HQ 0223668 - Application for Further Review of Protest No. 3901-90-100089; Liquidation Extensions; Reliquidation; 19 U.S.C. 1504; 19 CFR 159.12; 19 U.S.C. 1501 - United States International Trade Commision Rulings

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HQ 223668

March 3, 1993

LIQ-9-02-CO:R:C:E 223668 SLR

CATEGORY: LIQUIDATION

District Director of Customs
610 South Canal Street
Chicago, IL 60607

RE: Application for Further Review of Protest No. 3901-90-100089; Liquidation Extensions; Reliquidation; 19 U.S.C. 1504; 19 CFR 159.12; 19 U.S.C. 1501

Dear Sir:

The above-referenced protest was forward to our office for further review. We have examined its contents and our decision follows.

FACTS:

This protest involves twenty-eight entries consolidated for ease of review. The entry dates range from 2-12-86 to 5-30-86.

The facts indicate that in January of 1986, Amdahl Corporation (Amdahl), the protestant, began to import merchandise from Canada through the port of Chicago. The merchandise was being entered in item 676.5435/Free, Tariff Schedules of the United States Annotated (TSUSA), as data processing parts. In the opinion of the Chicago import specialist processing the entry, however, the invoice merchandise description was too exiguous to afford proper classification. He suspected that the merchandise was being misclassified and believed the correct TSUSA item number to be 684.6700/5%, a provision for telecommunication parts.

On February 25, 1986, a CF 28 requesting descriptive and illustrative literature for the subject merchandise was sent to Amdahl. (The CF 28 concerned merchandise identical to, but not the subject of, this protest.) No response was received. Nonetheless, according to our file, MSAS America, the broker for Amdahl, confirmed that its client had received the request.

Subsequently, your office contacted Customs offices on the West Coast. It was learned that in February 1985, in response to a CF 28 requesting the same information, Amdahl answered that it did not have descriptive literature for the questioned individual parts but did have descriptive literature for the products produced by the manufacturer of the parts. Amdahl then indicated that the products were used in telecommunications.

On June 12, 1986, your office referred the misclassification query to Customs Office of Enforcement for investigation and subsequently extended the liquidations of the subject entries pending the outcome of that investigation. Customs computer records indicate that the liquidation of each entry was extended three times and that all of the entries were automatically liquidated "no change" prior to their four-year anniversary date. Records further indicate that Customs reliquidated the entries at an increased duty rate within ninety days of liquidation.

The protestant currently challenges the reliquidation of the subject entries at the higher duty rate. The protestant claims that the reliquidations under 19 U.S.C. 1501 were invalid because they were carried out after the four-year limit set forth in 19 U.S.C. 1504(d). It maintains that the duty rate which applies is that which was assessed by Customs at the time of liquidation.

The protestant also challenges the legality of the liquidation extensions. It claims that the second and third liquidation extensions were invalid because the U.S. Customs Service showed no cause for further extension. Moreover, it claims that the liquidation extensions were invalid because the extension notices did not give any reason for the extensions and because some of the extension notices were not received. In this respect, the protestant maintains that the entries were deemed liquidated as a matter of law at the duty rate asserted by the protestant at the time of entry.

On July 9, 1992, a representative from Amdahl, along with counsel for the protestant, met with Customs Headquarters officials. A September 28, 1992, submission followed.

ISSUES:

Whether Customs properly reliquidated the subject entries.

Whether Customs properly extended the liquidation of the subject entries.

LAW AND ANALYSIS:

Section 504 of the Tariff Act, as amended (19 U.S.C. 1504) provides:

(a) Liquidation.--Except as provided in subsection (b) of this section, an entry of merchandise not liquidated within one year from:

(1) the date of entry of such merchandise;
shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer, his consignee, or agent.

(b) Extension.--The Secretary may extend the period in which to liquidate an entry by giving notice of such extension to the importer, his consignee, or agent in such form and manner as the Secretary shall prescribe in regulations, if--

(1) information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer;

(2) liquidation is suspended as required by statute or court order.

(3) the importer, consignee, or his agent requests such extension and shows good cause therefor.

