HQ 0112729 - Protest No. 3126-93-100005; Anchorage Vessel Repair Entry No. C31-0008394-9 dated September 28, 1990; M/V ARCTIC HERO V-1; Reconsideration of protest No. 3126-92-100005: 19 U.S.C. 1514; 19 U.S.C 1466 - United States International Trade Commision Rulings

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HQ 112729

May 14, 1993

VES-13-18 CO:R:IT:C 112729 BEW

CATEGORY: CARRIER

Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90831-0700

RE: Protest No. 3126-93-100005; Anchorage Vessel Repair Entry No. C31-0008394-9 dated September 28, 1990; M/V ARCTIC HERO V-1; Reconsideration of protest No. 3126-92-100005: 19 U.S.C. 1514; 19 U.S.C 1466

Dear Sir:

This is in response to a copy of a memorandum dated March 16, 1993, which was received on May 13, 1993, from your office. The memorandum forwards for our review a second protest, (3126-93-100005) filed by the attorneys for Palmco Pacific Corp., protesting our decision dated October 9, 1992 (HQ 112488 BEW), in which we granted in part and denied in part protest No. 3126-92- 10005. Copies of relevant materials relating to this case were received by our office on May 7, 1993, directly from Palmco's attorney.

FACTS:

The record reflects that the subject vessel, the M/V ARCTIC HERO, Voyage 1, arrived at the port of Anchorage, Alaska, September 22, 1990. The ARCTIC HERO is a U.S.-flag vessel owned and operated by Palmco Pacific Corporation of Seattle, Washington. A vessel entry was filed on September 28, 1990.

Pursuant to an authorized extension of time, an application for relief, dated December 18, 1990, was filed. The basis for the relief requested was that the conversion work in question constituted a nondutiable modification to the vessel. The conversion work purportedly entailed the following: (1) lengthening the vessel to create increased freezer storage space, a larger area for a processing deck and a longer net deck to repair and work the nets; (2) increasing the power, maneuverability and control standards of the propulsion system; (3) increasing the electrical and hydraulic power of the auxiliary engine systems to run processing, refrigeration and hydraulic machinery; (4) installation of a hydraulic system including hydraulic pumps, motors, and winches to operate the trawl net and to unload cargo; (5) installation of a processing plant to produce a marketable product; (6) installation of a refrigeration plant to freeze and preserve fish; and (7) increasing the number and size of all accommodation areas to house a substantially larger crew, including processing crewmen. The application for relief was denied on August 6, 1991 (HQ 111641 GEV), on the basis that:

... the Aizawa invoice descriptions do not enable us to determine conclusively that the work performed to the vessel is not dutiable as a modification. The invoices contain only the most general summary of the work carried out by the shipyard. Without details provided by the architectural plans and shipyard invoice descriptions of the work performed, we can only speculate on the actual work carried out. In the absence of such information, we find the costs contained in the Aizawa invoices to be dutiable with the exception of the charges for dockage on p. 1 (see C.I.E. 429/61) and domestic packing and freight on p. 19-A (see C.D. 1830).

The entry was liquidated on October 25, 1991. A protest was timely filed on January 22, 1992. The protest stated that the subject vessel was converted from an oil rig supply vessel to a stern trawler head and gut fish factory processing vessel at the Murakami Shipyard in Ishinomaki, Japan, during the period of July 21, 1989 - July 9, 1990. The protestant claimed that certain items contained in the Aizawa Shipping Company invoices were non- dutiable modifications. In support of the claim for relief various documentation including invoices, lease agreements, statements of corporate officers of Palmco Pacific Corporation, and prior Customs rulings were submitted. In addition, the protestant submitted drawings (A-N) indicating the structural changes made to the vessel. The record shows that the Aizawa Shipping Company managed the conversions, which actually took place at Murakami Shipyards, Ishinomaki, Japan.

On September 31, 1992, the protestant submitted additional evidence consisting of drawings explaining (a) the "non-dutiable installation of the fish processing factory", (b) the "newly converted hull superimposed over the previously existing hull", (c) the removal and scrapping of the existing machinery components and replacement with new components required for the newly extended service, and (d) the modification of the existing hull which was required in order to accommodate the larger and more complex machinery components, trawl gear, fish factory equipment, freezer storage space and larger accommodations. The services of expert marine surveyors, Nelson & Associates, Inc., were retained to review the work performed. The protestant, in submitting the new evidence, specifically sought relief for certain items of cost listed on pages 21, 21A and 21B of the Aizawa Shipping Co. Ltd. invoice. Further, the protest sought relief for certain other supplies and materials alleged to be U.S. spare parts.

On November 16, 1992, the Customs Form 19 was returned to the vessel operator with the notation that the protest was denied in part. Based on our October 9, 1992, decision on the protest, (HQ 112488 BEW), the entry was reliquidated on November 20, 1992. Palmco, through its attorney, now files a second protest in which it disagrees with Customs classification of certain items of cost listed on pages 21, 21A and 21B of the Aizawa Shipping Co. Ltd., invoice, which were found to be dutiable under the provisions of 19 U.S.C. 1466.

