HQ 0223103 - Application for Further Review of Protest No. 1001-90- 007337, concerning liquidation of electro-mechanical linear actuators. - United States International Trade Commision Rulings

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HQ 223103

June 28, 1993

LIQ-9-01-CO:R:C:E 223103 SR

CATEGORY: ENTRY LIQUIDATION

District Director of Customs
New York Seaport
6 World Trade Center
New York, New York 10048

RE: Application for Further Review of Protest No. 1001-90- 007337, concerning liquidation of electro-mechanical linear actuators.

Dear Sir:

The above-referenced protest was forwarded to our office on Application for Further Review of Protest No. 1001-90-007337, dated August 29, 1990. We have considered the facts and the issue raised; our decision follows.

FACTS:

Electro-mechanical linear actuators were imported by Klinger Scientific Corp. for use in a NOVA laser-generation system by Lawrence Livermore National Laboratory, University of California. The actuators were entered in twelve separate entries from March 17, 1982 through February 3, 1984. The purchaser, a non-profit institution established for educational or scientific purposes, filed a Commerce form ITA-338P requesting duty-free treatment of the actuators under item 851.60, Tariff Schedules of the United States (TSUS), which provides for articles entered for the use of any nonprofit institution, whether public or private, established for educational or scientific purposes; instruments and apparatus, if no instrument or apparatus of equivalent scientific value for the purposes for which the instrument or apparatus is intended to be used is being manufactured in the United States. Merchandise classified under this provision is entered at a free rate of duty.

The ITA-338 was filed with each entry and forwarded to the Department of Commerce. By letter dated June 15, 1982, the Department of Commerce notified the Customs Service that the linear actuators were not scientific instruments. The Customs Service notified the importer by letter HQ 724690 dated March 9, 1984, that the linear actuators were not eligible for duty-free entry under item 851.60, TSUS.

The Department of Commerce Federal Register notice of September 17, 1986 (51 F.R. 39935) stated that the applicant's request for duty-free treatment was revoked by the Customs Service letter of March 9, 1985. Since the actual date of the letter was March 9, 1984, the notice was erroneous in this respect.

The applicant requested internal advice on January 16, 1987, through the Kennedy Airport Area. That request was answered by HQ 084541, dated April 9, 1990, which held that the linear actuators were classifiable in item 708.93, TSUS, and affirmed HQ 724690 stating that the actuators were not eligible for duty- free treatment under item 851.60, TSUS.

The entries were liquidated dutiable on June 1 and 15, 1990. The protest appears to have been filed on August 29, 1990 by the importer. The surety protested separately on November 13, 1990. The surety protest certified that its protest was not filed collusively. The importer's protest principally claims that the liquidations of June 1 and 15, 1990 were deemed liquidated before those dates by operation of law.

ISSUE:

Whether the entries were deemed liquidated by operation of law according to 19 U.S.C. 1504(b).

LAW AND ANALYSIS:

Extension of liquidation is provided for under 19 U.S.C. 1504(b) as follows:

(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; or
(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. * * *

According to the Customs Regulations of 1982, if merchandise is entered desiring to obtain free entry of an instrument or apparatus under item 851.60, TSUS, liquidation will be suspended. 19 CFR 10.114(d)(2) (1982 ed.) states as follows:

(2) Liquidation procedures. Except as otherwise provided herein, liquidation of an entry with respect to which duty- free treatment under item 851.60, TSUS, is claimed shall be suspended for a period of 180 days from the date of entry. . . . With respect to entries for which an appropriate Form ITA-338P has been timely filed, liquidation shall be suspended until the official designated by the Secretary of Commerce has notified the district director of customs concerned of the final determination with respect to the application relating to the entered merchandise.

When Klinger requested duty free treatment under item 851.60, TSUS, Customs suspended the liquidation according to 19 CFR 10.114(d)(2), and requested a determination from the Secretary of Commerce. Customs records show that notice of suspension for each entry was sent to both the importer of record and the surety.

Based on the technical advice received from the Bureau of Standards, the Customs Service determined that the actuators were neither an instrument nor an apparatus within the meaning of item 851.60, TSUS. That determination has been consistently followed in HQ 724690 and HQ 084541. The Federal Register notice of September 17, 1986, added no new information with respect to that determination.

