HQ 0223694 - Application for further review of Protest No. 3801-1-102409; Rescission of an allowed protest is permitted prior to reliquidation; Automotive Products Trade Act; Subheading 8708.29.00.50, HTSUS; Subheading 5608.19.20, HTSUS; Subheading 5608.90.3000, HTSUS; Presidential Proclamation No. 6123 - United States International Trade Commision Rulings

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HQ 223694
June 26, 1992

LIQ-10-CO:R:C:E 223694 DHS

CATEGORY: LIQUIDATION PROTEST

District Director
U.S. Customs Service
Patrick V. McNamara Building
Detroit, Michigan 48266

RE: Application for further review of Protest No. 3801-1-102409; Rescission of an allowed protest is permitted prior to reliquidation; Automotive Products Trade Act; Subheading 8708.29.00.50, HTSUS; Subheading 5608.19.20, HTSUS; Subheading 5608.90.3000, HTSUS; Presidential Proclamation No. 6123

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the points raised and our decision follows.

FACTS:

Two entries of automobile carg net assemblies were intered on July 19, 1989 and August 7, 1989. Liquidation occurred on November 13, 1989, classifying the merchandise under subheading 5608.90.3000, of the Harmonized Tariff Schedules of the United States (HTSUS). On February 9, 1990, the importer timely protested this liquidation contending that the merchandise was properly classifiable under subheading 8708.29.00.50, HTSUS, as parts of automobiles, or alternatively, under subheading 5608.19.20, HTSUS, subject to a reduced rate of duty under the Canadian Free Trade Agreement (CFTA).

On March 15, 1990, Detroit Customs approved the protest which included two entries of identical nets. One of the entries was reliquidated under subheading 8708.29.00.50, HTSUS which resulted in a complete refund of duties for that entry. The second entry, however, was not reliquidated. In May, 1991, the protestant notified your office that the merchandise had never been reliquidated. After review, it was concluded that the reliquidated entry was erroneously reliquidated as duty-free. The second entry was, therefore, reliquidated on May 29, 1991, under subheading 5608.19.20, HTSUS, subject to the reduced rate of duty under the CFTA. This rate of duty was based upon NY Ruling Letter 843948, dated August 8, 1989. Accordingly, a partial refund of duties was reimbursed to the importer.

The protestant, thereafter, filed a protest, on August 29, 1991, contesting the amount of the refund upon reliquidation. The protestant submits that the second entry of nets are entitled to duty-free treatment in light of the duty-free treatment accorded the first entry (under subheading 8708.29.00.50, HTSUS). The protestant, therefore, requests a refund of all duties plus interest under 19 U.S.C. 1520(d).

Your office contends that the protestant is not entitled to duty-free treatment since no provision for duty-free treatment was at issue when the protest was approved on March 15, 1990. Furthermore, even though a retroactive application of duty-free treatment was applicable to this class and kind of merchandise imported on or after January 1, 1989, under Proclamation No. 6123, dated April 26, 1991, the protestant did not timely file under 19 U.S.C. 2013(a)&(b) for its application.

ISSUES:

(1) Whether Customs is permitted to rescind or amend its decision allowing a protest prior to reliquidation?

(2) Whether NYRL 843948, dated August 8, 1989, should have been applied to reclassify the second entry?

(3) Whether the protestant is entitled to retroactive duty-free treatment under the Automobile Products Trade Agreement?

LAW AND ANALYSIS:

(1) Whether Customs is permitted to rescind or amend its decision allowing a protest prior to reliquidation?

HRL 221723, dated March 26, 1991, presents a factual situation similar to that under consideration. In HRL 221723, a headquarter's ruling letter was issued classifying metal frames under item 808.00, TSUS. The frames were subsequently liquidated classifying the merchandise in accordance with that ruling letter. Customs reliquidated the frames a year later with an increase in duty under 640.30, TSUS. A protest was timely filed against this decision and affirmed. The protestant received notice of the decision but the entry was never reliquidated to classify the frames under item 808.00, TSUS, in accordance with the decision. Customs rescinded the approval the following year based upon the belief that the protest had been mistakenly approved by the import specialist.

