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HQ 223547


March 11, 1992

CON-9-07 CO:R:C:E 223547 C

CATEGORY: ENTRY LIQUIDATION

District Director of Customs
300 South Ferry St. Terminal Island
Room 2017
San Pedro, CA 90731

RE: Protest and application for further review no. 2704-7- 001755; temporary importation under bond; demand for liquidated damages for failure to export or destroy merchandise entered temporarily under bond; demand for liquidated damages not protestable under 19 U.S.C. 1514; 19 U.S.C. 1514; 19 C.F.R. 10.31(e); 19 C.F.R. 10.31(h); 19 C.F.R. 10.39(d)(1)

Dear Sir/Madam:

This responds to the referenced protest and application for further review. We have reviewed the record and our decision follows.

FACTS:

In March 1986, PROTESTANT imported a milling machine under item 864.20 of the Tariff Schedules of the United States, subheading 9813.00.20 of the Harmonized Tariff Schedule of the United States which became effective on January 1, 1989. Both item 864.20, TSUS, and 9813.00.20, HTSUS, pertain to the temporary importation under bond (TIB) of samples imported solely for the purpose of taking orders. Under the temporary bond conditions, the merchandise was to have been exported or destroyed by expiration of the bond period. PROTESTANT, in breach of the bond conditions, sold the merchandise to a buyer in the United States, thereby failing to export or destroy the merchandise as required. Consequently, in accordance with section 10.39(d)(1) of the Customs Regulations, Customs issued a "Notice and Demand for Liquidated Damages," demanding payment of liquidated damages in the amount of 110% of the estimated duties as determined at entry. (Note: the file does not contain a copy of the "Notice"; however, section 10.39(d)(1) provides that the district director will issue a written demand for payment of liquidated damages; we assume that a "Notice" or some other written demand was issued.) PROTESTANT submitted payment for the liquidated damages by check dated February 27, 1987, in the amount of $47,487.10. PROTESTANT also filed this protest, contesting the assessment of liquidated damages in the above amount. The protest, filed on May 29, 1987, asserts the following: the value of the merchandise established at the time of TIB entry was erroneous; since the bond amount is based on the value of the merchandise as determined at the time of entry, the amount of the bond, and thus the amount of the demand for liquidated damages, was also erroneous. PROTESTANT argues that the value of the merchandise at entry should have been less than was established at that time.

ISSUES:

(1) Was the instant protest timely filed?

(2) Is the issuance of a demand for liquidated damages under 19 C.F.R. 10.39(d)(1) a protestable decision under 19 U.S.C. 1514?

LAW AND ANALYSIS:

(1) The protest was filed on May 29, 1987, objecting to the assessment of liquidated damages on the ground that the valuation of the merchandise, set at the time of entry, March 4, 1986, was erroneous. The date of the demand for liquidated damages is unknown (since a copy of the demand is not in the file; nor is the date of same mentioned), but it clearly pre-dates PROTESTANT's payment of liquidated damages which was accomplished by check dated February 27, 1987. More than 90 days had elapsed between the date of the check and the date the protest was filed. Necessarily, then, more than 90 days had elapsed between the demand for liquidated damages and the filing of the protest. The protest therefore was not timely filed within 90 days of the demand for liquidated damages, or any other Customs decision, and it must be denied for untimeliness.

(2) Further, it has been acknowledged by the United States Court of International Trade (Halperin Shipping Co., Inc. v. United States, No. 87-02-00371, slip op. 90-63 at 9 (CIT July 2, 1990); Pope Products, Division of Purex v. United States, No. 89- 05-00254, slip op. 91-50 at 8, 11 (CIT June 18, 1991)) and the United States Court of Appeals for the Federal Circuit (United States v. Toshoku America, Inc, 879 F. 2d 815, 818 (Fed. Cir. 1989)) that a demand for liquidated damages is not a Customs decision that is protestable under 19 U.S.C. 1514. (A party can seek relief generally from a demand for liquidated damages by resort to the mitigation procedure of 19 C.F.R. 172.1.) Therefore, even had this protest been filed within 90 days of the demand for liquidated damages, it would be denied.

Because a TIB entry does not involve an appraisement or a liquidation (19 C.F.R. 10.31(e) and 10.31(h)), such an entry is not protestable under 19 U.S.C. 1514(a)(1) or 1514(a)(5). In the past, Customs has held that assertions of error in classification or valuation in a TIB entry be considered in mitigation of liquidated damages, a process provided for under part 172 of the Customs Regulations. This was the holding of C.S.D. 79-377, wherein an error in the valuation of merchandise entered under TIB was alleged and remedy was sought under the reliquidation provision of 19 U.S.C. 1520(c). (See 13 Cust. Bull. 1566 (1979).)(See also Customs ruling letters 217538 and 726002, dated November 29, 1984, and August 13, 1984, respectively (copies attached).) Section 172.21 of the Customs Regulations provides that the district director may cancel any claim for liquidated damages incurred, on such terms and conditions as, under the law and in view of the circumstances, he shall deem appropriate. If an importer can establish to the district director's satisfaction that a classification and/or valuation in the TIB entry is incorrect, the district director can take that into consideration when determining the propriety and extent of mitigation. Section 172.2(a) provides that a petition for mitigation must be filed within 30 days of the date of mailing of the notice of liquidated damages. On the facts here, while the date of such mailing is unknown, it is clear that the 30 day filing requirement was not complied with.

HOLDING:

(1) The instant protest was not filed within 90 days of a Customs decision having a bearing on this case and, therefore, must be denied for untimeliness.

(2) A demand for liquidated damages is not a decision that is protestable under 19 U.S.C. 1514. Errors in the valuation or classification of TIB entries can be appropriately addressed in the procedure for mitigation of liquidated damages upon establishment, to the satisfaction of the district director, that the valuation or classification was incorrect.

Based on the foregoing, you are instructed to deny the protest in full. A copy of this decision should be attached to the Form 19, Notice of Action, to be sent to the PROTESTANT.

Sincerely,

John Durant, Director

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