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HQ 224695


August 20, 1993

LIQ-9-01-CO:R:C:E 224695 CB

CATEGORY: ENTRY

District Director
U.S. Customs Service
Main and Stebbins Streets, PO Bldg.
P.O. Box 1490
St. Albans, VT 05478

RE: Protest No. 0201-93-100101; mistake of fact; substitution of consumption entry for TIB entry

Dear Sir:

The above-referenced protest and application for further review was forwarded to this office for determination. The facts and arguments presented have been considered and a decision follows.

FACTS:

A temporary importation under bond (TIB) was filed under subheading 9813.00.05, of the Harmonized Tariff Schedule of the United States (HTSUS) for the subject merchandise on February 6, 1992. The entry documentation indicates that the merchandise was being imported under a TIB for the purpose of repairs. The record indicates that by way of telefax transmittal dated February 18, 1992, the purchaser questioned why the protestant had filed a TIB entry rather than a consumption entry.

On January 27, 1993, protestant submitted a request for permission to substitute a consumption entry for the TIB entry alleging mistake of fact. This request was denied by way of letter dated January 28, 1993. The subject protest was filed timely. Protestant alleges that a TIB entry was not intended by the importer but, that due to a misunderstanding, a TIB was filed in lieu of a consumption entry. Protestant contends that this is a mistake of fact within the meaning of Section 520(c)(1) of the Tariff Act of 1930. In support of its contention, protestant cites Headquarters Ruling 710679 and T.D. 78-363.

ISSUE:

Whether the relief sought may be granted under this set of facts?

LAW AND ANALYSIS:

Initially, we note that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. 1514 and 19 CFR Part 174).

There is no regulatory or statutory authority to grant protestant the relief sought. Under the Customs regulations there is authority to allow the substitution of a TIB entry for a consumption entry. Specifically, 19 CFR 10.31(g) provides:

(g) Claim for free entry under Chapter 98,... may be made for articles of any character described therein which have been previously entered under any other provision of law and the entry amended accordingly upon compliance with the requirements of this section, provided... or even though released from Customs custody if it is established that the original entry was made on the basis of a clerical error, mistake of fact, or other inadvertence within the meaning of section 520(c)(1), . . . .

Therefore, the regulation is very specific in setting forth under which circumstances substitution will be permitted. There is nothing in the pertinent regulation to indicate that substitution of a consumption entry for a TIB entry is permitted.

Protestant contends that, under 19 U.S.C. 1520(c)(1), Customs has the authority to grant substitution of a consumption entry for a TIB entry based on a mistake of fact. The statutory provision in question states:

(c) Reliquidation of entry

Notwithstanding a valid protest was not filed, the appropriate customs officer may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to correct -- (emphasis provided)

(1) a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law,. . . .

As stated above, pursuant to 19 CFR 10.31(h), TIB entries are never liquidated. An entry which is never liquidated cannot be reliquidated. Section 520(c)(1) of the Tariff Act of 1930, as amended (19 U.S.C. 1520(c)(1)) provides that Customs may correct certain errors, if adverse to the importer, within one year of the date of liquidation. An entry may be reliquidated in order to correct a clerical error, mistake of fact, or inadvertence not amounting to an error in the construction of a law. See 19 U.S.C. 1520(c)(1); 19 CFR 173.4. Section 520(c) is not an alternative to the normal liquidation-protest method of obtaining review, but rather affords limited relief where an unnoticed or unintentional error has been committed. See Computime, Inc. v. United States, 9 Ct. Int'l Trade 553, 554, 622 F. Supp. 1083, 1085 (1985); see also Universal Cooperatives, Inc. v. United States, 13 Ct. Int'l Trade 516, 518, 715 F. Supp. 1113, 1114 (1989).

