HQ 0220491 - Internal Advice No. 47/86; Protests 1001-84-017473, 1001- 84-203618 through 1001-84-203637, 1001-86-200512, and 101- 86-001697; 19 U.S.C. 1520(c)(1) - United States International Trade Commision Rulings

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HQ 220491

January 8, 1991

LIQ-9-01-CO:R:C:E 220491 PH

CATEGORY: LIQUIDATION

Area Director of Customs
New York Seaport, New York

RE: Internal Advice No. 47/86; Protests 1001-84-017473, 1001- 84-203618 through 1001-84-203637, 1001-86-200512, and 101- 86-001697; 19 U.S.C. 1520(c)(1)

Dear Sir:

Internal Advice Ruling No. 47/86 (copy enclosed for your convenience) was sent to you on April 19, 1988 (File: CLA-2 CO:R:CV:V 543912 EK). The ruling did not address 49 liquidated entries upon which you also sought advice. The file was forwarded to this office for our advice on those entries. Our advice follows.

FACTS:

According to the file, in the years 1982 - 1985, the client of the law firm which asked that this internal request be sent to Headquarters imported quantities of baseball caps, baseballs, and softballs. The complicated factual situation, with regard to the basis for valuation of the imported merchandise, is described in the April 19, 1988, ruling. Suffice it to say that, for purposes of our advice on the 49 liquidated entries, some of which were protested under 19 U.S.C. 1514 and for some of which reliquida- tion under 19 U.S.C. 1520(c)(1) was requested, a Customs audit to determine the feasibility of deductive value for the baseball caps was commenced in August of 1984. This audit was suspended and it was discontinued in June of 1985 when a Customs field office determined that a transaction value of identical or similar merchandise pursuant to 19 U.S.C. 1401a(c) was available.

The April 19, 1988, ruling held, with regard to the baseball caps, that "[u]pon receipt of the necessary information [i.e., documentation necessary to appraise the merchandise pursuant to deductive value], and assuming it meets the statutory require- ments of deductive value pursuant to section 402(d), then appraisement pursuant to that section is proper." With regard to the appraisement of the baseballs, it was stated that it was Customs position that documentation with respect to deductive value had not been substantiated. As with the baseball caps, the ruling held that upon receipt of the necessary information, "assuming it meets the statutory requirements of deductive value pursuant to section 402(d), then appraisement of the baseballs pursuant to deductive value is proper as well."

By letter of November 15, 1984, the representative of the importer requested that liquidation of all unliquidated entries of baseballs, softballs, and baseball caps be withheld pending completion of the audit being conducted to verify deductive value information. According to this letter, "[l]iquidation was recently resumed by new [Customs] officials responsible for caps, notwithstanding the withholding of appraisement in May 1983 by the Customs officials previously responsible for caps pending completion of the audit." It was stated that recently liquidated entries have been protested and it was requested, pursuant to 19 U.S.C. 1520(c)(1), that certain entries liquidated less than one year before the date of the November 15, 1984, letter be reliquidated on the basis of deductive value, pending completion of the Customs audit.

By letter of February 28, 1986, the representative of the importer requested that internal advice be sought on the protests, requests for reliquidation, and proper appraisement of the unliquidated entries of the baseball caps, baseballs, and softballs under consideration. Such internal advice was sought in your memorandum to this office of March 13, 1987.

In your memorandum of March 13, 1987, you recommended, with regard to the liquidated entries for which you sought internal advice, that the requests for reliquidation under 19 U.S.C. 1520(c)(1) be denied because that provision precludes reliquida- tion for a mistake in the construction of a law, which you state appraisement would be. You recommended that the protests under 19 U.S.C. 1514 be denied because the 90-day period for filing such protests had expired.

By letter of April 22, 1988, the representative of the importer described the basis of her petitions for relief under 19 U.S.C. 1520(c)(1). The mistakes of fact stated to be the basis for relief were "(i) the existence of an ongoing audit unknown to the liquidators of these entries, which was being conducted in order to verify data which had been submitted to support a deductive value appraisement; and (ii) that the liquidation of other entries containing identical merchandise was being extended for the same reason, i.e., that the information necessary to liquidate the entries was not yet available." It is stated that the Customs commodity team which liquidated these entries was not aware of the procedural history of this matter and the pendency of the audit and that "the Area Director had granted [the] request dated November 15, 1984 that the liquidation of open entries be extended pending collection and verification of value data in the audit."

ISSUES:

(1) If the protests filed in this case under 19 U.S.C. 1514 were timely filed, may the protests be granted?

(2) Were the liquidations of entries in this case clerical errors, mistakes of fact, or other inadvertences not amounting to errors in the construction of law under 19 U.S.C. 1520(c)(1) and, if so, may the entries for which a request for reliquidation was filed under that statute be reliquidated?