By virtue of T.D. 82-224, the procedure for indefinite suspension of liquidation provided in 19 CFR 10.114(d)(2) (1982 ed.) was superseded on November 29, 1982. As a result, implementation of item 851.60, TSUS, is provided by 15 CFR Part 301. Part 301 does not expressly provide for unlimited suspension of liquidations until the designated Commerce official notifies the concerned district director of the final determination. Instead, notice is provided to the applicant and by publication in the Federal Register.

Assuming, without deciding, that the suspension requirement
provided by 19 CFR 10.114(d)(2) permitted a basis to extend liquidation under 19 U.S.C. 1504(b)(2), the effect of the Customs determination of ineligibility must be considered. The Customs Service determined in HQ 724690 that the linear actuators were neither instruments nor apparatus under 851.60, TSUS. Under 15 CFR 301.4(a)(2) the Customs Service was to determine whether an instrument fell within the classes of instruments eligible for consideration for treatment under item 851.60, TSUS. Customs letter HQ 724690 must be considered a negative determination, within the Customs area of jurisdiction, that the actuators were within the scope of the Act. The Federal Register notice of September 17, 1986 shows that the Department of Commerce recognized that HQ 724690 was such a negative determination.

Having determined that the actuators were outside the scope of item 851.60, TSUS, there was no basis to suspend liquidation under whatever authority may have existed under 19 CFR 10.114(d)(2) (1982 ed.). That is, the Customs determination of March 9, 1984, made any determination by the Department of Commerce moot. Under no circumstances could any subsequent Commerce decision affect the classification of the actuators. Any authority to suspend liquidation under 19 CFR 10.114(d)(2)(1982 ed.) ceased on March 9, 1984, because the sole purpose of suspension was to permit a determination of eligibility by the Department of Commerce. If an article was determined by the Customs Service to be an instrument or apparatus that was classifiable within any of the provisions listed in headnote 6(a), Part 4, Schedule 8, TSUS (19 U.S.C. 1202), the Department of Commerce was to determine whether there was a domestic instrument of equivalent scientific value. In reaching that determination, the Department of Commerce was required to permit public comment. If the ultimate eligibility determination depended on a determination by the Department of Commerce, there would be a logic to the liquidation suspension because Customs could not act. The March 9, 1984, determination foreclosed the only possible purpose of 19 CFR 10.114(d)(2)(1982 ed.) for a continuation of suspension.

Consequently, assuming the existence of a valid suspension which prevented a deemed liquidation beyond the first year, that logic would fail after the Customs determination of ineligibility on March 9, 1984. Since any suspension under 19 CFR 10.114(d)(2)(1982 ed.) would have to be considered lifted on March 9, 1984, the failure to liquidate within the four-year period set by 19 U.S.C. 1504(d) must be considered. The court in Nunn Bush Shoe Co. v United States, ___ CIT ___, Slip Op. 92-9 (1992) held that when valid suspensions were lifted before the entries were four years old, they were deemed liquidated by
operation of law on the fourth anniversary of the period that began on the respective entry dates.

The Federal Register notice of September 17, 1986, can not be considered the act which lifted the suspension because that notice did no more than acknowledge that the prior Customs determination of ineligibility rendered any consideration by the Department of Commerce moot.

The request for internal advice cannot be considered a request pursuant to 19 U.S.C. 1504(b)(3). There is no language in HQ 084541 to show that such a request was considered or granted. Moreover, such a request in 1987 would be ineffective for entries made in 1982 under 19 U.S.C. 1504(d). Nor can the request for internal advice be considered a waiver of 19 U.S.C. 1504. See United States v. Cocoa Berkau, Inc., and Washington International Insurance Co., Appeal No. 92-1390 U.S. Court of Appeals for the Federal Circuit, (March 30, 1993), 789 F.Supp. 1160 (Ct. Int'l Trade 1992) which held that only administrative proceedings that are required by contract or law can toll the running of a limitation period.

HOLDING:

The merchandise at issue is deemed liquidated according to 19 U.S.C. 1504(d), as asserted at the time of entry by the importer.

Accordingly you are directed to allow the protest. A copy of this decision should be furnished to the protestant in order to satisfy the notice requirement of section 174.30(a), Customs Regulations.

Sincerely,

John Durant

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