HQ 0222636 - Request for further review of protest #3501-9-000023; reliquidation of an entry under 19 U.S.C. 1520(c)(1); misclassification of merchandise on entry documents. - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1993 HQ Rulings > HQ 0221393 - HQ 0222782 > HQ 0222636

HQ 222636

September 16, 1991

LIQ-9-01-CO:R:C:E 222636 TLS

CATEGORY: ENTRY PROTEST

Area Director
U.S. Customs Service
110 South Fourth Street
Minneapolis, Minnesota 55401

RE: Request for further review of protest #3501-9-000023; reliquidation of an entry under 19 U.S.C. 1520(c)(1); misclassification of merchandise on entry documents.

Dear Sir:

We have received your memorandum of April 18, 1990, forwarded to us from the Chicago regional office requesting further review of the above-referenced protest. Upon review of your position and the protestant's arguments, we have reached a decision that is discussed in detail below.

FACTS:

The protestant, LaCrosse Footwear, Inc. (LaCrosse), entered 3,600 pairs of ladies' boots on September 4, 1987 through the Minneapolis port. This entry was liquidated on October 9, 1987, with the importer listing the merchandise as being classified under Tariff Schedules of the United States (TSUS) item number 700.57, dutiable at 37.5%. On subsequent review, LaCrosse found that the appropriate classification for the boots was TSUS item number 700.56, which carries a duty rate of 6%. The latter classification is more correct because the boots contained over 90% of plastics on its exterior surface. The protestant claims not to have been aware of this fact at the time it filed for entry. LaCrosse claims that the broker who filed the entry documents on its behalf did not know of the correct classification because the broker did not have all the facts needed to make a proper classification decision.

You contend that the protestant was in fact aware of all pertinent facts necessary to make the proper classification decision. Specifically, you state in your memo that the importer's entry documents indicate that it had knowledge of the exact physical composition of the footwear, including the 97% plastic exterior content. This fact is listed on LaCrosse's CF- 5523, which was filed with other entry papers.

The protestant requested reliquidation due to a clerical error, mistake of fact, or other inadvertence as provided for under section 520(c)(1) of the Tariff Act of 1930, amended (19 U.S.C. 1520(c)(1) (1990). In particular, the protestant argues that a mistake of fact was made when the broker unknowingly misclassified the merchandise because he believed the boots had a different physical make-up than they actually do. You contend that the misclassification of the goods constitutes an error in the construction of law rather than a mistake of fact. It is on that basis that you denied the request for reliquidation. Consequently, the importer filed this protest which has been forwarded to us for further review.

ISSUE:

Whether the importer's misclassification of merchandise constitutes a mistake of fact correctable under 19 U.S.C. 1520(c)(1) when documents filed with Customs indicate that the broker had knowledge of the pertinent facts at the time of entry.

LAW AND ANALYSIS:

As noted above, the relevant law in the present case is found in section 520(c)(1) of the Tariff Act, which reads as follows:

(c) Notwithstanding a valid protest was not filed, the appropriate customs officer 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 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 the appropriate customs officer within one year after the date of liquidation or exaction;... (emphasis added.)

The record shows that the broker in this case requested reliquidation of the subject entry within one year of the original liquidation. That the decision to classify the merchandise under item 700.57 is an error adverse to the importer is not in dispute. The relevant terms of section 520(c)(1) have been defined before in previous rulings. In 94 Treas. Dec. 244 (May 6, 1959) [T.D. 54848], a "clerical error" is defined as when a person intends to do one thing but does something else, e.g., he meant to write 'par. 231' but wrote 'par. 131.' A "mistake of fact" occurs when a person believes the facts to be other than they really are and takes some action based on that erroneous belief. "Inadvertence" is defined as inattention, oversight, negligence, or lack of care. The ruling states that these terms are not necessarily mutually exclusive. 94 Treas. Dec. 244, 245- 46. Clerical error, mistake of fact, and inadvertence are distinguished from an "error in the construction of a law", which occurs when a person knows the true facts of a case but has a mistaken belief of the legal consequences of those facts and acts on that mistaken belief.

In the present case, the protestant argues that a mistake of fact occurred when its broker entered the subject merchandise under the incorrect classification number. The protestant contends that the decision to classify the merchandise under TSUS item 700.57 instead of item 700.56 amounted to a factual determination that was made without knowledge of the true facts. This argument is based on the belief that because similar articles had previously been entered under the correct classification number the classification decision itself is merely a "matter of calculation."

