HQ 0223524 - Protest nos. 1001-89-004671 and 1001-90-008261 through 1001- 90-008264; mistake of fact correctable under 19 U.S.C. 1520(c)(1) where the entry invoice contains a misdescription of the merchandise; burden of establishing mistake of fact rather than error of law; correctable error must be manifest from the record or established by documentary evidence - United States International Trade Commision Rulings

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HQ 223524

February 13, 1992

LIQ-9-01 CO:R:C:E 223524 C

CATEGORY: ENTRY LIQUIDATION
Area Director
JFK Airport Area
J.F.K. Airport - Bldg. 178
Jamaica, New York 11430

RE: Protest nos. 1001-89-004671 and 1001-90-008261 through 1001- 90-008264; mistake of fact correctable under 19 U.S.C. 1520(c)(1) where the entry invoice contains a misdescription of the merchandise; burden of establishing mistake of fact rather than error of law; correctable error must be manifest from the record or established by documentary evidence

Dear Sir/Madam:

This responds to an October 15, 1991, memorandum from the Protest and Control Section, New York, concerning the five referenced protests (PRO-2-05-O:C:R JAD; Cert. #P727035081). We have reviewed the record and our decision follows.

FACTS:

The five protests involve 20 entries of merchandise entered under item 336.64 of the Tariff Schedules of the United States (TSUS) at a duty rate of 33% ad valorem - Woven fabrics of wool; Other; Valued over $9 per pound. The entries were liquidated automatically as entered. After 90 days from the dates of liquidation, but within one year of such dates, PROTESTANT, the importer, filed requests for reliquidation under 19 U.S.C. 1520(c)(1), asserting that errors correctable under the statute had occurred causing misclassifications of the merchandise. PROTESTANT asserts that some of the merchandise should have been classified under item 337.50, TSUS, at a duty rate of 8% ad valorem - Woven fabrics of silk; In chief value, but not wholly, of silk; Containing over 17 percent of wool by weight; Not jacquard-figured - and some under item 336.15, TSUS, at a duty rate of 8 cents per pound plus 12.5% ad valorem - Woven fabrics of wool; Fabrics hand-woven with a loom width of less than 30 inches; Other. The 1520(c)(1) requests respecting the above entries were denied on the ground that the misclassifications were mistakes in the construction of law and, thus, not correctable under the statute. PROTESTANT filed the instant protests against these denials under 19 U.S.C. 1514(a)(7). The protests set forth three scenarios and assert that each forms the basis for a determination that correctable error occurred:

1.) Some merchandise was misclassified by the broker because the invoices expressly indicated that the merchandise was in "Chief Value Wool." In fact, the merchandise is in chief value silk with more than 17% of wool. Therefore, instead of item 336.64, TSUS, item 337.50, TSUS, was applicable.

2.) Some merchandise was misclassified by the broker because he did not know that the merchandise was in chief value silk. Unlike (1) above, the invoices did not expressly indicate that the merchandise was in chief value wool. The invoices provided composition breakdowns of wool and silk. Again, item
337.50, TSUS, was the correct tariff item.

3.) Some merchandise was misclassified by the broker because he did not know that the merchandise had a loom width of less than 30 inches. There was no document in the entry package that indicated this characteristic. Instead of item 336.64, TSUS, item 336.15, TSUS, was applicable.

PROTESTANT asserted in its requests for reliquidation that the three situations above amounted to mistakes of fact that are correctable under 19 U.S.C. 1520(c)(1). PROTESTANT asserts in these protests that Customs erred in holding that the misclassifications were mistakes of law and in denying the reliquidation requests. PROTESTANT files its applications for further review under 19 C.F.R. 174.24(c).

ISSUE:

Do the foregoing allegations, if true, amount to mistakes of fact correctable under 19 U.S.C. 1520(c)(1)?

LAW AND ANALYSIS:

Initially, we note that PROTESTANT's requests for reliquidation under 19 U.S.C. 1520(c)(1) and its instant protests filed under 19 U.S.C. 1514(a)(7) were filed timely. Its applications for further review of these protests are proper under 19 C.F.R. 174.24(a) or (c).