(d) Limitation.--Any entry of merchandise not liquidated at the expiration of four years from the applicable date specified in subsection (a) of this section shall be deemed liquidated at the rate of duty, value, quantity, and amount of duty asserted at the time of entry by the importer, his consignee, or agent, unless liquidation continues to be suspended as required by statute or court order. * * *

Section 501 of the Tariff Act of 1930, as amended (19 U.S.C. 1501), provides:

A liquidation made in accordance with section 1500 of this title or any reliquidation thereof made in accordance with this section may be reliquidated in any respect by the appropriate customs officer on his own initiate, notwithstanding the filing of a protest, within ninety days from the date on which notice of the original liquidation is given the importer, his consignee or agent. * * *

The protestant claims that the reliquidations under 19 U.S.C. 1501 were invalid because they were carried out after the four-year limit set forth in 19 U.S.C. 1504(d).

Customs timely liquidated the subject entries within the 19 U.S.C. 1504(d) four-year time period and timely reliquidated the entries ninety days thereafter. Consequently, Customs properly reliquidated the entries.

Customs processes the liquidation of entries by using a computer listing to inform each appropriate Customs officer of the liquidation status of the listed entries. This listing or "alert report" informs the officer that listed entries would be scheduled for liquidation on the listed dates. If the appropriate officer determines that a listed entry should not be liquidated, that officer can reset that scheduled date. Likewise, if the officer determines that a listed entry should be liquidated on schedule, the bulletin notice will be so prepared by the computer. The computer alerts the appropriate Customs officer and prepares the bulletin notice of liquidation. The computer does not liquidate entries; the determination whether to liquidate is done by the appropriate Customs officer as required by 19 U.S.C. 1500. A liquidation of an entry after review by the an appropriate Customs officer is a liquidation under 19 U.S.C. 1500 even if that officer uses a computer to generate the bulletin notice of that liquidation. Any liquidation done pursuant to 19 U.S.C. 1500 is subject to a reliquidation under 19 U.S.C. 1501.

The protestant challenges the legality of the liquidation extensions.

The regulations indicate that Customs can extend the liquidation of an entry for consecutive one-year periods not to exceed three years in total for the reasons set forth in 19 U.S.C. 1504(b) quoted above. 19 CFR 159.12.

Customs properly extended the liquidation of the subject entries the first time because more information was needed in order to classify the goods. The instant case presented inconclusive evidence of classification; consequently, prior to the first-year anniversary dates of the subject entries, Customs sought assistance in fact-finding from its Office of Enforcement. (See International Cargo & Surety Insurance Co. v. United States, 15 CIT , 779 F. Supp. 174, 178 (1991), where the Court of International Trade (CIT) construed the term "information" in 19 U.S.C. 1504(b)(1) as including internal information sought by Customs.)

The protestant maintains that there was no justification for extending the liquidations beyond the first one-year extension.

In St. Paul Fire & Marine Insurance Co. v. United States, Slip. Op. 92-125, Vol. 26 Cust. B. & Dec. No. 35, p. 40 (August 26, 1992), the CIT addressed the reasonableness of the length of an extension under 19 U.S.C. 1504. In St. Paul Fire, Customs extended the liquidations of certain entries three times (in the case of some of the entries, two times) because it was awaiting receipt of information from the importer to support the claim for entry under TSUSA item number 807.00.

(Item 807.00, TSUSA, provides duty-free treatment for imports of articles assembled abroad with components produced in the United States. Classification of merchandise in item 807.00, TSUSA, is conditioned upon the importer's submission to Customs of supporting documentation including certificates of origin and actual cost data.) St. Paul Fire & Marine Insurance Co. (the surety for the importer and the plaintiff in the case) maintained that the extensions were invalid because Customs had all the information it needed to properly classify the merchandise, i.e., to deny the claimed 807.00 classification, by the second anniversary date of each entry and because the total length of time of the extensions for each entry was unreasonable. The Court held that Customs acted reasonably in extending the liquidation the first time because Customs lacked the information to liquidate the entries under the proper classification (id. at 40). After stating that the number of extensions of liquidation must be reasonable in light of the circumstances or "relative to the situation" (id. at 41), the Court held that the second and third extensions were unreasonable, citing the failure of the importer to submit the required documentation within two years from the date it entered the merchandise or to even make any effort to contact Customs concerning the entries, and the failure of Customs to contact the importer about the missing documentation until after the third (in some cases, the second) extension of the liquidations.

