HQ 0223611 - Request for Further Review of Protests 1001-91-107135 and 1001-91-107136, Dated July 3, 1991 - United States International Trade Commision Rulings

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HQ 223611

January 21, 1993

LIQ-9-01-CO:R:C:E 223611

CATEGORY: RELIQUIDATION

Regional Commissioner of Customs
New York Region
6 World Trade Center
New York, New York 10048-0945

RE: Request for Further Review of Protests 1001-91-107135 and 1001-91-107136, Dated July 3, 1991

Dear Sir:

The following is in response to the request of the Head of the Protest and Control Section, for further review of the above- referenced protests.

FACTS:

The protests concern two different importers with identical issues except that in Protest No. 1001-91-107135, the request of May 31, 1989, to reliquidate a Consumption Entry dated March 8, 1988, was not timely made within one year after the date of liquidation of May 8, 1988, as required by 19 U.S.C. 1520(c)(1). All of the other entries were liquidated between June 17, and September 2, 1988, and within one year after the date of liquidations, timely requests were made on May 31, 1989, for reliquidations under 19 U.S.C. 1520(c)(1). Timely protests were filed on October 1, 1991, under 19 U.S.C. 1514(a)(7) within ninety days after the refusal on July 3, 1991, to reliquidate the entries under 19 U.S.C. 1520(c)(1).

Temporary legislation which provided for the suspension of duties for certain merchandise, including Items 906.38 and 907.16, of the Tariff Schedules of the United States (TSUS), expired on December 31, 1987. In a Telex numbered 17408, dated December 31, 1987, the Assistant Commissioner, Office of Commercial Operations, informed field personnel that Customs had no statutory authority to continue the preferential (free) duty rate and issued instructions that merchandise entered or withdrawn for consumption after January 1, 1988, "must be entered
under the appropriate . . . TSUSA number with the applicable duties deposited." Because it was anticipated that pending legislation would extend the expiration date, field personnel were instructed that "liquidation shall be withheld until further notice. . ." . Further, the Telex instructed field personnel to make this information available to all interested parties. The Deputy Assistant Regional Commissioner (Commercial Operations), New York Region, in conformity with the Headquarters Telex, issued a notice, Pipeline No. 1516, dated January 6, 1988, to customhouse brokers, importers and others concerned to inform them that there was no statutory authority to extend the preferential duty treatment and that duties must be deposited. The notice also informed the public that "liquidation of these entries and all entries previously accepted under an expired Schedule 9 item number will be withheld until further notice is received from Headquarters."

On December 8, 1988, Headquarters issued Telex number 15901 advising all field offices of the passage of the Technical and Miscellaneous Revenue Act of 1988, effective November 10, 1988, which extended the expiration date of December 31, 1987, to December 31, 1992, for certain duty reductions including the merchandise covered by these protests. Headquarters also stated that further instructions would follow concerning reliquidation.

On June 28, 1989, Headquarters issued Fact Sheet number 37, signed by the Director, Office of Trade Operations noting that the Act merely extended the existing effective period of the temporary legislation but did not provide for retroactive reliquidation. The Director noted that liquidated entries that have not become final within ninety days after the dates of liquidation may be reliquidated under section 171.3 of the Customs Regulations (19 U.S.C. 1501) or by the filing of a protest under 19 U.S.C. 1514. Further, it noted that Customs had no authority to reliquidate those entries whose liquidations have become final by operation of other laws (19 U.S.C. 1514).

In conformity with Telex 17408, some of the entry summaries covered by the protests contained the notation "Liquidation to be withheld, Headquarters Directive." Notwithstanding the Telex and the notations on the entry summaries, the entries were liquidated.

ISSUE:

The issue is whether the refusal to reliquidate entries in accordance with the Technical and Miscellaneous Revenue Act of 1988 was proper.

LAW AND ANALYSIS:

Customs is required by 19 U.S.C. 1520(c)(1), notwithstanding a valid protest was filed (under 19 U.S.C. 1514), to 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 when the importer brings it to the attention of Customs within one year after the date of liquidation.

Section 9004 of the Technical and Miscellaneous Revenue Act (Act of November 10, 1988, 102 Stat. 3342, Pub. L. 100-647) extended the expiration date of several temporary duty exemptions. The law became effective November 10, 1988. The case of Miles v. U.S., 290 F. Supp. 395, 61 Cust. Ct. 245 (1968) remanded 416 F. 2d 973, 57 CCPA 1 (1969) involved similar legislation. The effect of Public Law 89-468 was considered. That law provided, in pertinent part:

An Act

To amend the Tariff Schedules of the United States to provide that certain forms of copper be admitted free of duty.

Be it enacted by the Senate and House of
Representatives of the United States of
America in Congress assembled, That subpart B Part 1 of the appendix to the Tariff
Schedules of the United States (19 U.S.C. sec. 1202) is amended by

(a) amending items 911.10, 911.11, and 911.12 to read as follows:

911.10 Copper waste and scrap Free

Sec. 2. The amendments made by the first section of this Act shall apply to articles entered, or withdrawn from warehouse, for consumption after February 8, 1966.

Approved June 23, 1966.