Under 19 U.S.C. 1520(c)(1), Customs 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. Certain conditions must be met. These are: 1) the error is adverse to the importer's interest; 2) the error is manifest from the record or established by documentary evidence; and 3) the error is brought to Customs attention within one year of the date of liquidation. The relief provided for under 19 U.S.C. 1520(c)(1) is not an alternative to the relief provided for under the protest procedure of 19 U.S.C. 1514. Section 1520(c)(1) provides only limited relief in the situations described therein. Phillips Petroleum Company v. United States, 54 CCPA 7, 11, C.A.D. 893 (1966); Computime, Inc. v. United States, 9 CIT 553, 555, 622 F. Supp. 1083 (1985); Concentric Pumps, Ltd. v. United States, 10 CIT 505, 508, 643 F. Supp. 623 (1986). Under the entry processing scheme, it is the protest procedure that provides for redress of errors in the liquidation of entries. Virtually any error in the liquidation can be corrected if brought to Customs attention within 90 days of the date of liquidation. Such redress is not available if the 90 day period has expired. It is not the purpose of the reliquidation provision of 19 U.S.C. 1520(c)(1) to extend the period for filing objections that are properly redressable under the protest procedure. As stated, section 1520(c)(1) applies only in limited circumstances.

PROTESTANT herein asserts a mistake of fact. In C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, C.D. 4327, 336 F. Supp. 1395 (1972), aff'd, sub nom. United States v. C.J. Tower & Sons of Buffalo, Inc., 61 CCPA 90, C.A.D. 1129, 499 F. 2d 1277 (1974), a mistake of fact was defined by the United States Customs Court as "a mistake which takes place when some fact which indeed exists is unknown, or a fact which is thought to exist, in reality does not exist [see cases cited]. . . . A 'mistake of fact exists where a person understands 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.'" C.J. Tower, 68 Cust. Ct. at 22, 336 F. Supp. at 1399 (quoting 58 C.J.S. Mistake, section 832). Yet, section 1520(c)(1) "is not remedial for every conceivable form of mistake or inadvertence adverse to an importer." Godchaux-Henderson Sugar Co., Inc. v. United States, 85 Cust. Ct. 68, 69, 74, C.D. 4874 (1980). In Universal Cooperatives, Inc. v. United States, 13 CIT 516 (1989), the Court of International Trade described mistakes of fact as either "decisional mistakes" or "ignorant mistakes." The former are legal mistakes correctable only under 19 U.S.C. 1514, while the latter are mistakes correctable under 19 U.S.C. 1520(c)(1):

[T]here are more types of factual mistakes than are dreamt of in plaintiff's philosophy. There is the 'decisional' mistake in which a party may make the wrong choice between two unknown, alternative set of facts. There is also the 'ignorant' mistake in which a party is unaware of the existence of the correct alternative set of facts. The decisional mistake must be challenged under Section 514 [of the Tariff Act of 1930, as amended][19 U.S.C. 1514]. The ignorant mistake must be remedied under Section 520 [19 U.S.C. 1520]."

Id. at 518.

PROTESTANT asserts that under the first scenario above, a mistake of fact is evidenced where the broker misclassified merchandise on the basis that the invoice described the merchandise to be in "CHIEF VALUE WOOL." It is asserted that this description led the broker to classify the merchandise as woven fabric of wool, 336.64, TSUS, rather than as woven fabric of silk, in chief value but not wholly of silk, 337.50, TSUS. Under PROTESTANT's second scenario, it is asserted that a mistake of fact is evidenced where the broker classified merchandise under the above item for woven fabric of wool because he did not know that the merchandise was in chief value of silk. In this instance, the invoice does not state that the merchandise is in "CHIEF VALUE WOOL." Rather, documents in the entry package set forth relative percentages of wool and silk, such as "70% wool, 30% silk." (One document submitted with this protest set forth percentages according to value, such as "57.02% silk, 42.98% wool." It is not clear whether this document was submitted with the entry or afterward with the reliquidation request or protest.) Under PROTESTANT's third scenario, it is asserted that a mistake of fact is evidenced where the broker was unaware that the merchandise had a loom width of less than 30 inches. There was no indication in the documents comprising the entry packages that the woven fabric of wool had this characteristic.

PROTESTANT asserts that in all of the foregoing scenarios, a mistake of fact occurred since there was, in each of the three scenarios, a fact in existence that the broker was unaware of - to wit, that the merchandise was in chief value of silk, in the first two scenarios, and the merchandise had a loom width of less than 30 inches, in the third scenario. Had the broker known these facts, it is asserted, the misclassifications would not have occurred.

As above, the mistake of fact, or other error correctable under the statute, must be manifest from the record or established by documentary evidence. According to the United States Court of International Trade in PPG Industries, Inc. v. United States, 4 CIT 143 (1982), "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.'" Id. at 147-48 (quoting from the lower court in Hambro Automotive Corp. v. United States, 81 Cust. Ct. 29, 31, C.D. 4761, 458 F. Supp. 1220 (1978)). The obvious reason for this requirement, or this burden of proof, is to avoid the situation where a broker or importer who misclassifies merchandise simply, and expediently, points to a fact that characterizes the entered merchandise, claims that fact was unknown at the time of entry, and asserts mistake of fact to obtain reliquidation. If bald assertions of this type were enough to gain redress under the statute, any misclassification could be reliquidated. Moreover, it is not the purpose of section 1520(c)(1) to provide a safety net for brokers or importers who occasionally (or more often) perform their customs business with less than appropriate "due diligence."

