtaining the release of such merchandise under the immediate delivery procedure, rather than the new expedited entry procedure. Therefore, we believe that any error involved in this case was a mistake of law, rather than a clerical error or mistake of fact within the meaning of section 520(c)(1) of the Tariff Act." In addition, as recently ruled in C.S.D. 89-29, mistake of fact cannot be presumed from circumstances.

The documentary evidence submitted consists of affidavits of two A & K employees (your exhibits "A" and "D"), two telecopy messages from A & K to the broker in Buffalo, New York (your exhibits "E" and "F"), and one telecopy message from A & K to CN Railroad (exhibit "G").

The first affiant (exhibit "A") gave no instructions whatsoever to the broker prior to the release of the merchandise under immediate delivery procedures followed by consumption entries after the effective date of the preliminary countervailing duty determination. The second affiant (exhibit "D") had discussions with the broker, as pertinent here, on February 14, 21 and 23, 1989. There is no indication in any of the documents that the broker was given specific instructions by A & K on how to handle the importation, release, and entry of the merchandise.

Exhibits "E" and "F" relate to the location of certain railcars and express concern that the cars cross the border by February 23, 1989. Exhibit "G", of course, is not to the broker.

It is clear that A & K wanted the merchandise to cross the border by February 23, 1989; but it is not clear that the importer specifically intended that a consumption entry be filed. The release of the merchandise under immediate delivery procedures was entirely lawful and there may have been reasons for so electing even though the filing of consumption entries prior to the effective date of the preliminary countervailing duty determination might have resulted in some benefit for the importer. As stated in C.S.D. 89-29 "[w]here it is claimed that failure to follow the principal's instructions was a misunderstanding and a mistake of fact under the law, it is fundamental to establish what those instructions were."

While it is our opinion that A & K has failed to established a mistake of fact under the law, it is our further opinion that the use of immediate delivery procedures rather than the filing of a consumption entry was a mistake in the construction of a law.

A & K also states that "[R]elease pursuant to immediate delivery is the commencement of the entry process;" apparently arguing that release under a special permit for immediate delivery is tantamount to an entry for consumption and that the holding in Godchaux Hendersen Sugar Co., Inc. v. United States, 85 Cust. Ct. 68, C.D. 4874 (1980), is not applicable to A & K. In Godchaux Hendersen the plaintiff imported sugar which was unladen under an immediate delivery permit on February 24, 1976. Under this permit, plaintiff was allowed to import the sugar without filing a consumption entry for 10 business days after release of the merchandise, in this case March 9, 1976. Duty- free status for the sugar in issue was withdrawn, effective with respect to merchandise entered, or withdrawn from warehouse, for consumption on or after February 29, 1976. On March 4, 1976, plaintiff attempted to file a duty-free entry but the entry was rejected as the sugar was no longer duty-free. On March 9, 1976, the merchandise was entered as dutiable and was liquidated accordingly on May 14, 1976. Plaintiff sought reliquidation under section 520(c)(1) of the Tariff Act alleging clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of the law.

The court did not decide the issue of whether there was a mistake of fact or a mistake of law holding that even assuming arguendo that the duty-free status of the sugar did not involve "construction of a law," which is excluded from relief under section 520(c)(1), plaintiff's failure to file a duty-free entry by the deadline prescribed by law is not within the scope of that section. We do not agree that the situation faced by A & K is entirely different from that in Godchaux Hendersen; we believe Godchaux Hendersen to be directly in point.

It is also urged that even if release for immediate delivery is not an entry, A & K still satisfies the requirement of section 520(c)(1) that the mistake must have occurred in an entry, liquidation or other customs transaction, claiming that release under immediate delivery is a "customs transaction," citing Geo. Wm. Rueff, Inc. v. United States, 41 Cust. Ct. 331, abs. 62204 (1958). We do not agree that Rueff stands for the proposition that A & K's use of immediate delivery procedures when the filing of an entry for consumption might, by inference, have been more beneficial to them, is an "other customs transaction" correctable under 520(c)(1). The selection of release under a special permit for immediate delivery, as authorized by 19 U.S.C. 1448(b) was both voluntary and lawful. In any event, as it is our opinion that if there was a mistake it was a mistake of law, relief is not available under 19 U.S.C. 1520(c).

HOLDING:

The failure to file an entry for consumption prior to the effective date of a preliminary affirmative countervailing duty determination on merchandise released under an immediate delivery permit prior to that date is not a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law within the meaning of 19 U.S.C. 1520(c)(1) unless it can be established by documentary evidence satisfactory to the Customs Service that the broker had been instructed to file entries for consumption. The documents submitted do not establish that the broker had been so instructed and we affirm the decisions of the District Directors of Customs in Buffalo and Detroit denying relief under 19 U.S.C. 1520(c)(1).

Sincerely,

John Durant, Director

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