Protestant states that a TIB entry was not intended by the importer; however, due to a misunderstanding a TIB entry was filed in lieu of a consumption entry. Protestant cites T.D. 78-363 and Headquarters Ruling 710679 in support of its contention. In T.D. 78-363 the Customs Service denied the request to substitute a consumption entry for a temporary importation entry on the ground that the facts did not support a finding that the entry for temporary importation was made as the result of a mistake of fact or inadvertence. The ruling did state that with the proper facts the statute, 19 U.S.C. 1520(c)(1), could be used to allow the substitution of an entry.

In HQ 710679 (September 20, 1979), a situation involving a former item 832.00, TSUS, was considered. The Customs Service found that the military procuring officer failed to correctly certify the articles under the provision because it involved a lease rather than a purchase. The Customs Service was informed by the procuring officer that the failure was erroneous and contrary to the military's position. In view of the decision in C.J. Tower v. United States, 68 Cust. Ct. 17, C.D. 4327 (1972), aff'd 61 CCPA 90 (1974) which dealt with the interpretation of former item 832.00, TSUS, and 19 U.S.C. 1520(c)(1), the Customs Service ruled that substitution of a consumption entry for a temporary importation entry was permissible.

Subsequent to HQ 710679 and T.D. 78-363, the court decided the case of Godchaux-Henderson Sugar Co. v. United States, 85 Cust. Ct. 68, C.D. 4874 (1980). The issue involved the scope of 19 U.S.C. 1520(c)(1). The Customs Court stated in Godchaux-Henderson Sugar that there is "nothing in either section 520(c)(1) or the legislative history cited by plaintiff which suggests that Congress intended the statute to be remedial in situations where, as here, the importer mistakenly or inadvertently failed to make an entry within the time limit prescribed by law to obtain duty-free treatment. . . ." (at p. 74) The facts in Godchaux-Henderson were that sugar was imported from Nicaragua on February 24, 1976, which was unladen under an immediate delivery permit, but no consumption entry was filed at that time. At the time of importation, plaintiff was not aware of the duty-free status of Nicaraguan sugar under the GSP. On March 3, 1976, plaintiff learned for the first time that the sugar could have been entered duty-free under the GSP, but that the duty-free status of that merchandise terminated on February 29, 1976, by virtue of an Executive order. The shipment was entered as dutiable and liquidated accordingly. The court went on to say that "[s]imply put, plaintiff's 'mistake' or 'inadvertence' was not in an entry, but rather in failing to make an entry. . . ." 85 Cust. Ct. at 74. Therefore, even assuming arguendo that a 1520(c)(1) protest could be filed under the present facts, protestant's "mistake" or "inadvertence" was not in an entry but rather, in failing to make an entry. Thus, following the Customs Court's holding in Godchaux-Henderson, "the scope of relief afforded by section 520(c)(1) is not addressed to the facts and circumstances disclosed by the record." 85 Cust. Ct. at 75. This statutory provision grants limited authority to reliquidate in order to correct a liquidation which resulted from a clerical error, mistake of fact, or other inadvertence.

TIB entries are considered entries. However, TIB entries shall not be liquidated (19 CFR 10.31(h) and 159.2). Entries, once properly accepted, may not be rejected by Customs (see 19 CFR 141.64 and 141.68; see also ruling 222367, dated December 28, 1990). There is no authority for the conversion of a TIB entry which has been accepted by Customs to a consumption entry (19 CFR 10.31-10.40). The correct procedure for Customs to follow when a TIB entry is filed and accepted by Customs for merchandise subsequently found not to qualify for the TIB provision is to consider the bond breached and to assess liquidated damages (letter 723561/726002, dated August 13, 1984).

HOLDING:

Customs has no authority to allow an importer to convert the TIB entry under which merchandise has been entered to a consumption entry after the TIB entry has been accepted by Customs. T.D. 78- 363 and Headquarters Ruling 710679 were superseded by the court's decision in Godchaux-Henderson Sugar Co. v. United States, 85 Cust. Ct. 68, C.D. 4874 (1980). Therefore, this protest should be DENIED.

A copy of this decision should be attached to the Customs Form 19 and provided to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director

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