LAW AND ANALYSIS:

Under section 514(a), Tariff Act of 1930, as amended (19 U.S.C. 1514(a)), a protest may be filed against, among other things, "the appraised value of merchandise". Under paragraph (c)(2) of section 514, a protest of a decision, order, or finding described in paragraph (a) of section 514 must be filed within 90 days after the notice of liquidation or reliquidation or the date of the decision as to which the protest is made.

Under section 520(c)(1), Tariff Act of 1930, as amended (19 U.S.C. 1520(c)(1):

Notwithstanding a valid protest was not filed, [Customs] may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to correct ... (1) a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law, adverse to the importer and manifest from the record or established by documentary evidence, in any entry, liquidation, or other customs transaction, when the error, mistake, or inadvertence is brought to the attention of [Customs] within one year after the date of liquidation or exaction ....

If, as you indicate, the protests filed under 19 U.S.C. 1514 in this case were filed more than 90 days after the date of the notice of liquidation, these protests must be denied. If these protests were timely filed, action on them should be consistent with the April 19, 1988, ruling. That is, "[u]pon receipt of the necessary information [i.e., documentation necessary to appraise the merchandise pursuant to deductive value], and assuming it meets the statutory requirements of deductive value pursuant to section 402(d)," the protests filed under section 1514 should be granted. If the "necessary information" has not yet been provided to Customs, the protestant should be given the opportunity to do so by means of a written notice, enclosing a copy of this ruling and the April 19, 1988, ruling, stating that the protestant has 90 days from the date of the notice to provide Customs with the required information. If the information is not provided within this period, the protests filed under 19 U.S.C. 1514 should be denied or, if application was made for further review and the criteria for such review are met (see 19 CFR 174.24), forwarded for further review.

According to the file and our review, the requests for reliquidation under 19 U.S.C. 1520(c)(1) were timely filed. They should be treated as outlined below.

The relief provided for in 19 U.S.C. 1520(c)(1) is not an alternative to the relief provided for in the form of protests under 19 U.S.C. 1514; section 1520(c)(1) only offers "limited relief in the situations defined therein" (Phillips Petroleum Company v. United States, 54 CCPA 7, 1, C.A.D. 893 (1966), quoted in Godchaux-Henderson Sugar Co., Inc., v. United States, 85 Cust. Ct. 68, 69, C.D. 4874 (1980); see also, Computime, Inc. v. United States, 9 CIT 553, 555, 622 F. Supp. 1083 (1985), and Concentric Pumps, Ltd. v. United States, 10 CIT 505, 508, 643 F. Supp. 623

The three situations giving rise to relief under 19 U.S.C. 1520(c)(1), assuming that the other requirements therein are met, are (1) a clerical error, (2) a mistake of fact, and (3) an "other inadvertence", none of which may amount to an error in the construction of a law and each of which must be adverse to the importer and manifest from the record or established by documentary evidence. These terms, as used in 19 U.S.C. 1520(c)(1), have frequently been interpreted by the Courts.

It has been stated that "[a] clerical error is a mistake made by a clerk or other subordinate, upon whom devolves no duty to exercise judgement, in writing or copying the figures or in exercising his intention" (see PPG Industries, Inc., v. United States, 7 CIT 118, 124 (1984), and cases cited therein). It has been held that a "mistake of fact exists where a person under- stands the facts to be other than they are, whereas a mistake of law exists where a person knows the facts as they really are but has a mistaken belief as to the legal consequences of those facts" (Hambro Automotive Corporation v. United States, 66 CCPA 113, 118, C.A.D. 1231, 603 F. 2d 850 (1979), quoted in Concen- tric Pumps, Ltd., v. United States, supra at 508; see also, C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, 22, C.D. 4327, 336 F. Supp 1395 (1972), aff'd, 61 CCPA 90, C.A.D. 1129, 499 F. 2d 1277 (1974), and Universal Cooperatives, Inc. v. United States, Vol. 23 Cust. Bull. & Dec., No. 29, July 19, 1989, page 38, 40, CIT Slip Op. 89-89). Inadvertence has been defined as "an oversight or involuntary accident, or the result of inattention or carelessness, and even as a type of mistake" (Occidental Oil & Gas Co. v. United States, Vol. 23 Cust. Bull. & Dec. No. 17, April 20, 1989, page 40, 42, CIT Slip Op. 89-40, quoting C.J. Tower & Sons of Buffalo, Inc. v. United States, supra at 22).

