HQ 0220105 - Application for further review of Protest Nos. 5201-4- 000144; 5201-4-000167; 5201-4-000168; 5201-4-000169; and 5201-4-000303; injunction of CIT restraining liquidation; voidable liquidation. - United States International Trade Commision Rulings

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HQ 220105

April 26, 1991

PRO-2-05/LIQ-4-02-CO:R:C:E 220105 JR

CATEGORY: ENTRY LIQUIDATION

Deputy Assistant Regional Commissioner of Customs (C&V) Southeast Region
909 S.E. First Avenue
Miami, Florida 33131

RE: Application for further review of Protest Nos. 5201-4- 000144; 5201-4-000167; 5201-4-000168; 5201-4-000169; and 5201-4-000303; injunction of CIT restraining liquidation; voidable liquidation.

Dear Sir:

The above-referenced protest was forwarded to our office for further review. We have considered the facts at issue. Our decision follows.

FACTS:

In Protest No. 5201-4-000168, footwear consisting of one container of 432 cartons of men's shoes, leather, 4371 pairs (classified under TSUS item numbers 700.3550; 700.2980; 700.2960; 700.5836), was imported at Port Everglades, Florida, from Alicante, Spain. The date of the entry was October 22, 1980, and estimated duties of $6,854.55 were paid on November 5, 1980. On December 9, 1980, the importer/protestant was notified that liquidation was suspended. See 19 U.S.C. 1504(b)(2), (c). The importer/protestant received a second extension on August 18, 1982 and a third on September 12, 1983.

On October 12, 1983, Customs sent the importer a Notice of Action (CF 29) stating that the entry was in the liquidation process per the Commerce Department's notice of final results of administrative review of a countervailing duty order, published in the Federal Register on September 8, 1983 (see 48 FR 40536), finding that non-rubber footwear from Spain was subject to a countervailing duty of 4.91% of the f.o.b. invoice price on all shipments entered, or withdrawn from warehouse for consumption, on or after January 1, 1980 and exported on or before December 31, 1980. The Court of International Trade (CIT) issued a temporary restraining order on October 20, 1983, against the liquidation of non-rubber Spanish footwear entries made between January 1, 1980 through December 31, 1980. A preliminary injunction was later ordered by the CIT on November 9, 1983, restraining the Customs Service from liquidating the above- specified entries. See Volume Footwear Retailers of America v. United States, 10 CIT 12 (1986). Notwithstanding the outstanding court order, Customs liquidated on February 3, 1984, the footwear entries with an assessment of a countervailing duty of 4.91% and an interest rate of 11%, in accordance with Headquarters' Telexed Instructions #83/214 of September 30, 1983.

The protestant timely filed a protest on March 21, 1984. See 19 U.S.C. 1514(a). The protestant contends that the since Customs liquidated the entries in contravention of a court order restraining such liquidation, the liquidation was invalid. He further contends that regardless of the restraining order, there is no basis under law for an assessment of countervailing duties or interest on these entries.

The other four protests involve the same merchandise and the same importer/protestant; however, although the entry and liquidation dates differ in each protest, they all fall within the enjoined time period:
(i.e., Protest #144: entry 10-15-80; liquidation 12-16-83 Our file lacks the background documents on these four protests. We assume that the field office has access to the necessary information. Despite the fact that we will limit our discussion to Protest #168, the same principles are equally applicable to the other protests.

ISSUE:

Is the liquidation of an entry by Customs valid when there is an outstanding court injunction restraining the liquidation of particular entries?

LAW AND ANALYSIS:

19 U.S.C. 1514(a) provides that all administrative decisions as to value, classification, duty, exclusion, liquidation or reliquidation, etc., including the legality of all orders and findings entering into such decisions, are "final and conclusive upon all persons (including the United States and any officer thereof)" unless the decision is timely protested. Although Customs may not "unliquidate" a liquidation, see United States v. UTEX International, Inc., 6 Fed. Cir. (T) 166 (1988), when a liquidation has been timely protested, the liquidation does not become final and the correctness or legality of the liquidation remains in issue. See Headquarter Ruling Letters, HQ 221591, dated February 13, 1990, and HQ 222364, dated August 21, 1990. In this case, the protestant timely-filed a protest under 19 U.S.C. 1514 against the validity of Customs' liquidation and the exaction of countervailing duties and interest.

No entries between January 1, 1980 and December 31, 1980, could be legally liquidated while there was an outstanding injunction against the liquidation of these entries of non- rubber footwear from Spain. A preliminary injunction dissolves either when the case is dismissed or a final judgment is entered. Volume Footwear Retailers, supra. We therefore find the liquidation on February 3, 1984, to be erroneous and thus voidable. See 19 CFR 159.51 and 19 CFR 159.58; see generally Omni USA, Inc. v. U.S., 840 F.2d 912, 915 (Fed. Cir.), cert. denied, 109 S.Ct. 56 (1988); United States v. A.N. Deringer, Inc., 66 CCPA 50, CAD 1220, 593 F.2d 1015, 1020 (1979).

As the original liquidation is not considered final due to the importer's timely protest, Customs may reliquidate based upon the final results of the Administrative Review of the Countervailing Duty Order [C-469-022] issued by the Commerce Department (48 FR 40536). The injunction against liquidation of non-rubber footwear dissolved on May 15, 1985, when the Volume Footwear Retailers case was dismissed. A reliquidation by Customs in this case is now proper since the validity of the assessment of countervailing duties and interest was upheld by the Court of International Trade and the U.S. Court of Appeals for the Federal Circuit in Canadian Fur Trappers Corp. et. al. v. United States, 22 Cust. B. & Dec. No. 33, 12 CIT 612, 691 F. Supp. 364 (July 8, 1988), aff'd, 23 Cust. B. & Dec. No. 39, 884 F.2d 563 (C.A. Fed. Cir. August 29, 1989). See Headquarters Ruling Letter, HQ 222364, dated August 21, 1990. We find that the issues have been finally settled and that Customs may now properly reliquidate the footwear entries.

With regard to the amount of interest, all interest either due or payable on overpayment or underpayment of Customs duties determined at liquidation shall be in accordance with the Internal Revenue Code rates established by 26 U.S.C. 6621 (simple rate of interest) or 26 U.S.C. 6622 (compounding interest). Enclosed are copies of Headquarters' Telexed Instructions #85- 415 of December 16, 1985 and Headquarters' Telexed Instructions #86-1 of January 7, 1986, which were issued after these protests were referred for further review. Please follow these Telexs in determining the interest payable on reliquidation of the entries.

HOLDING:

A liquidation by Customs of certain entries, while there is an outstanding court order enjoining liquidation is an unlawful liquidation and, accordingly, is considered voidable. In this case, since the importer timely protested against the erroneous liquidation on the basis that the Customs Service liquidated contrary to a court order, Customs can allow the protest and reliquidate in accordance with the Commerce Department's final CVD order and the applicable interest laws.

You are hereby instructed to allow the protest due to the erroneous liquidation, and to reliquidate with an assessment of countervailing duties (4.91%) and interest as per this decision.

Sincerely,

John Durant, Director

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