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HQ 224829


April 18, 1994

LIQ-9-01-CO:R:C:E 224829 CB

CATEGORY: LIQUIDATION

District Director
U.S. Customs Service
1801-K Cross Beam Drive
Charlotte, NC 28217

RE: Protest and Application for Further Review No. 1512-93- 100031; Claimed clerical error; 19 U.S.C. 1520(c); misclassification of merchandise

Dear Sir:

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

FACTS:

According to the file 57 entries were made between September 3, 1991 and March 9, 1992. The entries were liquidated between December 27, 1991 and July 6, 1992 respectively. On November 16, 1992, the protestant filed a request for reliquidation under 19 U.S.C. 1520(c) on behalf of the importer. Protestant asserted that a mistake of fact had been made at the time of entry in classifying the merchandise.

In its request, the protestant stated that it believed, based on the information supplied, that the goods were properly classified under subheading 5506.20.0000, HTSUS, as synthetic staple fibers, carded, combed or otherwise processed and dutiable at 6.5% ad valorem. Subsequent to the liquidation of the subject entries, the importer completed its end of the half-fiscal year review of its general accounts. One of those accounts included duty payments made to U.S. Customs through protestant. Upon review of this account, the importer became aware that the amounts recorded were much higher than projected. An investigation disclosed that protestant had been misclassifying the merchandise upon entry. The goods are, in fact, not carded, combed or otherwise processed and should have been entered under subheading 5503.20.0000, HTSUS, and dutiable at 4.9% ad valorem.

Protestant alleges that all of the relevant facts pertinent to classification were not known at the time of entry. The commercial invoices and all other documentation for the shipments failed to disclose whether the merchandise was carded or not carded. According to protestant, the entry filer was well aware of the difference between carded fiber and fiber which is not carded but believed the goods to be carded based on previous entries of similar merchandise. Once the error had been made on the initial entry, the error was perpetuated in subsequent entries. The 1520(c) petition was denied and this protest was filed.

ISSUE:

Does the above-described fact situation qualify as a mistake of fact under 19 U.S.C. 1520(c)(1)?

LAW AND ANALYSIS:

Initially, we note that protestant's request for reliquidation under 19 U.S.C. 1520(c)(1) and its instant protest filed under 19 U.S.C. 1514(a)(7) were timely filed. Its application for further review of this protest is proper under 19 C.F.R. 174.24(a) or (c).

Section 514, Tariff Act of 1930, as amended (19 U.S.C. 1514 (1982)), sets forth the proper procedure for an importer to protest the classification and appraisal of merchandise when it believes the Customs Service has misinterpreted the applicable law. A protest must be filed within ninety days after notice of liquidation or reliquidation. Otherwise, the tariff treatment of merchandise is final and conclusive. Under the entry processing scheme, it is the protest procedure that provides for redress of errors in the liquidation of entries. Virtually any error in the liquidation can be corrected if brought to Customs attention within 90 days of the date of liquidation. Such redress is not available if the 90-day period has expired.

Section 520, Tariff Act of 1930, as amended (19 U.S.C. 1520(c)(1)), is an exception to the finality of 1514. An entry may be reliquidated to correct a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law. However, certain conditions must be met. These are: 1) the error is adverse to the importer's interest; 2) the error is manifest from the record or established by documentary evidence; and 3) the error is brought to Customs attention within one year of the date of liquidation. Section 1520(c)(1) provides only limited relief in the situations described therein. Phillips Petroleum Company v. United States, 54 CCPA 7, 11, C.A.D. 893 (1966); Computime, Inc. v. United States, 9 CIT 553, 555, 622 F. Supp. 1083 (1985); Concentric Pumps, Ltd. v. United States, 10 CIT 505, 508, 643 F. Supp. 623 (1986). It is not the purpose of the reliquidation provision of 19 U.S.C. 1520(c)(1) to extend the period for filing objections that are properly redressable under the protest procedure.

The burden of proof requirement imposed under 1520(c)(1) is one that must be met by the petitioner during the 1520(c)(1) petition and review process. It is the affirmative burden of the petitioner to establish, from the record or by documents submitted, the nature of the error and to demonstrate, thereby, that the error is in fact correctable under the statute. Where a misclassification can be explained by either a legal error or a correctable mistake of fact or clerical error, the petitioner's burden is to show, on the record or by documentary evidence, how correctable error was responsible. Failure to rule out legal error by proving correctable error will result in a denial of the petition for want of evidence.

In the instant case, in both the 1520(c)(1) petition and subsequent protest, the protestant has alleged that it was not aware of all of the relevant facts pertinent to classification at the time of entry. A critical fact relative to the classification of the merchandise had not been provided. Consequently, the merchandise was incorrectly classified upon entry. Once the error was made on the initial entry at the new port, this mistake was followed on all subsequent entries until the importer conducted its review. Prior to this instance, the protestant had been classifying the merchandise correctly at a different port. Protestant contends that HQ 220965 (November 26, 1990) is controlling in this instance. However, protestant incorrectly states that said ruling held that the "misclassification of this merchandise constituted a mistake of fact." HQ 220965 did not address the question of classification. The protest under consideration in that ruling concerned the type of entry filed (a consumption entry was filed rather than a temporary importation under bond entry which was protestant's usual practice), not the classification of the merchandise entered. Therefore, contrary to protestant's contention, HQ 220965 is not controlling in this instance.

However, Customs has ruled on a similar issue in previous rulings. In HQ 222841 (March 12, 1991) the protestant alleged that it had misclassified men's golf jackets because it was not aware that the jackets were water resistant. In denying the protest, it was noted that among other things "[t]here is no affidavit by an appropriate employee of the protestant and/or manufacturer or foreign exporter as to the facts of the claimed clerical error, mistake of fact, or other inadvertence. . . ." Just as in HQ 222841, the protestant herein has not provided any documentary evidence to substantiate its claim that the entry filer was not aware of the true nature of the merchandise.

Likewise, in HQ 223524 (February 13, 1992) it was held that "[w]here the invoice is not materially misleading, and there is lacking sufficient other evidence to establish that a mistake of fact. . . is responsible for an erroneous classification, mistake of fact will not be found because of this failure of evidence." In that ruling, three different scenarios were discussed. In the third scenario some merchandise was misclassified by the broker because it was not aware of the width of the fabric. The documentation included with the entry package did not indicate the width of the fabric. In discussing this fact scenario, it was noted that there was no ". . .evidence to establish that mistake of fact was responsible for the misclassification rather than the importer's or broker's ignorance of the legal significance of loom width. . . . There is no evidence to establish that this error was an ignorant mistake and not a decisional mistake." The same conclusion must be reached with respect to the subject protest. Protestant simply asserts that "[t]he entry filer was well aware of the differences between carded fiber and fiber which is not carded in terms of tariff treatment. . . ." However, protestant did not provide any evidence in support of this conclusion.

Additionally, we note that the record includes a copy of a "fax" transmission dated October 8, 1992 from "Manny Seligman" to "WGCMGR" which states that "[w]e have gone back thru (sic) our records and can find no written evidence of where the bad number originated. It is our practice to consult with our textile clients when we begin a relationship to ensure proper classifications; however, in this instance we cannot prove our case one way or the other." In view of this information and the above discussion, we conclude that Customs did not err in denying the reliquidation request.

HOLDING:
You are hereby directed to DENY this protest in full. The evidence submitted in this case was insufficient to grant the 19 U.S.C. 1520(c)(1) petition, the denial of which is the subject of this protest.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to the mailing of the decision. Sixty days from the date of this decision, the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and to the public via the Diskette Subscription Service, Lexis ,Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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