HQ 0221137 - Liquidation; automatic liquidation; 19 U.S.C. 1500; deemed liquidation; reliquidation is a new liquidation - United States International Trade Commision Rulings

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HQ 221137

February 23, 1990

LIQ-9-02-CO:R:C:E 221137 GG

CATEGORY: ENTRY LIQUIDATION

Area Director of Customs
Kennedy Airport Area
Jamaica, New York

RE: Liquidation; automatic liquidation; 19 U.S.C. 1500; deemed liquidation; reliquidation is a new liquidation

Dear Sir:

This is in response to the above-referenced protest, dated January 1, 1984, which was forwarded to our office last November for further review. This particular protest concerned two importations of footwear which were entered on May 14 and 19, 1981, respectively. Both entries were automatically liquidated "no change" on May 6, 1983, following an extension of liquidation in January of that same year. A bulletin notice was posted at the customhouse as required by law. Customs subsequently reliquidated the entries at a higher rate of duty on July 28, 1983. A formal demand for payment of the additional duties was made on the surety, the Washington International Insurance Company, on November 4, 1983, which resulted in that company filing the protest at issue on January 9, 1984.

The protestant requested further review; your office has forwarded the protest to Headquarters to resolve the issue of whether an automatic liquidation is a proper liquidation under 19 U.S.C. 1500, which can be voluntarily reliquidated by Customs within 90 days of the automatic liquidation. This issue was raised because the protestant has challenged the validity of automatic liquidations, and maintains that the entries were deemed liquidated and therefore could not be reliquidated by Customs.

After examining the protest, we find that it is unnecessary to address the question of whether the automatic liquidation was proper, because the protestant is precluded from using that issue as a ground for protest.

It is our position that the protestant, Washington International Insurance Company, is barred from challenging the validity of the original liquidation, because the demand for payment was made on the reliquidated, not the liquidated, amount.

A reliquidation is a new liquidation and an abandonment of all former ones, and is subject to protest, just as the first liquidation was. United States v. Fensterer & Ruhe, 12 Ct. Cust. App. 410 (1924). All previous liquidations, such as the May 6, 1983, liquidation, are subsumed by the most recent liquidation, which in this case would be the July 28, 1983, reliquidation. The time to protest begins to run when the entries have been finally liquidated, and not from a previous liquidation which has been abandoned. Robertson v. Downing, 127 U.S. 607, 613 (1888). Although the time frame within which sureties may protest a liquidation or reliquidation is different from that allowed the other protestants listed in 19 U.S.C. 1514(c)(1) (within 90 days from the date of mailing of the notice for demand for payment instead of within 90 days of notice of liquidation or reliquidation), the underlying principle permitting protest only of the most recent liquidation remains the same for all protestants; applied here, this would allow Washington International Insurance Company to protest only the July 28, 1983, reliquidation, not the earlier liquidation.

Similarly, 19 U.S.C. 1514(d) limits the protest of a reliquidation to issues directly involved in the reliquidation. As discussed in the previous paragraph, the surety could not base its protest on arguments questioning the legality of a prior, abandoned liquidation. The importer of record, Fiesta Shoe Corporation, could have challenged the legality of the automatic liquidation procedure by filing a timely protest. However, the importer's failure to take such action and the subsequent reliquidation of the entry make the automatic liquidation issue a moot point.

The portion of 19 U.S.C. 1514(c)(2) which authorizes a surety with an unsatisfied legal claim under its bond to file a protest within 90 days from the date of mailing of the notice of demand for payment under its bond, was enacted to ensure that a surety's right to pursue legal recourse would not be prejudiced if a demand for payment were made only after the usual time for filing a protest had expired. It accomplished this purpose by permitting a surety to file a protest in its own name and by extending the time within which a surety could file a protest. See legislative history to Public Law 96-39, printed in 1979 U.S. Code Cong. and Adm. News, 381 at p. 640. 19 U.S.C. 1514(c)(2) does not disturb the previously-discussed rule that only finally- liquidated entries, as opposed to previously-liquidated-but-now- abandoned entries, may be protested; restated simply, it merely serves to give a surety sufficient time to protest a final liquidation or reliquidation. See Peerless Insurance Co. v. United States, 703 F.Supp 104, Slip Op. 88-177 (CIT 1988). Thus, Washington International Insurance Company may not protest the validity of the original liquidation; to permit it to do so would expand the surety's rights beyond those contemplated by law.

For the reasons outlined above, you are directed not to grant the protest on the basis of the automatic liquidation issue; you, may, however, take into account the merits of the other arguments raised by the protestant.

Sincerely,

John Durant
Director, Commercial

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