The discussion in this case distinguished San Francisco Newspaper Printing Co. v. United States, 9 CIT 517, 620 F. Supp. 738 (1985), from its facts. In San Francisco, the Court concluded that Customs cannot rescind a decision denying a protest because the 180-day time period to file a complaint in the Court of International Trade would be altered. Allowing a protest, on the other hand, would not effect any procedural time periods prescribed by statute.

To further clarify the procedural affect of rescinding a decision of the district prior to reliquidation, HRL 304019, dated February 15, 1977, was introduced into the analysis. We stated in that ruling that Customs cannot alter a decision granting a section 520(c) claim once the claimant has been notified of the decision and more than 90-days has passed since the original liquidation. Up until the 90-day period, the district director may decide to change his decision and reliquidate the entry accordingly under 19 U.S.C. 1501 and 19 CFR 173.3. The claimant would still have the right to file a protest under 19 U.S.C. 1514 and 19 CFR 174 within 90 days from the date of the voluntary reliquidation under 19 U.S.C. 1501.

We, therefore, concluded that "a decision to allow a protest issued in error, can be rescinded if the allowance was rescinded before reliquidation." The rationale for this conclusion was that the importer would not be prejudiced by the rescission of the allowance as he would be by the rescission of the denial since the 180-day denial period would begin to run from the denial.

(2) Whether NYRL 843948 should have been applied to reclassify the nets?

Under the facts provided, the import specialist who granted the protest did not know NYRL 843948, dated August 8, 1989, classifying the nets had been issued. Therefore, upon the request to reliquidate the second entry, it was appropriate for the concerned import specialist to apply the New York ruling letter. "There is no legal or equitable reason which would compel Customs to perpetuate an error to the further detriment of the revenue." C.S.D. 82-44, October 23, 1981. The classification under subheading 5608.19.20, HTSUS, was, therefore, correct.

(3) Whether the protestant is entitled to retroactive duty-free treatment under the Automobile Products Trade Agreement?

Presidential Proclamation No. 6123, dated April 1, 1989, provides retroactive duty-free treatment to this class and kind of merchandise (nets subject to the 5608.19.20, HTSUS) imported on or after January 1, 1989.

The power to proclaim modifications to the Tariff Schedules of the United States to provide for duty-free treatment of any Canadian article which is original motor-vehicle equipment can be found in 19 U.S.C. 2011(b).

Section 2013 sets forth the effective date of any proclamation issued under 19 U.S.C. 2011. This section provides:

(a) Subject to subsection (b) of this section, the President is authorized, notwithstanding section 1514 of this title or any other provision of law, to give retroactive effect to any proclamation issued pursuant to section 2011 of this title ....

(b) In the case of liquidated customs entries, the retroactive effect pursuant to subsection (a) of this section of any proclamation shall apply only upon request therefor filed with the customs officer concerned on or before the 90th day after the date of such proclamation and subject to such other conditions as the President may specify. (emphasis added)

The language utilized in the protest suggests that the protestant's claim is based upon the duty-free treatment accorded under subheading 8707.29.00.50, HTSUS. The submission does not set forth distinctly and specifically a claim for duty-free treatment based upon the proclamation. See, 19 U.S.C. 1514(c). In the event, however, that such a claim is being requested, we are in agreement with your office, that since the protestant did not file a request for the retroactive application of the duty- free treatment to the nets within the 90 day statutory period the protestant may not benefit from the proclamation. It was necessary that the protestant file a request for the retroactive application of the duty-free treatment to the nets under subheading 5608.19.20, HTSUS, with Customs by July 26, 1991, in accordance with 19 U.S.C. 2013, even though he had appropriately filed a protest under 19 U.S.C. 1514.

HOLDING:

Based upon the foregoing, the decision to allow the protest was properly rescinded prior to the reliquidation. The protestant is not entitled to duty-free treatment under the Presidential Proclamation since he did not timely file for such treatment in accordance 19 U.S.C. 2011. The reliquidation under subheading 5608.19.20, HTSUS, as stipulated in NYRL 843948, is therefore, proper. The protest should be DENIED. A copy of this decision should be attached to the CF 19 and provided to the protestant as part of the Notice of Action on the protest.

Sincerely,

John Durant, Commercial

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