The Courts have held that errors in valuation or classification of merchandise are not mistakes of fact but mistakes as to the applicable law (see Hambro Automotive Corporation v. United States, supra, and Mattel, Inc. v. United States, 72 Cust. Ct. 257, 262-263, C.D. 4547 (1974), and cases cited therein; see also, Cavazos v. United States, 9 CIT 628 (1985), and Occidental Oil & Gas Co. v. United States, supra). However, it has also been held that the contention that a determination of constructed value necessarily involves a "construction of the law" is totally without merit (see Lester Engineering Co. v. United States, 3 CIT 236, 240 (1982)). In this latter case, the Court went on to state that:

Appraisement on the basis of constructed value involves a complex compilation and analysis of many facts covering various costs, expenses and profits, and such factual determinations certainly are susceptible to clerical errors, mistakes or other inadvertences not amounting to an error in the construction of the law. [3 CIT at 240.]

The same is true of the appraisement on the bases of other kinds of value. We conclude that errors involving the valuation of merchandise are not necessarily errors in the construction of the law for purposes of 19 U.S.C. 1520(c)(1).

Basically, the error claimed by the representative of the importer as a basis for relief under 19 U.S.C. 1520(c)(1) is that Customs inadvertently liquidated the entries because of the ig- norance of the responsible Customs officers of the ongoing audit to verify data with regard to a deductive value appraisement and of the granting by the Area Director of the request to suspend the liquidation of these entries. Customs has ruled, in a case in which there was "some confusion or misunderstanding as to whether or not Customs had agreed to withhold liquidation pending resolution of the appraisement question" that the entries under consideration in the ruling had been liquidated through inadver- tence and should be reliquidated under section 1520(c)(1) (see Customs Service Decision 79-386; see also Omni U.S.A., Inc., v. United States, 11 CIT 480, 663 F. Supp 1130 (1987), in which it is indicated that inadvertent liquidation could qualify for reliquidation under section 1520(c)(1) although relief under that section was denied because the application for relief was untimely filed).

In the case of the entries for which reliquidation under 19 U.S.C. 1520(c)(1) is requested there is evidence that Customs may have agreed to withhold liquidation pending resolution of the appraisement question, as well as considerable "confusion or misunderstanding" about any such agreement. On the basis of the authorities cited in the foregoing paragraph and in the absence of evidence other than that in the file, we believe that these entries may be treated as having been liquidated due to clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of law.

To result in reliquidation under 19 U.S.C. 1520(c)(1), a clerical error, mistake of fact, or other inadvertence must be "adverse to the importer and manifest from the record or established by documentary evidence." In this regard, according to the Court in PPG Industries, Inc., v. United States, 4 CIT 143 (1982), quoting in part from the lower court in Hambro, supra, (Hambro Automotive Corp. v. United States, 81 Cust. Ct. 29, 31, 458 F. Supp. 1220, C.D. 4761 (1978)):

... it is incumbent on the plaintiff to show by sufficient evidence the nature of the mistake of fact. The burden and duty is upon the plaintiff to inform the appropriate Customs official of the alleged mistake with "sufficient particularity to allow remedial action." [4 CIT at 147-148, emphasis added.]

Therefore, action in this case on the requests for reliquidation under 19 U.S.C. 1520(c)(1) should be governed by the same criteria as the criteria governing action on the protests filed under 19 U.S.C. 1514. That is, such action should be consistent with the April 19, 1988, ruling. "Upon receipt of the necessary information [i.e., documentation necessary to appraise the merchandise pursuant to deductive value], and assuming it meets the statutory requirements of deductive value pursuant to section 402(d)," the requests for reliquidation should be granted. If the "necessary information" has not yet been provided to Customs, the requester for reliquidation should be given the opportunity to do so by means of a written notice, enclosing a copy of this ruling and the April 19, 1988, ruling, stating that the requester has 90 days from the date of the notice to provide Customs with the required information. If the information is not provided within this period, the requests for reliquidation should be denied.

HOLDINGS:

(1) If the protests filed in this case under 19 U.S.C. 1514 were timely filed, the protests should be granted if the informa- tion described in Internal Advice No. 47/86, dated April 19, 1990, has been provided to Customs or is provided to Customs within the 90 days of the date the protestant is given written notice to submit the required information. If the information is not provided within this time period, the protests should be denied or, if application for further review was requested, forwarded for further review.

(2) The liquidations of entries in this case for which reliquidation under 19 U.S.C. 1520(c)(1) was sought may be treated as having been liquidated due to clerical error, mistake of fact, or other inadvertence not amounting to errors in the construction of law under section 1520(c)(1) and reliquidation should be granted if the information described in Internal Advice No. 47/86, dated April 19, 1990, has been provided to Customs or is provided to Customs within 90 days of the date the requester for reliquidation is given written notice to submit the required information. If the information is not provided within this time period, the requests for reliquidation should be denied.

Sincerely,

John Durant, Director

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