Customs has ruled on a similar issue in a previous ruling. In HQ 220042 (April 10, 1989), it was held that an error of judgement on the part of a customs officer who was aware of the pertinent facts but entered the merchandise under the wrong tariff item number is a mistake in the construction of law, not correctable under section 520(c)(1). Customs Ruling HQ 220042 at p. 7, citing Computime, Inc. v. United States, 9 CIT 553 (1985) and Mattel, Inc. v. United States, 72 Cust. Ct. 257 (1974). While it is indeed a fact that the boots are constructed with over 90% plastic on its exterior surface, the classification decision itself is a legal determination based in part upon that fact. HQ 220042 involved a misclassification of goods upon entry and a subsequent request for reliquidation, as is the case here.

While the aforementioned court cases involved decisions made by Customs officials, we find that the precedent is applicable to alleged mistakes made by importers and their agents as well. There exists no reason to distinguish those cases from the present one on that basis alone. In fact, the similarities are too numerous to ignore. In HQ 220042, the case involved the misclassification of articles that had been classified under the correct TSUS item on several previous occasions. Here, the protestant is claiming that the incorrect classification decision constitutes a mistake of fact because of several previous decisions made with regard to similar merchandise. The importer in the previous ruling claimed that its agent did not know all the true facts necessary to make a correct determination. It was subsequently found that the agent had access to the information through entry documents that he filed with Customs. In the present case, the protestant claims that its agent did not know all the true facts necessary to make its classification decision. Entry documents filed by the agent, however, show that the critical facts alleged to not have been known at the time were in fact recorded on page 6 of the invoice submitted to Customs. Thus, just as we found in the previous ruling with similar circumstances to consider, the true facts necessary to make a correct classification decision were known to the importer's agent responsible for making the determination in this case.

The protestant cites to HQ 220965 to further support its argument that a mistake of fact exists here. In that case, the broker's agent who normally handled entry processing for the importer was not available and someone not familiar with the transactions was charged with the responsibility of making the entries. The substitute agent's inexperience evidently led to the misclassification of the merchandise. As a result, Customs found a mistake of fact based upon the importer's previous dealings with the agency. In this case, agent was indeed familiar with the normal operations and as is evident from the documents she filed with Customs, had constructive knowledge, if not actual knowledge, of the true facts. Therefore, no mistake of fact is found to exist in this case.

It is also argued in the alternative that an inadvertence occurred based on the same set of facts. Referring back to the definition of inadvertence, it states that inattention, oversight, negligence, or lack of care characterizes such a mistake. In proving the assertion that its agent made his decision due to inadvertence, the importer must provide evidence to refute the possibility that the agent made his decision after reviewing all the facts available to him, albeit incorrectly. See PPG Industries, Inc. v. United States, 4 CIT 143, 147 (1982). The protestant has not presented any evidence that might indicate that the agent did not consider all the relevant facts before making the classification decision. As noted before, the record reflects that she had the crucial facts at his disposal when the decision was filed with Customs. Customs cannot presume that the importer meant to record one classification number over another when the importer apparently made its decision with all the necessary documents in order as presented to the agency.

To further support this claim, the protestant cites to HQ 303373, which held that a clerk's unintentional omission of a crucial designation on entry documents was an inadvertence correctable under 520(c). Customs had found that the record reflected an intent to claim free of duty status under the Generalized System of Preferences (GSP). The documentary evidence here simply does not support a finding of inadvertence on the part of the importer, however. Furthermore, none has been shown by the protestant. The importer's employee's statement notwithstanding, the documents she controlled and was in charge of, which she ultimately filed, indicate that she at the very least had constructive knowledge of the boots' composition. The fact that she chose an alternative classification to the one potentially most favorable shows that a decision was made that the importer apparently now regrets. This was not a mere recordation of a decision already made. Therefore, we do not find inadvertence to be present here. Consequently, the error that was made in this case constitutes an error in the construction of the relevant law, which is not correctable under section 520(c)(1) of the Tariff Act.

HOLDING:

No mistake of fact or other inadvertence has been shown to exist through either the documentary evidence presented or a manifestation of the record in this case. As a result, there is no mistake correctable under 19 U.S.C. 1520(c)(1). The protest should be denied in full.

Sincerely,

John Durant, Director

Previous Ruling Next Ruling