The question presented therefore is this: Is the evidence on the record of these protests sufficient to clearly demonstrate that a mistake of fact, as opposed to a mistake of law, was responsible for the erroneous classifications? Ordinarily, mistakes in classification of merchandise are considered mistakes in the construction of a law and not correctable under section 1520(c)(1). Mattel, Inc. v. United States, 72 Cust. Ct. 257, 262-63, C.D. 4547 (1974) (and cases cited therein). Only when an error correctable under 19 U.S.C. 1520(c)(1) is identified as responsible for the misclassification can there be a reliquidation of a classification error under section 1520(c)(1) and only then if it is manifest from the record or established by documentary evidence.

With respect to PROTESTANT's first scenario, where the invoices contained the words "CHIEF VALUE WOOL," we conclude that sufficient evidence exists to indicate a mistake of fact. This conclusion is based on our finding that these words reasonably caused the broker to misunderstand the nature of the entered merchandise and reasonably and directly led to the classification of the merchandise under item 336.64, TSUS. The liquidation by Customs can also be characterized as based on this misunderstanding, since the invoices with the misleading words were submitted with the entry package for review. With respect to PROTESTANT's second scenario, where the invoices did not contain the words "CHIEF VALUE WOOL," there is not sufficient evidence to demonstrate that it was a mistake of fact that caused the misclassification rather than an error of law. With respect to PROTESTANT's third scenario, where the entry package contained no indication that the merchandise had a loom width of less than 30 inches, again, there is not sufficient evidence to establish that it was a mistake of fact that caused the misclassification rather than an error of law.

In the second scenario, above, it cannot be said that the words "CHIEF VALUE WOOL" caused the misunderstanding and consequent misclassifications. Further, there is no way of knowing that the entered classifications were not the result of a decisional mistake rather than an ignorant mistake, the former being correctable only under the protest procedure of 19 U.S.C. 1514 and the latter being correctable under 19 U.S.C. 1520(c)(1). Universal Cooperatives, Inc. v. United States, 13 CIT 516, 518 (1989). Bald assertion alone is not enough to establish mistake of fact.

In the third scenario, above, there is no evidence establishing that either the importer or broker was unaware of the true nature of the entered merchandise. Further, there is no evidence to establish that mistake of fact was responsible for the misclassification rather than the importer's or broker's ignorance of the legal significance of loom width in the classification of woven wool fabric under Subpart C, Part 3, Schedule 3, TSUS. There is no evidence to establish that this error was an ignorant mistake and not a decisional mistake. Again, bald assertion is not enough. Had the invoices indicated that the loom width was in excess of 30 inches, the case would be akin to that evidenced in the first scenario. However, that is not the case here, and in the absence of evidence of this or another kind to establish a mistake of fact, the claim must fail for want of evidence.

Based on the foregoing, we conclude that the protests covering merchandise that was classified under item 336.64, TSUS, rather than item 337.50, TSUS, for the reason that the invoices contained the words "CHIEF VALUE WOOL," are approved. Protests covering merchandise that was classified under item 336.64, TSUS, rather than item 337.50, TSUS, where the invoices did not contain the words "CHIEF VALUE WOOL," are denied. Protests covering merchandise that was classified under item 336.64, TSUS, rather than item 336.15, TSUS, are denied. In these latter two cases, the proper remedy was to have filed a protest under 19 U.S.C. 1514. The reliquidation provision of section 1520(c)(1) is not an alternative available for those who fail to file a timely protest.

HOLDING:

In order to obtain reliquidation to correct a mistake of fact under 19 U.S.C. 1520(c)(1), such mistake must be manifest from the record or established by documentary evidence. The burden is on the protesting party to bring such mistake to Customs attention with sufficient particularity. On the facts here, where the record shows that the invoice contained an erroneous description of the merchandise, and where the record indicates that such misdescription reasonably caused the broker and Customs to misunderstand the nature of the merchandise, there is sufficient evidence upon which to base a finding of mistake of fact. Where the invoice is not materially misleading, and there is lacking sufficient other evidence to establish that a mistake of fact - as opposed to an error of law - is responsible for an erroneous classification, mistake of fact will not be found because of this failure of evidence.

Based on the foregoing, you are instructed to approve protest no. 1001-89-004671 and deny protests numbered 1001-90- 008261 through 1001-90-008264. A copy of this decision should be attached to the Form 19, Notice of Action, to be sent to the PROTESTANT in accordance with the notice requirement of 19 C.F.R. 174.30.

Sincerely,

John Durant, Director

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