In Miles, the copper in issue was entered after February 8, 1966, and, thus, was within the express language of section 2 of the law. Both the trial and appellate court found that section 2 of the law was a retroactive application provision. The appellate court remanded and expressly disagreed that 19 U.S.C. 1520 applied. Miles had filed a request for reliquidation on July 11, 1966, 18 days after the law's enactment on June 23, 1966. The appellate court found that while the entries had been liquidated correctly between March 7 and April 25, 1966, the retroactive application of the law created a new right of action on June 23, 1966. The request for reliquidation was timely, although it could not have been based on 19 U.S.C. 1520(c)(1).

The language of section 9004 of the Act of November 8, 1988 does not contain a provision equivalent to that of section 2 of the Act of June 23, 1966. The same appellate court further explained its reasoning in C.J. Tower & Sons of Buffalo, Inc. v. U.S., 336 F. Supp. 1395, 68 Cust. Ct. 17 (1977), aff'd. 499 F. 2d. 1277, 61 CCPA 90 (1974) when it stated at 499 F. 2d. 1281:

In Miles we did not find that appellant's right arose under section 520, though recognizing rights might arise thereunder, but under a retroactive act of
Congress, P.L. 89-468, providing for free entry of copper scrap.

While the court did not state the statutory basis for jurisdiction and relief, it expressly held that it did not do so under 19 U.S.C. 1520. An analysis of the facts indicates that 19 U.S.C. 1514 was the statutory basis. The law was retroactive, it expressly covered the entries in issue, and a request for reliquidation was filed well within the protest period following enactment. The fact that the request cited 19 U.S.C. 1520 would not necessarily be fatal to finding that the request was a protest under the rationale in Mattel, Inc. v. U.S., 377 F. Supp. 955, 72 Cust. Ct. 257, 265 (1974). There, the court found no basis for denying the sufficiency of letters which were conceded to meet the requirements of 19 U.S.C. 1514 merely because of the gratuitous addition of the words "under section 520(c)."

Here, there are two significant differences from the other cases, particularly from the situation in Miles. First, it is not clear that Congress intended section 9004 of the Act of November 10, 1988 to be retroactively applied to entries that were liquidated before the date of enactment, November 10, 1988. Second, if section 9004 was to be retroactive and created a new cause of action on November 10, 1988, the requests for reliquidation were not filed until May 31, 1989, well outside the 90-day protest period.

The next point to consider is whether the failure of the appropriate Customs officer to withhold liquidation as instructed is an error warranting reliquidation under 19 U.S.C. 1520(c)(1). Instructions to withhold liquidation were issued by the Commissioner of January 3, 1987; by the Assistant Commissioner, Commercial Operations, on December 31, 1987, and by New York Regional Pipeline No. 1516 (January 6, 1988).

We note that deemed liquidation under 19 U.S.C. 1504 is not in question here because the dates of consumption entries were between March, 1988 through July 1988; the date of the instructions to withhold liquidations were effective January 1, 1988; and the dates of liquidations were between April 1988 of November 10, 1988. All events occurred within less than one year after the dates of entries.

With respect to the application of 19 U.S.C. 1520(c)(1), it is important to note that the provision for mistake of fact was added by the Act of August 8, 1953, 67 Stat 519. Prior to that time, clerical errors only were covered. By T.D. 54848 (1959), Customs implemented the provision. The required substantive elements were:

(1) does not amount to an error in the construction of a law
(2) is adverse to the importer
(3) is manifest from the record or established by documentary evidence.

In ORR Ruling 75-0026 (LIQ-9-01 of January 24, 1975), Customs took the position that the failure to follow a Headquarters instruction did not automatically become a mistake of fact under 19 U.S.C. 1520(c)(1). That is, if a Customs officer knew of the existence of an instruction and erroneously determined that the instruction did not apply to the situation or if that officer applied the instruction incorrectly, neither error was correctable under 19 U.S.C. 1520(c)(1), because both would be errors involving the construction of a law. On the contrary, if the evidence showed that the Customs officer was unaware of the existence of the instruction, and that lack of knowledge caused the Customs officer to err, that error was correctable under 19 U.S.C. 1520(c)(1).

In this case there is no evidence that the liquidating officials were unaware of the instructions. On the contrary, some of the very entry papers in issue contain a notation referring to those instructions. A similar situation was considered by the court in Gerry Schmitt & Co. v. U.S., 71 Cust. Ct. 194 (1973). At page 196, the court noted that even if a request for suspension was made, it was within the discretion of the district director to suspend the liquidations and that if there was a failure to do so, the plaintiff's only remedy was to challenge the liquidation by means of a timely protest. The court held that a plaintiff cannot revive its right to challenge a liquidation by utilizing an administrative method designed to rectify mistakes other than those which are decisional in nature.

HOLDING:

The liquidation of entries that were liquidated before the enactment of the Technical and Miscellaneous Revenue Act of 1988, even if contrary to an instruction to withhold liquidation, is not an error within 19 U.S.C. 1520(c)(1).

There is no evidence to show that the appropriate Customs officers were unaware of instructions to withhold liquidation so as to apply the holding of ORR Ruling 75-0026.

You are instructed to deny the protests in full, and provide each protestant with a copy of this decision attached to the Customs Form 19 as notice of action.

Sincerely,

John Durant, Director

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