The instant case is distinguished from St. Paul Fire in that Customs did not have enough information to classify the merchandise prior to the second and third liquidation extensions of the subject entries. The enforcement investigation which commenced prior to the first extension of the subject entries continued throughout the three years preceding the liquidation of the subject entries. Consequently, evidence of the proper classification of the merchandise prior to the second and third anniversary dates of the subject entries remained inconclusive. Therefore, in light of the circumstances, Customs properly extended the second and third liquidations of the subject entries.

The protestant maintains that it did not receive any notice of extension for three of the subject entries, and for the other twenty-five entries, it received only some of the notices.

Customs must give notice of the extension of liquidation to the importer, his consignee or surety in the form and manner prescribed in the regulations. The regulations provide that Customs shall give notice on Customs Form 4333-A, appropriately modified, and the notice shall state the reason for the extension. 19 CFR 159.12(b). Failure to provide such notice results in liquidation by operation of law. Enron Oil Trading and Transportation Co. v. United States, Slip Op. 91-91, Vol. 25 Cust. B. & Dec. No. 44, p. 18, 19 (Sept. 27, 1991) (citing Pagoda

Trading Co. V. United States, 9 CIT 407, 411, 617 F. Supp. 96, 99 (1985), aff'd, 804 F.2d 665 (Fed. Cir. 1986)).

Customs computer records indicate that all of the extension notices were sent. Government officials are entitled to a presumption that their duties are performed in the manner required by law. Star Sales & Distributing Corp. v. United States, 10 CIT 709, 710, 663 F. Supp. 1127, 1129 (1986). Therefore, a presumption arises that proper notice was given. This presumption, however, is not conclusive and may be rebutted by evidence indicating that notice was not received.

In Enron, the Court of International Trade found that an affidavit from the importer's recordkeeper, stating that an extension notice had not been received, was sufficient to rebut the presumption. Here, the protestant baldly asserts that it did not receive several of the extension notices, but it does not provide legally sufficient evidence to support its assertion. Consequently, the protestant has failed to rebut the presumption that proper notice was given.

The protestant maintains that the liquidation extension notices did not adequately inform the protestant of the reason for the extensions. Copies of the extension notices read:

THE LIQUIDATION OF THIS ENTRY HAS BEEN EXTENDED. ADDITIONAL TIME IS REQUIRED BY CUSTOMS TO PROCESS THIS TRANSACTION. NO ACTION IS NECESSARY ON YOUR PART UNLESS INFORMATION IS SPECIFICALLY REQUESTED BY CUSTOMS.

The CIT previously has been presented with this very language and considered it to be sufficient reason for extension. See Enron, supra, at 21.

The protestant maintains that the language "NO ACTION IS NECESSARY ON YOUR PART UNLESS INFORMATION IS SPECIFICALLY REQUESTED BY CUSTOMS," included in the notices, is inconsistent with Customs basis for extending the liquidations, i.e., that additional information was needed in order to classify the goods.

At the time of each notice, Customs, through its Office of Enforcement, was engaged in obtaining the evidence necessary to finally liquidate the entries. The language of the notice is fully consistent with this ongoing activity.

HOLDING:

Customs properly reliquidated the subject entries under 19 U.S.C. 1501. Customs timely liquidated the entries within the 19 U.S.C. 1504(d) four-year time period and timely reliquidated the entries ninety days thereafter.

Customs properly extended the liquidations of the subject entries under 19 U.S.C. 1504. Customs had good cause to extend the liquidations; the liquidation extension notices provided adequate reason for the extensions; and the protestant has failed to rebut the presumption that the extension notices were received.

You should deny the protest in full. A copy of this decision should be attached to the Customs Form 19 and mailed to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director
Commercial Rulings Division

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