ISSUE:

Whether the Customs Service may reconsider a final protest decision.

LAW AND ANALYSIS:

The protest cites 19 CFR 174 and the decision in Philip Morris U.S.A. v. United States, 13 CIT 556 (1989), 716 F. Supp. 1476 as a basis for reconsideration of the initial protest.

Procedures for protests of decisions by the United States Customs Service have been established through statute and regulations. Section 514, Tariff Act of 1930, as amended, provides that decisions of appropriate customs officers relating to, inter alia, the liquidation of an entry are final and conclusive unless a protest is properly filed or a civil action contesting the denial of a protest is commenced in the Court of International Trade (19 U.S.C.A. 1514(a) (West Supp. 1992)).

Following liquidation, a protest may be filed against the decision to treat an item or a repair as dutiable under 19 U.S.C. 1466(a) (19 C.F.R. 4.14). Under the provisions of title 19 United States Code, section 1514, such protest of duties shall be filed within 90 days from the notice of liquidation. Under the provisions of title 19, United States Code, section 1514(c)(1), a protest of a decision under subsection (a) of this section shall be filed in writing with the appropriate Customs officer designated in regulations prescribed by the Secretary of the Treasury, setting forth distinctly and specifically each decision described in subsection (a) of this section as to which protest is made; each category of merchandise affected by each such decision as to which protest is made; and the nature of each objection and reasons therefor. Only one protest may be filed for each entry of merchandise, except where the entry covers merchandise for different categories, a separate protest may be filed for each category.

Section 174.13(a)(5) of the Customs Regulations (19 CFR 174.13(a)(5)), provides that a protest shall contain a specific description of the merchandise affected by the decision as to which protest is made. Section 174.13(a)(6) of the Customs Regulations (19 CFR 174.13(a)(6)) provides that a protest shall set forth the nature of, and justification for the objection set forth distinctly and specifically with respect to each category, payment, claim, decision, or refusal.

In the subject case, the first protest (No. 3126-92-10005) contained specific descriptions of cost associated with the Aizawa Shipping Co., Ltd. invoice. The protest was granted in part and denied in part, and the entry was reliquidated. Section 1514(c)(1) limits an importer to filing one protest to contest all administrative decisions arising out of an entry comprising one category of merchandise. The first protest covered all categories of merchandise, including the items of cost listed on pages 21, 21a, and 21b, of the Aizawa Invoice, which are also the subject of the second protest. Inasmuch as our decision covered all entered items and was based on the evidence submitted with the first protest, the second protest even though containing additional evidence, i.e, the Hull and Cargo Surveyors, Inc report of survey, File No. SSE 90 0756, dated June 14, 1990, is improperly filed (see Webcor Electronics v. United States, 1977, 442 F.Supp. 95, 79 Cust. Ct. C.D. 4725).

Under Customs Regulations, a protest may be amended prior to final determination, however, under the provisions of section 174.31 of the Customs Regulations, any person whose protest has been denied in whole or part, may only contest the denial by filing a civil action in the United Stated Court of International Trade in accordance with 28 U.S.C. 2632 within 180 days after -

(a) The date of mailing of notice of denial, in whole or in part, of a protest, or
(b) The date a protest, for which accelerated disposition was requested, is deemed to have been denied in accordance with section 174.22(d).

Under the provisions of section 174.30(a) of the Customs Regulations (19 CFR 174.30(a)), the date appearing on the Customs Form 19 shall be deemed the date on which such notice was mailed. In the subject case the Customs Form 19 is dated November 16, 1992.

The statute (19 U.S.C. 1514) plainly requires the filing of one protest on each category of merchandise. Inasmuch as the first protest contested each category of merchandise, the protestant has exhausted its administrative remedies. Accordingly, subject protest is denied on the basis that administrative remedies have been exhausted.

Moreover, the Court of International Trade has itself held that initiation of an action in the Court of International Trade is the only recourse available following the denial of a protest by the Customs Service. San Francisco Newspaper Printing Co., v. United States, 9 C.I.T. 517, 518-19, 620 F. Supp. 738, 740 (1985).

The Court in the Philip Morris U.S.A. case, supra., which the protestant cites as a basis for filing of its second protest, held that when Customs reliquidates merchandise beyond the statutory period allowed for reliquidation, an importer must file a protest in order to challenge the unlawful reliquidation. The case further held that under 19 U.S.C. 1514(c)(2)(A), an importer must file a protest challenging reliquidation even if the protest is essentially identical to a prior protest against liquidation. In Philip Morris, the reliquidation was untimely performed by the Customs Service, thus rendering it unlawful. Protest following reliquidation was necessary in order that the Court might have jurisdiction over the matter. In the present case, the entry was not unlawfully reliquidated, but was reliquidated on the basis of our determination of the same issues appearing in the first protest.
HOLDING:

This office declines to review on the merits the request for reconsideration of the denial of the protest (No. 3126-92-10005). The subject protest is denied in that the requirements set forth in 19 U.S.C. 1514 permit the filing of only one protest for each category of merchandise (19 U.S.C. 1514(c)(1).

Sincerely,

Stuart P. Seidel
Director, International

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